In a story which should have been recognized at least two months and possibly 5-6 months ago but which remained unreported until last week, a Chicago bakery lost one-third of its workforce in July.
Press reports during the past week, most prominently one from Bloomberg News seen in the Chicago Tribune and elsewhere, won't directly admit what should be obvious, though the company involved is implausibly denying it: The workers were illegal immigrants.
The disconnect between the reporting and reality was so obvious, and so easily explained, that Tucker Carlson devoted a minute of his November 29 show to the situation:
Transcript (headline is found at the YouTube link; bolds are mine):
Bakery that hired illegals a victim of its own scam
TUCKER CARLSON: A story this week in the Chicago Tribune profiles what the paper seems to believe is a sad victim of the Trump presidency.
It’s a place called the Cloverhill bakery. The paper says it is scrambling to replace 800 workers who were caught up in an immigration crackdown. That’s about a third of the workforce.
The effect? Disastrous, the paper says. It could slow production, raise consumer prices. Why is that? Because so many of the illegal workers the bakery hired (were illegal, it) “Faces challenges in retaining staff and pressure to raise wages.” Can you believe that? Raising wages! That’s Bolshevism, according to the paper.
The bakery’s corporate board claims “it was not aware of the extent of the risk that existed to the business” from hiring literally hundreds of illegal workers.
We already know that that claim is bogus. They knew what they were doing and so did other countless politicians and business owners. If Americans won’t accept bottom of the barrel wages, they can replace them with illegal workers who will. That’s the scam.
Carlson's segment was brief. Here are headline and opening paragraph from the report:
Chicago immigration raid leaves bakery scrambling to rehire after 800 workers lost
A Swiss maker of hamburger buns for McDonald’s Corp. said it’s struggling to run a Chicago bakery after it lost a third of its workers in a clampdown on 800 immigrants without sufficient documentation.
Isn't that special? The workers were "immigrants," but darn it, they didn't have the right "documentation" and they had to be terminated. Bloomberg didn't have the integrity to directly admit that the workers didn't have the "documentation" because they were (and perhaps in many cases still are) in this country illegally.
Readers don't really need to guess how many of the workers without the right "documentation" said, "Let me go home and come back with my papers." The people involved are no longer working at Cloverhill because they entered and stayed in the U.S. illegally and because they were illegally allowed to work at the plant (more on that shortly). It's reasonable to infer that the plant's heavy use of illegals was well-known in the Windy City and to the federal Department of Homeland Security for years. One would also expect that at least a few of the Trib's journalists and reporters at other media outlets in the city were aware of the situation; if not, they should have been, if local journalism means anything any more.
Cloverhill is all of nine miles from Chicago's Loop (downtown) on the city's southwest side. But no one ever did anything about the situation until Donald Trump became President.
Back to the Bloomberg/Tribune article:
About 35 percent of the workers at Cloverhill Bakery had to be replaced, according to Zurich-based Aryzta AG. The company, which makes baked goods for fast-food chains and supermarkets at a bakery in Chicago's Galewood neighborhood, said the employees were supplied by a job-placement agency that faced federal audits earlier this year. It also has a warehouse in Cicero.
In other words, the "employees" were not employed by Aryzta/Cloverhill. They should have been treated as employees of the "job-placement agency." It seems more than a little likely that the agency didn't treat the workers as genuine employees; after all, you're required to have a Social Security number to be employed. The company wouldn't identify the name of that agency, and it appears that no reporter or news outlet has had the curiosity to even try to find out.
The raid on workers at Cloverhill is one of the biggest U.S. employment headaches reported by a European company so far as President Donald Trump has made curbing undocumented immigration a centerpiece of his presidency. Aryzta said it faces challenges in retaining staff in the U.S. and pressure to raise wages.
The company did not specify when the raid happened, but said in its annual report "following this disruption [Cloverhill] locations incurred €16.3m of losses during June and July 2017."
In other words, the raid happened 5-6 months ago, and either no one noticed it, or it was noticed and not deemed newsworthy.
Accounting principles require that the costs associated with a significant business disruption have to be estimated and recorded when the disruption occurs. So it's clear that those costs would have become generally known the next time the company was required to release financial statements. That apparently occurred in late September, and it was obliquely reported at the Irish Examiner that the company "incurred €37.6m in restructuring costs relating to 'business interruption challenges' at its Cloverhill Bakery business in Chicago, due to wholesale changes in staff."
Even if you excuse the Chicago press for missing the "business interruption" in June or July, one would think that the Irish Examiner report's reference to "wholesales changes in staff" in Chicago should have raised an eyebrow or two somewhere — assuming that the press doesn't expect the news to come to them, which is perhaps no longer a safe assumption.
As to the issue of employment costs, if Aryzta/Cloverhill's illegal-immigrant workers were agency employees, the agency, consistent with industry practice, would have marked up the hourly rate it paid to these workers by 40 percent to 50 percent. Chicago's minimum wage at the time of the raid was either $10.50 in June or $11.00 per hour in July, so Aryzta/Cloverhill should have been paying about $15-$16.50 per hour. If the rate was lower, that should have been a red flag to management that the agency was illegally treating these workers as independent contractors and not withholding or paying payroll taxes, unemployment insurance, workers' compensation costs, and the like.
As to the need to pay higher wages, the Chicago metro area had 193,000 and 183,000 people who were unemployed in June and July, respectively. It shouldn't have been that tough to find 800 people willing to work for $11 per hour, especially given that such employment has a minimum-wage law increase to $13 just 1-1/2 years from now built in.
Getting back to the Bloomberg/Tribune report:
Aryzta wasn’t able to verify that the workers had the necessary documents to work because they were brought in by a staffing agency, interim Chief Financial Officer David Wilkinson said in September. He also said the board wasn’t aware of the extent of the risk that existed to the business. The company first reported the loss of 800 workers at that time.
As Carlson noted Thursday night, the idea that the company didn't know these workers were illegal immigrants is nonsense.
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As to its current staffing difficulties, with all due respect, as columnist Joe Guzzardi noted on Sunday, "Americans can bake hamburger buns, too."
Cross-posted at BizzyBlog.com.