Hard Times In Sulphur
This past weekend various news media outlets in Oklahoma carried a report, or at least portions of a report, by John Clanton of “The Oklahoman” detailing the hard times that have arrived in Sulphur, Oklahoma following a raid by immigration agents in August, 2006.
The article indicates that Billy Cook Harness & Saddle lost 51 of its 75 employees because they were in this country illegally and subject to deportation. Forty-eight have been deported, two are awaiting deportation and one is on the lam. The article further points out that since the immigration raid that Cook has replaced 26 of the 51 lost workers and production is now at 60 percent of the pre-raid volume.
The article further points out that Cook has hired many more employees than 26, only to have them leave within a day, two days or a week.
And honestly, who could blame them? This since Mr. Cook is only willing to pay $6 per-hour, with the promise of a 50 cent raise and health insurance after they have stuck it out for 90 days. Mr. Cook points out in “The Oklahoman” version of the report that “You’re losing money at $6 an hour. They’re not productive for five or six months in this business.”
That lament would sound a lot more sincere if it were not for the fact that Mr. Cook’s company, in business since 1945, is an internationally recognized brand and according to the report his “little factory” turned out about 8,000 hand-made, hand-tooled saddles with the fanciest selling for $7,000 apiece last year.
Think about that for a moment and consider that if the average selling price was $1,000 per-saddle, multiplying that average times 8,000 saddles would equate to sales of $8 million a year. If the average selling price for all saddles was only $500 each, it would still equate to $4 million in total sales.
The article further states that Mr. Cook’s weekly after-taxes (do illegal immigrants pay taxes, if so how, with no Social Security number?) payroll was $35,000 per-week. It is impossible to determine from the article how much taxes were withheld, but a good rule of thumb is 20 percent. Using this as an average, it is likely that Mr. Cook’s weekly pre-raid payroll for 75 employees would be approximately $43,750. This means that for a year, 52 weeks times $43,750 per-week, Mr. Cook’s total payroll would be approximately $2 million, two-hundred and seventy-five thousand dollars.
Of course labor costs are not the only factor in a business, there’s many other expenses including raw materials, shipping, accounting, utilities, taxes, maintenance, tools and machinery, employee insurance, company insurance, workers compensation (at least for legal workers) and so forth. But by-in-large the biggest expense by far for most businesses is and always has been labor costs.
Reducing labor costs is how many companies seek to bolster their bottom line. A few companies survive by using cheap and illegal labor. “The Oklahoman” article indicated that some of the workers seized and deported had been with Mr. Cook for ten years. That’s a lot of “cheap illegal labor” and for an awfully long time.
Maybe it is time that Mr. Cook and other business owners faced up to the harsh realities of “cheap and illegal labor”. Those realities are that one gets what they pay for and eventually the immigration agents are going to come-a-calling and most of your employees disappear…
For reference:
See a short version of the report at KOTV.com
See the full version at NEWSOK.com
