Case Four: Making a Profit-Reduce Wages?

Three hundred workers at the Mott's apple juice plant (a Dr Pepper Snapple subsidiary) in Williamson, New York, waged a 16-week strike when the company demanded a $1.50 per hour pay cut even though Snapple had produced a $555 million profit in the previous year (2009)133 and increased its dividend by 67 percent in May 2010.134 Snapple claimed the wage cut was justifiable to increase competitiveness, because the workers were averaging $21 per hour while other similar workers were averaging $14.135 The union, on the other hand, noted that the area suffers from nearly a 50 percent poverty level.136 The strike ended in September 2010 with a three-year deal freezing rather than reducing wages. Snapple dropped a demand to freeze pensions for current employees, but new hires will join a 401(k) plan instead of receiving a pension. Snapple will save money on retirement plans. Both sides reportedly considered the result a victory.

Case Four Questions

1. Dr Pepper Snapple argued that it had a responsibility as a public company to seek concessions from its workers. Explain that argument.

2. Is it wrong in your judgment for a profitable company to seek wage concessions from its workers? Explain.