Audit Notes: Poor Employers, Unions Matter, SEC Claws

Are employers really having a tough time finding people to hire in this economy? The New York Times claimed that last month, and the Journal did it Monday.

As Yves Smith says, “The subtext of the piece, however, is that a major culprit is that workers are being too fussy and are not willing to accept what is on offer:” And Kevin Drum finds some holes in the story:

Here’s what the Journal says:

In Bloomington, Ill., machine shop Mechanical Devices can’t find the workers it needs to handle a sharp jump in business. Job fairs run by airline Emirates attract fewer applicants in the U.S. than in other countries. Truck-stop operator Pilot Flying J says job postings don’t elicit many more applicants than they did when the unemployment rate was below 5%.

And Drum:

Sounds puzzling. Unless you read the rest of the story. The truck stop job, it turns out, pays minimum wage. The airline job requires you to move to Dubai. And the machine shop company pays only $13/hour but requires people with very specific skills. When they set up a ten-week training course of their own, they got plenty of applicants and 16 out of 24 graduated. But apparently we’ve gotten to the point where blue collar employers are barely willing to invest even ten weeks in training new workers for high-skill entry level positions.

Pay a decent wage, get some workers. Not too hard to figure out.

The New Republic’s Jonathan Cohn has a very smart piece on how “public employees are the new welfare queens.”

But ask yourself the same question you should have been asking then: To what extent is the problem that the retirement benefits for unionized public sector workers have become too generous? And to what extent is the problem that retirement benefits for everybody else have become too stingy?

I would suggest it’s more the latter than the former. The promise of stable retirement—one not overly dependent on the ups and downs of the stock market—used to be part of the social contract. If you got an education and worked a steady job, then you got to live out the rest of your life comfortably. You might not be rich, but you wouldn’t be poor, either.

Unions, whatever their flaws, have delivered on that for their members.

Government workers are disproportionately represented by unions, who help get them decent wages and benefits. Hardly any private workers are unionized anymore:

Unions represent around 37 percent of public sector workers, compared to 7 percent of private sector workers. Note that one of the few exceptions to the public-private compensation differential seems to be unionized industrial laborers, like the auto workers…

That’s not to say that lots government pay and benefits don’t need reforming. Does society really need to have NYPD cops, say, retiring at 41 years old with half their salary?

Uh, no, boss.

The Wall Street Journal has a good scoop story (UPDATE: Bloomberg had this story first and the Journal should have credited it) on a dispute between the SEC’s commissioners over how tough to get on clawing back fraudulently gained compensation:

Commissioner Luis Aguilar, a Democrat, has threatened not to vote on cases where he thinks the agency is too lax, people familiar with the matter said. That prompted the SEC to review its policies for the intermittently used enforcement tool.

“The SEC ought to use all the tools at its disposal to try to seek funds for deterrence,” Mr. Aguilar said in an interview on Tuesday. “It’s important for us to the extent possible to try to deter, and part of that means using tools Congress has given us.”

Aguilar, like the rest of the country, sounds fed up.

In a speech in May, Mr. Aguilar took up the issue of executive pay in the context of the SEC’s lawsuit against Bank of America Corp. for failing to disclose to shareholders the size of bonuses paid to Merrill Lynch executives. The bank agreed to pay $150 million to settle the matter.

Mr. Aguilar said that penalty “pales” in comparison to the $5.8 billion in bonuses paid during the merger.

“Perhaps what should happen is that, when a corporation pays a penalty, the money should be required to come out of the budget and bonuses for the people or group who were the most responsible,” he said.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.