Yes you can: Obama supports Chicago strikers

President elect Obama supports the strikers at Chicago's Republic Windows & Doors:

“When it comes to the situation here in Chicago with the workers who are asking for their benefits and payments they have earned, I think they are absolutely right,” Obama said Sunday at a news conference announcing his new Veterans Affairs director. “What’s happening to them is reflective of what’s happening across this economy...I think that these workers, if they have earned their benefits and their pay, then these companies need to follow through on those commitments."

The company announced last week that the plant was closing.

Members of the United Electrical Workers Union are staging a sit-in because the company folded without paying them their severance and vacation pay, ostensibly because the Bank of America froze the company's line of credit:

Some 200 UE members at Republic Windows and Doors in Chicago have sat-down and occupied their plant until they win the compensation they are owed. The peaceful occupation began Friday on the last day of the plant’s scheduled operations before closure. Republic reportedly failed to comply with notification rules for mass layoffs and skipped a meeting with a member of Congress to discuss the workers’ predicament.

The union says bailed out Bank of America is to blame for freezing Republic’s line of credit and keeping it from paying owed severance and vacation pay.

Ron Bender, a striker with 14 years at the company, put it poignantly to the AFP news wire: “We're doing this for the other working people in the country.” [CP]

This is the first strike directly linked to the economic meltdown. The bailout was supposed to get the banks lending again, but the banks are using our money to buy other banks and pad their balance sheets instead of lending it out.

Bank of America got $15,000,000,000 on October 28. It just bought Merrill Lynch.

My preliminary research suggests that Republic was failing for months before the credit crunch, but the credit freeze may have been the straw that broke the camel's back.

Comments

[geeg]

Republic was failing for months before the credit crunch

As in any epidemic, I imagine the weakest will certainly go first.

[The Phantom]

I am very much in sympathy with these workers. They are entirely in the right. Good for them.

[John Protevi]

I am very much in sympathy with these workers. They are entirely in the right. Good for them.

We have found common ground on this, Phantom. Good for them for their struggle, and good for you for expressing your support.

[The Phantom]

If I lived in Chicago, I'd drive down there with a load of food and coffee. Am sure someone will do this.

This is one of those stories that, like that of the trapped miners in Sago WV, on which everyone in the country is going to be thinking about soon.

There's no shade of gray on this one. Let the employer and the bank sort out their issues. Do the right thing and make these workers whole, right now.

[Daniel]

Let me get this straight: Bank of America credit analysts (and Republic internal analysts too) have determined that Republic has no hope of servicing its current debt, let alone any new debt that it may take on, yet the strikers and their sympathizers demand that Bank of America extend more credit to Republic so that the employees can receive SEVERANCE pay, not wages, but SEVERANCE. So, directly from Bank of America's balance sheet to the wallets of the strikers for severance, without the barest illusion that this money will be paid back to Bank of America. Bank of America, instead of being praised for doing the prudent thing is condemned. Reckless lending by banks is what got us into the mess we are in. Bank of America should be praised for turning away from their former lax standards.

It is so dramatic. What are we, Argentina!

[The Phantom]

Both companies have their legitimate issues, but its common decency to put the workers to the head of the line of creditors and then let everyone else get paid afterward.

If that's not the law, then we need a new law.

[Alon Levy]

I believe it is actually the law.

[Daniel]

Wages owed to employees do not get preference over secured and unsecured bond holders, as it should be, otherwise who would ever lend to companies unless they were investment grade? Secured bondholders get first preference, unsecured holders and vendors come next, government after, then employees, finally equity holders. That is the law, and it has worked well for hundreds of years.

Considering these facts has it occurred to you that both Republic and Bank of America were at least partially looking out for the interests of workers by abruptly shutting down the plant and firing everyone? If it was known to Republic and Bank of America that they had only enough cash on hand to last a few weeks, and that there was no hope off turning the enterprise around, then the decent and correct thing to do would be to make the last payroll and then shut the doors so that workers would not be left having performed work for which they could not be paid.

The worst possible case is for the government to mandate credit decisions. To a great extent that is what has brought this economy to the bad state that it is in.

[The Phantom]

Sorry Daniel

I am a big supporter of capitalism, but if that is the law it should change. Workers come first and at the end of the day back pay and back vacation pay owed should be small beer compared to the other obligations Republic has to bondholders and suppliers.

I doubt that it would be that much of a material change to the situation

[Lindsay Beyerstein]

Workers should be first in line for work they've already done. Speculators shouldn't get paid back before people who already put in work.

Going to work shouldn't be a gamble. It should be the ultimate safe investment: Invest an hour of your valuable time working, get a return on your investment, guaranteed.

[The Phantom]

Well the word "speculators" has a bad tone to it. I prefer " investors ". And those who invest have already "worked"- by providing financing, they have benefited the concern and its employees.

Still, the employees should come first. Any investor knows he can lose the sum of his investment, but someone who puts in 40 hours work had better be able to expect that he gets 40 hours pay.

Someone who invests $10,000 in Republic Window bonds won't be expecting to feed a baby or pay the electric bill with the proceeds he ultimately gets, while a union guy making windows will often be doing exactly that- feeding a family.

As far as justice is concerned, this is a no brainer.

[TB]

Turns out things might be turning:

"The creditor of a Chicago plant where laid-off employees are conducting a sit-in to demand severance pay said Tuesday it would extend limited loans to the factory so it could resolve the dispute, but the workers declared their protest unfinished.

The Republic Windows and Doors factory closed last week after Bank of America canceled its financing. About 200 laid-off workers responded by staging a sit-in at the plant, vowing to stay until getting assurances they would receive severance and accrued vacation pay [...]

Leah Fried, a spokeswoman for the union representing the workers, said Tuesday that it was too soon to know whether the sit-in will be called off. She said that workers would have to vote to end the action but that negotiations among the bank, the company and union representative continued."

http://news.yahoo.com/s/ap/20081209/ap_on_re_us/workers_takeover

[Alon Levy]

Wages owed to employees do not get preference over secured and unsecured bond holders, as it should be, otherwise who would ever lend to companies unless they were investment grade? Secured bondholders get first preference, unsecured holders and vendors come next, government after, then employees, finally equity holders. That is the law, and it has worked well for hundreds of years.

In Israel, the workers do come first. Investors still lend to companies - if they expected them to go bankrupt, they probably wouldn't lend to them regardless of how the bankruptcy law were set.

[BT]

I understand the purpose of the wall street bailout was to loosen credit. But do we really want to loosen credit for failing companies? What good is it to extend funds to an already bankrupt firm? Isn't that what got us into this mess, that is, lending money to people who couldn't possibly pay it back?

I am all about companies paying their workers, but banks should not be required to throw good money after bad.

Alternative Analysis through looking at the Dicta.