November 28, 2012

Twinkies & Big Macs: Thinking Sociologically About Black Friday

WynnBy Jonathan Wynn

There were Black Friday protests at my local WalMart in Western Massachusetts, organized by unions and worker’s rights advocates. If you watched the news you may have seen one in your town too. Protesters object to the fact that the company offers low-pay, limited-benefit jobs while the Walton family holds as much wealth as the bottom third of the U.S. population. This follows reports from Hostess (makers of Twinkies), claiming a worker’s strike gave them little choice but to shut down production, and liquidation seems eminent. Hostess feels the pinch from owing over a billion dollars to creditors, including their workers’ pensions but also to hedge funds (like Silver Point Capital) that own 30% of the company’s debt).

Of course, you can still buy Twinkies at WalMart. While some lament the potential loss of the yellowcake confection (according to a book on Twinkies, some of the ingredients are "more closely linked to rocks and petroleum than any of the four food groups," and the primary sweetener is high-fructose corn syrup), we don’t talk too much about the working conditions of the folks that make them. Liquidation of Hostess would not only eliminate jobs but worker’s pension plans as well, even though workers already made significant concessions and the CEO pocketed a 300% increase in his compensation package.

While watching the news, I thought about those Hostess and WalMart workers, but I also wondered about workers in other countries. We can better understand the conditions of workers in a comparative context through another iconic American food: The Big Mac. How?

I’ll add that one of my oldest and dearest friends balked at a Facebook post I made about WalMart, stating that he was “stunned” that I would be against a company where stockholders only take 3 cents net profit on every $1 they sell. (Can you tell he’s an investment banker?) We had an intense back-and-forth. I wrote about wealth, the Gini Coefficient (which measures income inequality across nations, and places the U.S. on par with China), and human development indexes (accounting for factors like birth rates, literacy, and long-term unemployment). I wrote how, when incomes grow on average, those benefits are not necessarily shared equitably, and how the average CEO pay grew 380 times more than average worker pay. He wrote about shareholders, profits, and that capitalism raises people out of poverty around the world.

And what about that global scope? David Redmon made a great documentary about the Global Assembly Line called Mardi Gras: Made In China. (It has been part of the You May Ask Yourself set of Sociology in Practice film clips on the StudySpace). Redmon looks at a seemingly superfluous object—the Mardi Gras necklace—and follows it from the bacchanalia of New Orleans to Tai Kuen Bead Factory in rural Fujian Province, China. (In the same fashion, a wonderful book, Travels of a T-Shirt in the Global Economy, tracks the “biography” of a t-shirt across the globe, and a video lecture by the author is available here.)

Redmon interviews both workers in China and revelers in New Orleans and brings images and experiences from both ends of the global production chain in contact with each other. When shown images of manufacturing workers, most Mardi Gras folks watch in horror as they see young women working in sweatshop conditions. But one MBA student is interviewed and says, ”It doesn't matter, ten cents there is a lot of money.” In class conversation someone will usually echo this sentiment, albeit less callously, saying that the dollar amount is not the same across different socio-economic contexts. This is true. But how much of a difference?

This is where the Big Mac comes back. One of the tricks I use to compare the purchasing power of an hour of labor across different geographic and economic regions is called the ”Big Mac Index.” According to The Economist, this is created:

…based on the theory of purchasing-power parity (PPP), which says that exchange rates should move to make the price of a basket of goods the same in each country. Our basket contains just a single item, a Big Mac hamburger, but one that is sold around the world.

In other words, the Big Mac is made the same way in all 119 countries McDonald’s is located in, right? It’s the same object (almost), being made and sold in the same way whether it is in Buenos Aires or Yuyuan Garden in Shanghai or Buffalo, New York. So, we can compare work to purchasing power around the same unit of measurement. Here is some comparative data, from a recent Economist article:

 

This chart shows that in countries like Germany and France, a worker can buy 2.2 Big Macs for every hour working at McDonald’s, while a worker in India would need to work five and a half hours to buy the same amount of burger.  This, in the eyes of The Economist, is the way that you can better understand purchasing power across countries.

If Marx were alive today he would be horrified (but unsurprised) that folks would spend their day off from work eager to give back their hard earned profits back to billion dollar corporations, even as workers protest outside. (I’ll follow up on the consumerism side of the shopping season in my next blog post about crowds.) But thinking critically about labor conditions and the supply chain a la Redmon’s film is a great start.

Getting back to labor conditions in the U.S., there is a lot to be thankful for. Workers at Hostess and WalMart likely have better purchasing power than those in other countries. But is that a satisfying enough measure for you? What do you think these workers should do?

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