Shirley Leung

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Labor, management and Market Basket

If you don’t live in New England – you have probably never heard of the Market Basket grocery chain.  It has been known for customer service and low prices.  I confess that I’ve probably shopped there maybe twice in the last 20 years so I am clearly not a regular.  But I know people who swear by Market Basket and, for some, it is the only store in town.  Whether you have heard of MB and love it, or don’t know the first thing about the store, there are lessons to be learned for Labor Day.

For more years than I can count, there has been a feud between the two cousins, Arthur S. and Arthur T. who inherited the store.  It has involved an epic court battle, and if I remember correctly, disciplinary action against some of the attorneys.  There was also an actual fist fight as at one point between the Arthurs.  All the while, Arthur T. has been managing the stores and making money for everyone.  But, according to the employees and Arthur T., the board wanted to take a bigger share of the profits for themselves and the shareholders who are mainly family members. The board decided to fire Arthur T.  Shirley Leung writes in her Boston Globe column

For six weeks, we were mesmerized by the sight of thousands of grocery clerks, cashiers, and other workers protesting at stores, on Facebook, and on the front pages of this paper. They did so at great risk, without the protection of a union, not because they wanted higher wages, but merely the return of their beloved boss, Arthur T. Demoulas.

 

Who among us would do that? Not many, if any at all. We were riveted because we wanted to be them. These rebellious employees gave voice to the voiceless masses who just wanted to hold on to decent wages for a decent day’s work at a time when fat cats get $50 million paychecks for showing up, and the gap between the rich and the poor is as gaping as ever.

 

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After the Market Basket board ousted Arthur T., these foot soldiers of capitalism kept the story alive when they made flyers protesting his removal and distributed them to customers. Then they reached out to the media and politicians to talk about their improbable demand. Soon workers walked off the job and refused to restock shelves. Customers boycotted in solidarity, putting the economic squeeze on new management to do something.

While it is tempting to portray Arthur T. as the Good Arthur and Arthur S. as the Bad Arthur, as Leung points out Arthur S. and his pals never carried out threats to fire everyone and hire new people.  There was an attempt to hold a job fair, but it was never clear how many people came or if anyone was hired.  I believe eight people were fired early on, but that example didn’t slow either the employee action or customer boycotts.  The governors of New Hampshire and Massachusetts got involved.  A settlement was announced finally and Arthur T. is buying out Arthur S. so as to become the majority shareholder.  He will now be running a severely damage company in deep debt and will be borrowing money to pay for his purchase.

Employees seem optimistic.  They returned to work as soon as the announcement was made.  Whether the stores can be stocked so there are things for people to buy, whether suppliers can return, and whether Arthur T. can keep to his promise to continue to treat and pay workers well are open questions.  If Market Basket can beat the odds and make a comeback to profitability, the story will be studied in business schools and by labor historians for many years.  Actually, it will probably be studied no matter what happens.

Market Basket employees celebrate the return of Arthur T.

Market Basket employees celebrate the return of Arthur T.

The Market Basket story is one for this Labor Day.  Non-union employees took collective action to save a boss and his practice of putting employees above shareholders. I’ll let Joan Vennochi have the last word.

Most notable is the power of narrative. Market Basket workers used social media as an organizing tool, but, at the same time, they skillfully used old and new media to tell their story before the other side knew what was happening.

And, unless you were Arthur S., it was a story that had something for everyone:

Workers standing up for, not against, management.

The desire to believe in one corporate leader putting the well-being of his workers

over shareholders, in an old-fashioned “It’s A Wonderful Life” way.

Employees of modest means willing to put paychecks for rent and mortgages on the line for principle.

“It speaks to a search and yearning for respect and fairness,” said Lew Finfer, a veteran community organizer who has worked for decades with unions to do just that by promoting better worker pay, conditions, and benefits.

There are lessons here for everyone.

Photograph:  JESSICA RINALDI/GLOBE STAFF

 

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The Next Fed Chair? Not Larry Summers.

Why would the President want to appoint someone who once opined that women were not good at science?  The man who was hired to end the economic crisis, but likely contributed to its making.  I’ve been thinking about how to approach this for a few days now and then I saw two pieces by Shirley Leung in the Boston Globe Business Section.  I think she says exactly what I wanted to say.  In the first, she discusses Larry Summers.

No need to hold back here: Larry Summers as the next Fed chairman?

Worst idea ever.

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Summers, by all accounts, is a brilliant economist, one of the best of his generation. He is also someone who is confident, and, in times of crises, may be the adult in the room that he supposedly said the Obama administration didn’t have when the economy collapsed.

But he lacks one critical trait I like in my Fed chairmen: He’s not boring.

Summers is far from bland. He is arrogant and a lightning rod and would carry so much baggage he couldn’t fit it on the shuttle to Washington.

Do we need a Fed Chair that is all about Larry Summers?  I think not.

In his book “Confidence Men,” about the Obama White House’s handling of the economic crisis, former Wall Street Journal reporter Ron Suskind paints Summers as brilliant but overconfident and prone to unnecessary battles. “As he has aged, he has grown less troubled by being uninformed,” Suskind wrote.

That’s not what you want in a Fed chairman. The nation’s top central banker must manage the economy primarily by raising or lowering interest rates and must build consensus to do so. He must work with six other Fed governors and 12 regional Fed bank presidents. Imagine what would have happened if the Fed board was split over what to do with the economy in 2008? What would that have done to the markets?

“I know Larry very well. He is a smart guy,” said Allan Meltzer, a Carnegie Mellon professor who has written the definitive history on the Fed. “But the skills that are required for that job are not just brilliance, they are ability to manage compromise. He doesn’t do that well.”

This is to say nothing about how he ran Harvard.  When he left, they picked Drew Faust, a women who was his opposite in many important ways.

So, who should be the next Fed Chair?  How about a woman?  Senator Elizabeth Warren and Shirley Leung are backing Janet Yellen.

English: Official picture of Janet Yellen from...

English: Official picture of Janet Yellen from FRBSF web site. http://www.frbsf.org/federalreserve/people/officers/yellen.html (Photo credit: Wikipedia)

Just as forcefully as folks are coming out against Summers, there is a campaign mounting to promote Janet Yellen, Ben Bernanke’s number two.

Unlike Summers, Yellen has significant monetary policy experience. She has been the vice chair of the Fed board of governors since 2010, and prior to that she ran the San Francisco Federal Reserve bank for six years. She has been involved in the Fed’s quantitative easing strategy, hatched during the Great Recession to keep money flowing and the US economy alive.

And unlike Summers, she is sufficiently boring, a key trait we want in someone running our central bank.

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If Yellen got the nod, she would break the glass ceiling at the Fed, becoming the first woman at the top. She already has some high profile endorsements from New York Times columnist Paul Krugman and former FDIC chair and UMass-Amherst professor Sheila Bair.

Bair, in a blog posted on Fortune earlier this week, argues that Yellen is the most qualified candidate, but the financial world’s old-boy network is trying to derail her candidacy:

“So why isn’t she a shoo-in? The ‘whispering’ campaign against her among industry types has been deafening. ‘Doesn’t understand markets.’ Translation: She may not bail us out if we get into trouble again. ‘Not assertive enough.’ Translation: She won’t stand up for us against the populists who want more regulation. ‘Lacks gravitas.’ Translation: She doesn’t show up very often in the financial media.”

I guess we haven’t come far enough for the Wall Street guys to be comfortable with a woman.

Bair also takes a whack at Summers. “Unlike Larry Summers, Tim Geithner, and other Bob Rubin minions frequently mentioned in the financial press as potential Bernanke successors, she was not part of the deregulatory cabal that got us into the 2008 financial crisis. In fact, she had a solid record as a bank regulator at the San Francisco Fed and was one of the few in the Fed system to sound the alarm on the risks of subprime mortgages in 2007.”

Others are also rallying behind Yellen. Senator Elizabeth Warren of Massachusetts on Friday confirmed that she has signed a letter Senate Democrats are circulating and plan to deliver to President Obama calling on him to nominate Yellen because “she is the best person for this job.” As early as Monday, activists, including women’s advocacy groups NOW and Ultraviolet plan to send a letter to Obama and Senate majority leader Harry Reid to support Yellen’s candidacy and oppose Summers’. When he ran Harvard, Summers set off a firestorm when he suggested women lacked the same “intrinsic aptitude” for science as men.

The President recently said he was not going to make a decision until fall, so we have time to make sure he appoints the best qualified person who, in this case is a woman.  Not Larry Summers.

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