By: Bill Pilchak – 05/01/14
Bob Talbert, a Free Press columnist until the 1990’s, often wrote about “things learned en-route to looking up other things.” Attorneys, too, come across interesting information. Recently, I stumbled upon a Washington Post Blog by Thomas Heath about David Bonior, “the former Michigan Democratic congressman, liberal pit bull…and labor-union BFF.”
Heath reports that Bonior has recently undergone an epiphany. His change of heart occurred after he opened two restaurants in Washington D.C. Now 68 years old, Bonior is quoted as saying, “Small-business people work very hard.” This apparently comes as a surprise to Bonior, who spent most of his life in “in governmental service” or “at the public trough” (pick your own end to that sentence). He contrasted his new-found private sector perspective to what he found in government: “If you are a small-business guy, you are out there and not as protected as a government employee. They [business owners] struggle every day. [On] a snow day, a government worker is off. A restaurant person takes a hit from that snow day,” because of the loss of business. The fact that a former Congressman considers that observation sufficiently astute to say it out loud to a reporter should be alarming. Many on the left –dictating how businesses must be run – have absolutely no idea what it takes to run a business.
Now that he is on the other side of the fence, Bonior said if he had the power, he would lighten up on regulations. Heath quotes him as saying: “It took us a ridiculous amount of time to get our permits. I understand regulations and. . . the necessity for it. But we lost six months of business because of that. It’s very frustrating.” One wonders what Bonior would think if he were in an industry more highly regulated than the hospitality trade.
“The biggest surprise is how you have to hustle,” Bonior said to Heath in another shocking disclosure of his naiveté. “It was an eye-opener. I always heard this when I was in Congress. ‘You should try and own a business someday, Bonior.’” So now that he does own a business, he finds, “It’s tough to make it, in terms of profit margins. But somehow you get by and you figure it out.”
The co-author of the Bonior-Kennedy bill which sought to increase the minimum wage in 2000, pays his non-union employees “the tip wage,” $2.36 an hour. Oddly, the person who tried to force others to pay their employees more, chooses to pay his personnel the absolute minimum. It’s understandable, because restaurants, like retail and other industries, operate on a razor thin margin. But Bonior’s about-face is not merely hypocrisy, but reflects the realities of running a business in 2014. Bonior’s comments should be hand-delivered to every one of his former colleagues who are trying to raise wages in 2014. The pie has been sliced too thinly already. They should be told that even a left-wing warrior who spent a career trying to increase wages cannot do so “in real life” without ruining the venture into which he has poured his savings.
To be fair on the hypocrisy point, Bonior reports that his employees get paid vacations of at least two weeks a year. Heath’s blog article did not report if that vacation pay is paid at $2.36 per hour, or whether Bonior somehow provides the missing “tip income” to them while on vacation. The article does note that “most employees who were on the restaurants’ health plans have signed up for coverage via the Affordable Care Act,” but does not indicate whether Bonior required a steep co-pay or whether Bonior will eliminate the company plan now that his employees are on Obamacare. Tellingly, however, Bonior’s restaurants do not have retirement plans, though a 401-k plan is easily provided to employees at little cost to an employer.
As the title of this article suggests, Bonior is not the first liberal Dem to wake up and smell the coffee. Senator and 1972 Presidential candidate, George McGovern, similarly came to his senses late in life. He authored two widely disseminated articles repudiating his earlier liberal views. The first was an Op-Ed in The Wall Street Journal in 1992, titled “A Politician’s Dream Is a Businessman’s Nightmare.” Here are some excerpts from that article:
In 1988, I invested most of the earnings from th[e] lecture circuit acquiring the leasehold on Connecticut’s Stratford Inn… The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility — complete with an experienced manager and staff. In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England [in 1988] just as I was acquiring the inn’s 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender. (emphasis added.)
McGovern’s OpEd then speaks of regulations that may have appeared to make sense to the politicians passing them, but which were actually creating a huge headache for businesses:
In short, “one-size-fits-all” rules for business ignore the reality of the marketplace. And setting thresholds for regulatory guidelines at artificial levels — e.g., 50 employees or more, $500,000 in sales — takes no account of other realities, such as profit margins, labor intensive vs. capital intensive businesses, and local market economics. The problem we face as legislators is: Where do we set the bar so that it is not too high to clear? I don’t have the answer. I do know that we need to start raising these questions more often.
Fran Tarkenton, the former NFL quarterback and founder and CEO of OneMoreCustomer.com, a resource for Small Business Advocacy, wrote about McGovern at the time of his passing in 2012. Tarkenton reported that McGovern’s business went bankrupt within two years and closed by 1991. He quotes McGovern as saying, “The concept that most often eludes legislators is: ‘Can we make consumers pay the higher prices for the increased operating costs that accompany public regulations and government reporting requirements with reams of red tape.’” McGovern eventually concluded what anyone in business knows: “consumers do have a choice when faced with higher prices. . . Every such decision eventually results in job losses for someone.”
Certainly, Michiganians can attest to that. We all watched the foreign automakers land on our shores, but avoid Michigan with its gold-plated sue-the-employer statutes and union mindset, and set up shop in states where they could avoid litigation expenses and silly union work rules. Somewhat surprisingly, McGovern’s second published revelation speaks precisely to the union context. On May 22, 2006, McGovern’s letter to the editor appeared in many newspapers across the country, prominently referring to Michigan-based Delphi Corporation and the auto industry two years before Chrysler and GM were driven to bankruptcy. Here are some excerpts:
THE END OF `MORE’
I have never wavered in my support for policies that relieve poverty and improve the standard of living of American workers. As a lifelong liberal, I supported Medicare and Medicaid, civil rights, Social Security and workplace safety requirements…And I have always been a supporter of the labor movement. Unions have a proud legacy of improving the lives of millions of workers over the last century…
But lately I have seen developments that have me worried…
Delphi Corp., the biggest auto parts supplier in the country and the employer of 34,000 hourly workers, is bankrupt. One big reason is that the company’s unionized workers earn $64 an hour in wages and benefits — more than twice what some of its competitors pay…
General Motors and Ford — the companies that have epitomized high-paying unionized jobs over the last several decades — have stated that they will lay off 30,000 workers each…Wall Street thinks these are just the first steps.
“More” has, unfortunately, become “too much” in a global and far more competitive economy.
Many of my friends will consider this view heretical. But it is based on stark reality. Not unlike members of Congress, union leaders are in the business of asking for more. That’s what their mentors and predecessors and heroes did. It’s very difficult to turn around and say that “more” is not always possible.
It can be galling to hear companies argue that they have to cut wages and benefits for hourly workers — even as they reward top executives with millions of dollars in stock options. The chief executive of Wal-Mart earns $27 million a year, while the company’s average worker takes home only about $10 an hour. But let’s assume that the chief executive got 27 cents instead of $27 million, and that Wal-Mart distributed the savings to its hourly workers. They would each receive a bonus of less than $20. It’s not executive pay that has created this new world.
I understand the attraction of asking business — the perceived “deep pockets” — to shoulder more of the responsibility for social welfare. But there are plenty of businesses that don’t have deep pockets. And many large corporations operate with razor-thin profit margins as competitors, both foreign and domestic, strive to attract consumers by offering lower prices.
A popular 2013 book based on an old Dutch proverb uses the term “Too Late Smart.” The epiphanies experienced by Bonior and McGovern should be required reading for those on the left who have no responsibility for America’s industrial and commercial enterprises. America, and especially Michigan, do not have time for Too Late Smart.