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September 02, 2005
Labor Day List Celebrates Corporate-Union Collaboration
    by William Baue

The inaugural list launched by American Rights at Work spotlights positive relationships between companies and their workers.

"Proud to Be A Union Company." BellSouth (ticker: BLS) subsidiary Cingular Wireless touts this slogan, and prominently displays the logo of the Communications Workers of America (CWA) in its retail stores. Such union-embracing is an anomaly in corporate America, where union-busting is more prevalent.

American Rights at Work (ARAW) Socially Responsible Business program introduces its first annual Labor Day List, which honors companies that actively support unions and workers by framing the problem of union-busting. It points out that the National Labor Relations Act (NLRA) establishes and protects workers' rights to organize unions and bargain collectively, and that more than 57 million workers say they want unions (according to Peter D. Hart Research Associates.) National Labor Relations Board (NLRB) annual reports from 1993 through 2003 reveal that an average of 22,633 workers per year are illegally fired, demoted, laid off, or suspended without pay for union activity--that amounts to one instance every 23 minutes, according to ARAW.

"Many companies justify this behavior as a necessity to remain profitable in today's marketplace," states ARAW. "The experience of employers profiled in this report, however, suggests that hostile labor relations are a choice, not a fiscal requirement."

"These profiled companies offer a roadmap to countless others who mistakenly conclude that eroding worker benefits and protections is the only way to remain competitive or profitable," ARAW Socially Responsible Business Program Director Nikki Daruwala told "These companies recognize that it's important that the workplace not be an adversarial environment, and that workers should be viewed as assets, not liabilities."

The list includes a range of types of employers, including privately-held and publicly-traded companies, as well as non-profit organizations. Publicly-traded companies profiled include Costco (COST) and Harley-Davidson (HDI). Also profiled is Catholic Healthcare West (CHW), the largest nonprofit hospital care provider in California and the eighth largest healthcare system in the US, which is well known for its socially responsible investment (SRI) practices.

The SRI community is at the forefront of the investment community in supporting worker and union rights.

"The relationship management has with its employees, a primary resource in making their company productive, is and has been a central issue in evaluating a company's corporate responsibility policies and practices for social investors," said Tim Smith, president of the Social Investment Forum (SIF). "In addition, concerned investors have for decades been using their voice and vote as shareowners to press companies to adopt fairer and more responsible work practices in the United States and globally."

ARAW contrasts Costco's treatment of workers with that of its primary competitor, Wal-Mart (WMT), which is currently subject of a number of lawsuits over employee abuses. ARAW points out that International Brotherhood of Teamsters (IBT) members at Costco "have negotiated wage and benefit packages that are amongst the best in the retail industry." Furthermore, Costco CEO Jim Sinegal earns only about 10 times that of average Costco employees, much lower than most CEO-to-worker ratios.

Investment analysts tend to applaud Wal-Mart's money-saving treatment of workers while looking down on Costco's expenditures on employees, considering this to be money deflected from shareholder coffers. Such opinions seem myopic, missing the bigger picture of how employees repay with increased productivity.

"A 2004 Business Week study indicated . . . that Costco employees sell 50 percent more per square foot of sales space than Wal-Mart's rival warehouse chain Sam's Club," states ARAW. "They bring in profits that are about 25 percent higher than those at Sam's Club, despite the fact that Costco's hourly employees average $16 per hour and employees pay only eight percent of their health insurance costs."

However, social investors must balance Costco's positive treatment of its workers with its more problematic treatment of its other stakeholders and the environment. Christian Brothers Investment Services (CBIS), an SRI firm, filed a shareholder resolution asking Costco to develop a land procurement policy that assesses social and environmental impacts. The company's demolition of a culturally significant hotel and its environmentally sensitive surroundings to build one of its big box stores in Cuernavaca, Mexico generated strong stakeholder opposition, prompting the filing of the resolution last year and again this year.


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