Republic Windows: Alternative Solutions

On my post regarding Republic Window, a visitor left the following query:

"Just curious: what would your solution be?

The Federal law (silly, ridiculous, however it may be perceived) was put in place to protect workers. I'm glad it's there. But agree with it or not, it's the law.

You're not arguing that Republic should be able to break the law, are you?
What would your solution be to guarantee the workers what they're owed? Or are you suggesting that these particular workers in this particular company should not be paid?"

It's bad practice to simply complain without offering solutions, so I will oblige by answering each of these questions.

1) I am not arguing that Republic should break the law. Indeed, if you owe workers money, you owe workers money. However, whether or not there is any way they could obey the law is a matter very much up for debate. (This would involve investigating the books of Republic... something I cannot do, though BoA apparently did).  To put it simply, you cannot pay what you do not have.  Now, that is not to say that Republic cannot sell off assets to fulfill its obligations, but, in this economy, that is not presently a realistic possibility. So, whether you see Republic as an abhorrent corporation or merely a bankrupt one, the bottom line is that under normal circumstances (that is, without government intervention) they likely cannot obey the WARN act.

**UPDATE:  I am not ignoring the purchase of another firm by the owners (investors) in Republic Window.  It is simply not pertinent to the issue at hand.  Republic Window is a distinct corporation from other investments.  Thus, the owners of Republic Window are not responsible to the workers, rather the Corporation as an entity is.  While the actions of the ownership may not smell of Corporate responsibility, and do not make the owners very sympathetic people to argue for, they simply highlight the point made below:  the law needs to emphasize individual accountability and power rather than rigid and inflexible mandates.

2) The fact that the law is the law does not usually prevent most self-described "proud old lefties" from supporting illegal actions.  In fact, the sit-down strike, used by the Union in this circumstance, is illegal. Interestingly, this means that certain politicians were supporting an illegal union action). Just as some would argue that the Union had no 

choice in their illegal action, I would argue that the corporation had little choice is disregarding the WARN act.

3)  While not supporting the company jilting their workers of hard earned dollars, or supporting their violation of the WARN act, I will call the WARN act a silly piece of legislation.  

Why?  Because it makes no sense whatsoever.  

The WARN act requires that firms who employee that are verging on bankruptcy (for instance, Republic) give their employees sixty days notice before lay-offs are effective.  While the spirit of this law is effective, it has severe consequences.  Almost all businesses run their operations on credit.  Credit being granted to the business is generally contingent on the business being able to pay that money back.  However, if you publicly notify your employees that lay-offs will commence, this generally does not give the bank confidence in your ability to pay back future loans.  Thus, the WARN act places business in a conundrum: how to let your employees know the company is a sinking ship without ruining your line of credit with the banks?

4)  The worst consequence is that the WARN act takes the power out of the Union's hands and places it within the hands of the government. Because of the sixty-day provisions, companies are less likely to negotiate lay-off benefits with the Union.  Thus, the only remedy left to the Union lies with petitioning the government for intervention. So, to finally get around to the point, here is my solution:  Let Union's be responsible for securing lay-off notice on their own.

This seems to me to be a fairly easy task. Let's say that you have 100 workers and each would be paid $7,000 over the period of notice.  You simply require the company to issue some sort of guarantee (perhaps a letter of credit or standby), payable to the Union in the event of a lay-off.  When the company announces a layoff, the Union presents on the guarantee and is paid the $700,000 to stipend their workers throughout the period of notice on the line of credit previously secured.  

I am sure there are better solutions that more brilliant minds can think up, but there certainly are alternatives.  Most of my alternatives would be putting power into the hands of the Union and actually letting Unions do what they are supposed to do. The bottom line: there are better solutions than inflexible laws that require corporations to do the impossible. 

However, none of this was the point of my original post on the Republic Window sit-in strike. The point is that our public policy should not be to force banks to make bad business decisions to save those who are making bad business decisions.  This type of thinking is what got us into this financial mess and its continuation will undermine the purported purpose of the "financial bailout".