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from the FIRE-sector-doing-bad-math-again dept.
The Intercept reports:
Bank of America Merrill Lynch downgraded Chipotle and warned investors that the stock will "underperform", complaining that the restaurant chain is paying its workers too much, and that cutting labor costs further will be difficult for the chain.
[...] Chipotle spokesperson Chris Arnold called Bank of America's analysis "flawed and inaccurate", adding that the restaurant chain hasn't cut employee hours but recently increased hours in conjunction with the addition of queso to the menu.
"That analysis is making estimates and conclusions about our management practices over a 12-year time frame from 2006 to 2017", Arnold told The Intercept. "Obviously, the scale of our business and labor wages have changed dramatically over that time frame. Drawing conclusions from 2006 and applying them as a directional change to our business over the past 12 months is simply flawed."
[...] "We continue to pay wages and offer benefits that are competitive and that reflect the priorities of our employees", Arnold said. "And with a commitment to developing and promoting people from within, we are providing significant opportunities for advancement."
The downgrade is a symptom of Wall Street's maniacal obsession with labor costs.
(Score: 0) by Anonymous Coward on Sunday October 22 2017, @02:05PM (14 children)
Can someone please explain to me how cutting labor costs becomes MORE difficult if you pay your employees more? Surely, the more you pay your employees now, the more leeway you have to cut labor costs?
(Score: 5, Insightful) by srobert on Sunday October 22 2017, @03:01PM (8 children)
OK. I'll take a stab at it. Necessity never strikes a good bargain. If you pay your employees a little bit more than they need for the present, they will have savings. When they negotiate for the next round of wages with money in their savings accounts, they will not be bargaining in desperation, hence they will be in a better position to demand something from you. Better to keep them right at the point of starvation, so they will have to accept what you offer. Now if you happen to be one of those people who still makes enough money to have any savings, I'd recommend you keep those savings somewhere other than Bank of America.
(Score: 4, Insightful) by Whoever on Sunday October 22 2017, @06:03PM (7 children)
"Negotiate"? In the bottom rung of fast food. That gave me a good laugh.
The people working at Chipotle for somewhat higher wages don't earn enough to have significant savings. If anything, they will be more desperate to keep their jobs, because they know that the alternative is minimum wage.
(Score: 2, Insightful) by Anonymous Coward on Monday October 23 2017, @12:55AM (5 children)
Imagine this:
Every worker in the USA belongs to a labor union--and not just "a" union, but everybody in the SAME union.
Now, some company decides it wants to screw its workers.
The union representing those workers declares a strike.
That meant that EVERY worker in the union goes on strike.
You now have a general strike across the whole USA.
How long do you think that that company is gonna stick with its asshattery before the owners/managers of all the other companies in the nation, now idled, take that CEO aside and (metaphorically?) kick the living shit out of him?
"Worker of the world, UNITE! You have nothing to lose but your chains."
.
Alternately, imagine this:
Everyone in the USA is a worker-owner in his own worker-owned cooperative.
You now have no need for an Aristocratic Ownership Class, which will constantly try to exploit and screw The Workers.
-- OriginalOwner_ [soylentnews.org]
(Score: 2, Insightful) by Anonymous Coward on Monday October 23 2017, @04:44AM (2 children)
That sounds delightfully terrible. Piss off 'the union' and you are blackballed out of a job.
Your way would only work if everyone was nice to each other. There are assholes out there. They *do* *not* *care* *about* *you*. Putting them in a union does not change that.
(Score: 0) by Anonymous Coward on Monday October 23 2017, @08:20AM (1 child)
You sound like someone who totally pissed off YOUR CO-WORKERS.
Your entire attitude sounds self-centered and assholey.
It wouldn't surprise me at all if you are speaking from actual person experience about getting thrown out.
I wouldn't want you in -my- organization.
...and good luck going up alone against The Corporation with its lawyers and specialists in manipulation.
They are organized; you are easy pickings.
...and I mentioned that unions are on my list below worker-owned cooperatives.
...but as long as Capitalism still exists in a workplace, organizing as a union is the best card that those workers have to play.
-- OriginalOwner_ [soylentnews.org]
(Score: 0) by Anonymous Coward on Monday October 23 2017, @05:41PM
OK, so everyone who doesn't toe your party line can die in a fire, while all the good little cogs are good little cogs for the union.
Being an entrepreneur, risks and all, sounds really fabulously great in your world. Better than sucking union dick without even the option of changing the flavour of dick by changing jobs.
(Score: 2) by srobert on Monday October 23 2017, @04:17PM (1 child)
I think I'd prefer individual trade and labor unions over the Socialist Party one big union model. But, union or non-union, I'd like to see some legal requirement that would make it so no workers were working without a written contract of some sort. Years ago someone told me that this was the requirement in Belgium. (Can anyone confirm?). This "fire at will" crap in most of the U.S. is doing damage to the economy.
(Score: 0) by Anonymous Coward on Monday October 23 2017, @09:01PM
The more that the Capitalist Ownership Class can fragment The Workers, the easier it is to pick them off one by one.
My example took that to the other extreme.
When push comes to shove, bigger tends to be better and unions are no exception.
...that is, if the union officers handle things properly.
In recent years, union officials tend to be lapdogs for management/owners. 8-(
(We had a recent story about Aussie auto workers and their company-friendly union; why the members aren't voting out those losers I just don't understand.)
The nurses unions are the most vociferous bunch in the USA (and the most effective) and that's with them being split into several groups.
Just imagine if they clenched these individual fingers into a fist.
a written contract [for every worker]
Amen.
This "fire at will" crap
Yeah. I've been using the term The Precariat [google.com] more and more.
...in particular, WRT a lack of universal healthcare and a low labor participation rate and you've pointed to another aspect of the problem.
-- OriginalOwner_ [soylentnews.org]
(Score: 3, Interesting) by JoeMerchant on Monday October 23 2017, @02:17AM
For what it's worth, in 1988 I "negotiated" a $7/hr starting rate of pay as part time stock help at a grocery store (normal starting pay was minimum wage, $3.35/hr at the time). Simple fact was: they needed people, I convinced them A) I could do the job, and B) I would not be doing it for $3.35/hr. Little tyrant of an assistant manager there was a PITA for everyone there, about 3 months after I started he came to my aisle one day and dropped the "well maybe you don't need this job" on me, which I threw back at him with "well maybe I don't." That little confrontation got him removed from managing me, I started getting all the hours I wanted, when I wanted them, and the biggest bonus of all: I never saw his weasel face in my aisle again.
Oh, cool side effect: lots of part time stock help kids had been there for 2-3 years and were making ~$4.50/hr with their accumulated nickle and dime raises over the years. When I walked on at $7, word got around about it on my first night (not from me), and within a week they all were bumped up to the $6+ range - after that, every single one of them had my back.
🌻🌻 [google.com]
(Score: 1, Insightful) by Anonymous Coward on Sunday October 22 2017, @03:14PM (1 child)
Technically you're right, but only if they're willing to fire the people making the higher wages, which would significantly harm employee morale and give bad publicity if on a large scale. Lowering wages of current employees effectively results in the same. The issue is compounded by the fact that well paid employees tend to stick around, so natural turnover will be slow to allow them to make changes if they only cut the pay of new employees.
(Score: 0) by Anonymous Coward on Monday October 23 2017, @01:05AM
At Suma, the largest worker-owned co-op in UK, they democratically decided that every worker-owner gets the same (very nice) compensation package. [google.com]
-- OriginalOwner_ [soylentnews.org]
(Score: 3, Interesting) by tomtomtom on Sunday October 22 2017, @08:35PM (2 children)
Because that isn't what the research analyst said. This article unfortunately makes the Intercept look like a complete joke given they apparently misread the CNBC article, didn't bother going to the primary source and to top it off misunderstand what a research analyst's job is in a pretty fundamental way. Unfortunately this is pretty common for mainstream reporting of business news these days - the people reporting on it outside of the specialist press are almost all terrible and the specialist press are often not much better.
Firstly, the "underperform" rating is not a comment on the company but on their stock price - which they do not control. It means the analyst thinks the market is overvaluing the company and that there are better investments elsewhere when taking into account current prices. If you read the original CNBC article, the research analyst is saying that the market is overestimating how much more the company can cut costs in the future because they have *already* shrunk their labor costs about as much as possible (by reducing hours in his reading of the numbers, although Chipotle apparently disagrees with that).
Noone is saying that there is (or indeed is not) a link between the how much individual employees are paid and how easy it is to cut wages. The debate here appears to be about hours rather than wages.
Finally, the comment saying "it's a sympton of Wall Street's maniacal obsession with labor costs" is just straight up odd. For someone considering investing in an industry where labor costs account for 27% of sales (which is what the CNBC article quotes for Chipotle) it would be odd not to ask questions about how that cost is managed and what the company gets for its investment in terms of customer satisfaction, future sales growth, etc. Not to mention especially in this type of industry, the logistics of managing the workforce to get the most out of it are quite complex - you want to ensure that you are not understaffed at busy times, not overstaffed at quiet times, account for the fact that people need to work in shifts of a certain minimum length to be productive, different jobs might have different busy/quiet periods, etc etc, and on top of that the sector is one where a large portion of the labor will not stay with one employer for a long period so you need to manage the cost of employee turnover carefully too.
(Score: 0) by Anonymous Coward on Monday October 23 2017, @03:36AM (1 child)
There's software that does this. It's a problem that's been automated.
(Score: 2) by tomtomtom on Wednesday October 25 2017, @12:04PM
Yes, the rostering itself is easy to automate. But what I was trying to get at is that the second-order effects make a big real-world difference and optimising properly for these is hard and something that needs to be monitored continually. A couple of examples - what impact does it have on employee turnover, service quality, etc if you roster in longer shifts or shorter ones (longer shifts potentially means some wasted hours? How much employee flexibility should you allow in picking which days/times they work - at one end of the spectrum you could end up with very variable service quality if the same crew always work the same shifts so there is next to no overlap (and worse, good crews might not coincide with busiest periods) which could hurt your customer retention/growth but on the other hand if you impose some kind of rule e.g. "everyone must be available to be rostered at least one weekend shift per month" then you might be cutting some very good people out of your potential pool of employees. Even worse, the right answers to these questions will differ between markets, change over time and over the seasons (e.g. if you employ a lot of students).