Here’s a Fix for Our Fiscal Woes: Hire Staples Management

For Philadelphia to survive, it needs a new deal with its unions.

Convention Center photo | Jeff Fusco. Staples photo |

Convention Center photo | Jeff Fusco. Staples photo |

I’m tired of hearing the Mayor and City Council complain about our city’s fiscal problems. I’m tired of listening to our state representatives, congressmen, and gubernatorial candidates complain, too. We all know there’s a simple fix to the problem. Just ask Staples.

The office supply store chain (which is also a client of mine) is now testing a pilot program so that customers can buy stamps and other postal supplies at their convenience instead of being forced to go to the post office during the day. This sounds like a good thing, doesn’t it? Not for everyone apparently. The American Postal Workers Union has staged national demonstrations in protest because Staples is training and supervising their own employees and not postal workers. By providing a less expensive, more convenient service for its customers, Staples is threatening the union.

We need more of this.

Yes, unions are good. They provide a valuable service. Unions protect their workers from overly zealous employers. They produce trained people who can perform complicated tasks. Their members work hard for their money. They protect us from crime, put out fires, teach our children, change our bedpans, and make sure that buildings don’t fall down on our heads. But can we all agree that they need to change? Does anyone have the guts to do this?

Like Staples, the leaders at the Philadelphia Convention Center seem to. Just this week, and according to this report, they have unanimously approved a new plan to break from union control and give their exhibitors greater freedom to build and break down exhibits and modify other work rules. That’s because the center’s unions were upset that exhibitors, to cut costs, wanted to do more work themselves or use less expensive outside contractors.

Oh, there will be fights to come, but it seems like the Convention Center leaders have had enough. It’s no secret that too many meeting planners who want to come to Philadelphia choose other destinations after adding up all the additional costs due to the center’s requirement to use unions for construction and setup. The Convention Center’s actions would make the city more attractive for conferences and pull in millions in additional revenues for local businesses.

So what about the Mayor? City Council? This week school Superintendent Hite had to plead in front of Philadelphia’s City Council for hundreds of millions of dollars for the city’s broken school system. “The School District of Philadelphia cannot cut its way to solvency or to a system of great schools. It just cannot be done,” he said. What he didn’t say is the elephant in the room — that the district’s most significant costs are employee related: salaries, pensions, sick days, vacations, and the inability of leaders and management to hire and fire as any business owner can in order to attract and then retain the best possible people. Why? Union contracts won’t let them.

Philadelphia, like so many other American cities, counties, townships and states (and of course our Federal government) faces enormous deficits every year and healthcare and pension obligations so large they’re difficult to comprehend. A big reason why (at least for the city) is due to people expenses. Union contracts enable some people to retire in their 50s, collect a pension based on their last two or three years of service (can you say “lots of overtime, honey”?) and then take another job to fund their vacation home down the shore. Our city has one of the top 10 highest tax burdens in the country and even still our kids go without books, safety, or decent schools and the taxpayers (that’s you and me) are asked for even more money to barely keep things afloat.

But, thanks to Staples and the leaders at our Convention Center, there’s good news. This is a human problem with a human solution. The city’s fiscal woes, high taxes, and overall lousy business environment can be fixed pretty easily. If costs were significantly decreased then the tax burden on its people and businesses could be lowered, making the city a more attractive place to live and set up shop.  More could be spent on schools and infrastructure. The fix is simply changing union contracts.

Change existing contracts? Horrifying! Unheard of! A contract is a contract! A deal’s a deal! Except it’s not. As a business owner, people change contracts on me all the time – and usually in mid-contract. Customers ask for more time to pay. Others ask for bigger discounts on already agreed-upon prices. Suppliers tack on additional charges after the fact. Employees need extra time off. That’s because conditions change, facts change, the economy changes, people change. Anyone running a business will tell you that change is a part of doing business. Both parties, if they are responsible, are interested in long-term success — even if it means changing contracts. We see this all the time.

So what would happen if union contracts were changed to, for example, reduce pension payments to those less needy of them, require more contributions to healthcare like the rest of the world, or offer more flexibility to managers? Union members would flip out. Union management would go to battle. Union lawyers would lick their chops (mostly from the porterhouse steaks purchased with their union legal fees). Union money would flow to political candidates offering protection.

I know this is not an overnight solution. I realize that change takes time. I know that this is not easy. I know that there are good people working for the unions. I know that the unions will put up a fight (and I can’t blame them). But I also know that this problem can be fixed. And I know that contracts change in business all the time. What I don’t know is if our current political leaders (or our future ones) will have the courage to do what Staples, or the leaders at the Convention Center are doing.

I doubt they will. It’s much easier to just kick the can down the road.  And keep complaining.

Follow @GeneMarks on Twitter.