Why Not Leave Them Closed?

We have a tremendous opportunity before us. We must not waver. We must not hesitate.

The State Stores could easily be closed by June.

Let me explain. 

I have a tremendous idea!!

By now, you all must know that Governor Wolf has declared that the State Store System of Stores is CLOSED, nominally because of the COVID-19 pandemic. Shut down as of 9 PM on St. Patrick's Day, of all inane coincidences. What's more, the PLCB's FWGS website is no longer delivering booze to your door (you know, because they never really wanted to anyway), AND the licensee "service centers" are also closed (all the bars are closed anyway, except for takeout food and beer, two things with which the PLCB is entirely uninterested).

Wow. And as I was writing this earlier, Wolf issued a proclamation (link will download a PDF of the letter) shutting down ALL licensee operations that involve selling food or drink (of any kind) for consumption on premises. Take-out/to-go is still allowed, but one wonders for how long (see below). The only exception is for hotel room service.

Note: licensee operations only. Restaurants, lunch counters, etc. that are NOT licensed are still asked to voluntarily limit operation to take-out only. Wolf is doing this under the authority of The Almighty Liquor Code: "The PLCB, upon authorization from the Governor, has the authority under the Liquor Code (47 P.S. §4-462) to mandate the closure of licensed establishments in times of emergency."

Here's what you see when you go to Ye Olde Fine Wine Et Goode Spyrites site of Web:

Reaction has been mixed. There was an insane rush to the stores, people standing in line for half an hour, as if they were Fine Bottled Water and Good Toilet Paper Shops. People say, oh, you don't need booze (idiots). Or they say, booze is as necessary as groceries and medicine, which, if you really think that, then why didn't you tell your state rep that years ago and get it out of the state's incompetent control? Eh, another missed opportunity.

Back to today. Why did the governor close the State Stores, and not close beer distributors, not close the sales rooms of wineries, distilleries, or breweries (yes, and meaderies and cideries and kvasserei)? Simply because he could, most likely, and possibly because of union pressure. Naturally enough, why is not a question that's been asked of Wolf directly. It's much more important that we do 'flatten the curve' and get this damned virus under control. Believe me, that's absolutely true. Retail operations, particularly small ones, are going to take a whupping here, and that's going to be disastrous for the economy.

But that's not what we're here to talk about. It's about the opportunity to finally put an end to the ridiculous State Store System of Stores. 

Rahm Emanuel's famous quote was about the 2008 recession. He followed the famous part with this:

"This is an opportunity, what used to be long-term problems, be they in the health care area, energy area, education area, fiscal area, tax area, regulatory reform area, things that we have postponed for too long, that were long-term, are now immediate and must be dealt with."

Are the State Stores an immediate problem? Are they one that "must be dealt with"? Of course not. I'm not a fool. No one's livelihood or survival is threatened by the continued existence of this Relic of Repeal, this Fossil of Prohibition.

But it is definitely falls under "thing that we have postponed for too long," making this is a unique opportunity to deal with it. The State Stores will be closed for at least two weeks, probably more. And the Governor, a Democratic governor, has openly admitted that the State Stores are not necessary to serve the needs of the citizens of the state. 

He did? When did he say that? In the letter to Pennsylvania businesses (dated March 14) from Wolf's Secretaries of Health, and Community and Economic Development, there is a list of descriptions of "non-essential businesses" that are asked to close. At the end of that list, there are these bullet points:

NOTE: Liquor stores will begin an orderly closure. Individuals can still buy wine and beer at grocery stores with PLCB licenses
NOTE: Restaurants should stay open for carry-out and delivery only

You see? The State Stores can close because people can still buy wine at grocery stores and restaurants. Of course they can, and they do, in huge, growing amounts.

If the State would allow grocery stores (and beer distributors, and restaurants, and deli licenses, and private clubs) to sell spirits by the bottle -- and really, why not? It's all the same alcohol! -- we could just leave the State Stores closed. Never open them again.

It's not that hard. Have an auction, sell off the inventory, and have time for new businesses to get licenses and open with former State Store employees at the register (or at the helm, why not?).

At the very least, the Legislature should immediately adjust The Almighty Liquor Code to allow licensees -- grocery stores, bars, and beer distributors to add off-premise, take-out spirits sales. End this ridiculous prejudice against spirits. Let mom pick up a bottle of Bailey's at the Giant Eagle.

And do away with the stupid cafe requirements (because...we're only doing take-out now, and the world hasn't ended), and the childish "buy four bottles and step outside the door" limit. What ridiculous bullshit is that, anyway?

We could do this. It's just waiting to happen.

"...it's an opportunity to do things you think you could not do before." Clearly Governor Wolf is ready.

PRIVATIZE. And if we can't do that, take the spirits monopoly away from the State Stores. The grocery stores have earned it, beer distributors have earned it by staying open during the crisis...something the State Stores weren't prepared to do. 

UFCW gives up

After getting some real blowback by killing off a representative family in a series of cringe-inducing commercials, the State Store clerks' union, the UFCW, has decided that they no longer need to try and protect us with half-baked lies on their UFCW PA Wine and Spirits Council website. Not willing to openly admit defeat, they quietly let the sun set on their "proof" of the evils of privatization, and scuttled away into night.

So what does this mean for privatization?  Not much, since almost everything on the website had already been disproven. The UFCW still tells the clerks (I mean, surely no one else is bothering to look, right?) to "Learn more on UFCW PA's Wine and Spirits Council Website." I guess now that they can't squeeze dollars out of people who don't want to be involved with the union through "fair share," they must be trying to save their pennies like this.

Meanwhile, in another example of normal operating incompetence, the PLCBoard admitted under oath at the House Appropriations Committee hearing in February that they didn't have a clue about the costs of CRM (Customer Relationship Management) when they were pitching it to the legislature. That pretty much means that they read about it somewhere, thought it was a great idea, and never did even the minimal amount of research into it. At least this time they didn't hire some consultants to tell them it was expensive to do correctly. We'll be seeing the typical PLCB half-assed slow roll-out as they try to figure it out. Sounds like a plan....a PLCB plan to me.

Lastly, the PLCB hasn't gotten back to us about the number of industry-recognized wine specialists they have. It has only been three weeks, so we weren't expecting much...and that is exactly what we got.

Privatize.

6 Reasons to Keep The State Stores - Does it still hold up?

Marc Stier, a Philadelphia-based full-time progressive political activist, published six reasons why we should keep the State Stores five years ago. I thought I'd take a look at those reasons and how well they hold up today.

1. Poor regulation

"First, in an ideal world we could count on government regulation of private liquor stores to control the sale of alcohol. That’s important, because alcohol abuse remains a major public health hazard. But in the real world, regulation fails when it is carried out by those who hate government. And academic studies show that states that control the sale and distribution of alcohol have lower levels of problem drinking, drunk driving, and the violence and death that go along with them."

In an ideal world we could count on the government to control the sale of alcohol, Stier says, then makes the self-evident observation that the world isn't ideal. It never has been, it never will be. And what does "regulation fails when it is carried out by those who hate government" even mean? The state's liquor regulations are carried out by PLCB employees and BLCE cops: are they known for hating government? Doubtful.

So we're left with our non-ideal world, where the PLCB simply isn't very good at all at control or regulation. Pennsylvania has higher levels of DUI, underage DUI, DUI fatalities, underage DUI fatalities, binge drinking, and underage binge drinking overall than the states on our borders; the non-control states. So while academic studies (set in the ideal world, apparently) may show that states that control the sale and distribution of alcohol have lower levels of problem drinking, the reality is Pennsylvania, where the alcohol problems are in the stubborn middle, despite control.

2. Union organization

"Second, in an ideal world, the workforce in privately owned liquor stores would be able to form a union simply by securing the support of a majority of workers.
But in the real world, laws created and implemented by Republicans have made union organization in the private sector almost impossible. So I stand with currently unionized employees of the state stores."

Hung by that real world again. Stier didn't know that laws (and regulatory interpretation) would change to allow supermarkets to buy restaurant licenses and start selling beer and wine. And what happened? The majority of licenses purchased were by grocery stores which are already heavily unionized, most by the same union that the State Store workers already belong to. Guess union organization in the private sector isn't impossible after all.

3. Tax revenues

"Third, in an ideal world, businesses, including those that sell alcohol, would be taxed at reasonable rates, wouldn’t get to keep 1 percent of the sales tax to cover costs of collection they no longer have, and would pay all the taxes they owe.
In the real world, because we don’t have to worry about those problems, the wine and spirits stores generate more revenues for education, health care and other public needs than private stores would."

As we've always said, in the real world, the world we actually live in, tax collection problems are not a liquor store problem, they are a department of revenue problem. And having an average number of liquor stores for a state our size (about 2,400, compared to the 600 the PLCB manages to keep open...most days) will generate more tax revenue just due to the extra convenience. And don't forget the hundreds of millions of dollars that won't be going out of state to buy things that the bureaucrats in Harrisburg have decided we don't need or want. (BTW, if Stier thinks that in an ideal world alcohol would be taxed at reasonable rates...does he think the real world rates aren't reasonable? Because that's something we'd agree on.)

4. Wage disparity

"Fourth, in an ideal world, our governor and general assembly would be working to increase wages for working people and the middle class. But in the real world, the Republicans are attacking public sector workers and privatizing public services mainly to drive wages in the private sector down. So I stand against a proposal that is likely to make income even more unequal in our state."

In the real world, there would be LESS wage disparity. There wouldn't be the artificially large difference between a stock clerk in a grocery store and a stock clerk in a state-run monopoly liquor store (who are both represented by the same union...how's that work?). Also, I don't in any way consider the PLCB a service. It limits selection, never leads in new products, severely limits locations, and generally prevents entrepreneurs from providing the services consumers want. The PLCB stops job creation and is a drag on the economy, being well over a billion dollars in debt.

5. Discrimination protections

"Fifth, in an ideal world, the state would protect worker from discrimination by private businesses, including new private liquor stores. But in the real world, LGBTQ workers are only protected from discrimination by organized labor."

Simply not true..."in the real world." Again, Stier's pessimism (and drama) has undercut his positions, as the real world moved on and changed for the better. Workplace protections are provided by state law or regulation. Union agreements do not over-rule written law.

6. Corporate influence

"Sixth, in an ideal world, elections and public policy would be determined by the number of people on each side,  not by campaign contributions given by each side."

We strongly agree! Because by this measure, the PLCB should have been gone ages ago, since for decades the majority of people polled wanted private liquor stores. And we all know who gave more money to politicians -- those against privatization, even though it was against what the people wanted.


So what does this all mean?  In 2018 -- in the real world -- there are no reasons to keep the antiquated, anti-consumer jobs program called the PLCB.

Privatize.

The Union Scheme to keep PA in debt

(Another chapter in the continuing Wendell Young IV lies and I can prove it series)

On January 29th, the two unions that represent the State Store System clerks sent out a letter that, among other things, seemed to guarantee that 'modernization' will make $185 million MORE in its first year.

Let's look at the modernization scheme point by point.

They start off well with "Remove Sunday Sales Limitation on Store Openings and Hours of Operation" This actually makes sense, so when the system is privatized private store owners will be able to decide their own hours within the legal time span. 

Things start to go downhill with the second item. "Pricing/Customer Relations Management: Allows the PLCB to use best retail pricing practices to secure the very best price for the customer."  So for 80 years they really haven't been trying to get the best prices for the consumer? Then why should we believe that will change?

Item three is even more incredible. "Right Locating Fine Wine and Good Spirits Stores"  In other words, putting the stores where the people are. It took them this long to figure that out? Perhaps the Store in a Store (or One Stop Shop, as the PLCB calls it) is what they mean. That has only been around for 34 years and has not gone anywhere.  The high point was sixteen stores; it hasn't gone above that yet. It seems that most—and I mean thousands of stores—don't want the PLCB with them. After the Wine Kiosk Fiasco, it's no surprise.

The forth item "Expedited Review of PLCB Leases by the Department of General Services" makes sense until you realize that they have had 80 years to get the proper locations of state stores. You can't blame it all on the DGS. The PLCB should know where they want to put stores YEARS in advance and work toward doing that. That is how real business runs.

Item five is a bit revised since last year; "Direct Shipment of Wine and Spirits: Permits Pennsylvania residents to receive shipments of wine and spirits in Pennsylvania and also permit the PLCB to ship out of state." Spirits were added to this proposal. Not sure how other states will take to a different state agency shipping to their residents, but if our legislature is an example, it won't happen. It has only been a decade since Granholm and this may fix it...depending on how many wineries and distilleries sign up and pay for licenses. The current direct wine shipping program has less than 25, so for that to improve, some things will have to change. It isn't that wineries don't want to ship to PA, it is that they don't want to deal with the PLCB. That makes millions of us.

The sixth item is Lottery sales, and that makes sense also, even more so in a private system.

Item seven sounds good but..."Consortium Product Buying: Allows the PLCB to take the lead in joining some of the other 18 control states, like Michigan, Virginia, Ohio and New Hampshire, in buying product unified fashion to help secure the very best price for the PA consumer on the PLCB store shelf."  Real businesses save money by buying in bulk, and then doing the distribution of products themselves. They buy direct from the manufacturers. With the 3 tier system in place in many states this wouldn't be allowed. It would also force all the states involved to use the same distributor which may violate current distribution agreements. I can see this being a hornet's nest but hey, based on the past PLCB track record of business decisions... Keep in mind, it would only affect spirits; these other states don't "control" wine sales.

Now we come to the hook inside all this shining bait, the item that will lock the PLCB into the state budget for decades. DEBT.

The Unions think that: "Monetizing the incremental revenue gains of the agency would allow the state to secure a bond. Securing a bond on increased profits as a result of modernization – not the tax revenue - is very attractive to investors, since the agency has continued to deliver increased revenue annually to the State Treasury, during good and bad economic times. The risk is low and potential for reward high."

This means that the amount the Governor could ask for would have to be locked in, since additional profits (if any) would be used to finance the debt and couldn't be used for anything else. Rather than being discretionary, based on what the Governor thinks the needs of the Commonwealth are, it would be up to the PLCB to set the upper limit based on their needs and debt payment  So let us look at the statement "...the agency has continued to deliver increased revenue annually to the State Treasury." Remember, this isn't taxes, so any increase there doesn't count.

Using 1999 as a starting point, in the next 15 years from FY 2000 through FY 2014 inclusive, Operating Income has gone down eight times and gone up seven compared to the year before, and the amount sent to the General Fund has remain unchanged four times, gone down four times, and only gone up seven times. All with record sales every year. So the Union wants to put the taxpayers on the hook for an agency that DOES NOT deliver increased revenue annually, in an arrangement that makes the continuation of the State Store System a necessity under the terms of the bond. This is not about debt, or monetization: this is about shutting down all talk of privatization.

With the increased PLCB share of the pension obligations well over $600 million, the Unions think that increasing the Debt using future earnings (if any) is the way to keep the state store system.tied to the government. This isn't for the good of Pennsylvanians but only for the good of the state store clerks.

We are not safer, we are not better served and we are not satisfied. Privatize.

40 years of…….……nothing.

As you read this I want to remind you that A. Democrats have been in power 21 of the past 40 years and B. Shapp was a Democrat.

This story from 1973 illustrates that after 40 years the Union and PLCB have done almost nothing for the consumer. Let’s take the points one by one.

1.       The union proposed more stores, particularly self-service ones. Self-service stores like we have now were introduced in January of 1969 and 34 years later, or 30 years after this article was written, the last counter store finally closed. There were 750 stores in 1973 - we have 600 now. I would call that a double failure. (For those of you not old enough to remember, Pennsylvania had “Counter Stores” exclusively for the first 35 years after Repeal. You walked up to a front counter, marked a printed list of what you wanted or wrote down the code number, and gave it to the clerk, who then went into the back to get it for you. The last one closed in FY 2003-04.)

2.       Permit credit cards. While the union may have proposed this it was customers, particularly licensees that brought about this change in 1987 - 14 years later and at least 15 if not 20 years after other business of this size did. Certainly a failure at the time.

3.       Provide home delivery for large orders.  I would think that businesses would like delivery too since they place larger orders than most residents but notice how they weren’t mentioned.  A continuation of the PLCB “don’t rock the boat or we’ll screw you” policy still in effect today. In any case there is still no delivery. Another failure.

4.       Adjust markup on items.  You thought this was thought up recently didn’t you? 40 years later still nothing.  I’d call that a failure too.

5.       The union report claims that prices are no higher than in New Jersey.  Sound familiar? After 40 years the citizens still think New Jersey prices are better – mainly because it is true and the over $300 million in border bleed and the building of the outlet stores prove it.*

The fear-mongering hasn’t changed at all. Prices will go up if we raise taxes they say in the last paragraph.  Well DUH.  Don’t raise taxes, increase convenience and sales will go up and revenue will go up, border bleed will go down and everybody, especially the citizens, will be much happier that they don’t have to deal with the state store system. At least the union didn’t come up with “Privatization killed my daddy” in 1973 like they did this year although it was Wendell Young’s father in charge of the union back then.  Some things never change.

(*) For more information on outlet stores read this article

This quote is from the PLCB about the history of the PLCB. "June 3, 2003 - The PLCB opens its first PA Wine & Spirits outlet stores in Gettysburg (now closed), Hermitage and Franklin Mills. The stores, aimed at preventing customers from going out of state to buy alcohol, offer a large selection of products at discounted prices."  

Of course, this begs the question that if PA prices, selection, and service are better than surrounding states as the PLCB and Union claim…….why do we have to prevent people from going out of state?  The parenthetical information is mine.

Do you really want them in charge of "modernization" with a record like this?

Privatization IS modernization. Accept nothing less.

The PennDot Plan

The latest Wendell Young IV press release.*

Ladies and gentlemen, thank you all for coming.  Today I would like to propose a new plan and direction for the state stores.  I call this plan the PennDot plan in honor of our union brothers who originated it.

For too long we have been trying to act like a business, be as efficient as a business and react like a business.  While we haven't failed at this it has not been as successful as we would have liked.  Today I propose we go back to doing what we do best - act like a union and not a business. Starting this week I will be working with the Board and legislature to triple the amount of  employees in each store. Where ever a customer goes they will now find at least one employee standing around waiting for them. There will now be employees guiding customers around the dangerous areas for the 6-10 months it will take to redo the floors between each of the shelving units.  Every customer will get a handout when they come in the door so they will know exactly who can help them based on one of the 50 color coded aprons.  The customers will soon learn that a blue with green stripe apron is an expert in TableLeaf Chardonnay while one in green with blue stripes is a Franzia red specialist. This will make their shopping experience that much greater by knowing exactly who they can talk to.World class aprons make for world class stores and world class shopping and we are proud to expand this fine initiative!

Stores will be cleaner and brighter than ever with a Board authorized person for each assignment to get the bucket, fill the bucket, move the bucket and finally mop the floor. This kind of specialization will make each member of the mopping team an expert in the task ready to take on the duties of the next in line provided there is a written request from the district manager at least 2 weeks in advance and that the shop steward approves. With over 9,000 PLCB paid employees the PA economy will flourish and it will be impossible to consider privatization again. These new employees will increase the total contribution into retirement and medical to make them solvent again for the current generation of PLCB employees and will give us time to figure out how to fix the PLCB pension system before they start retiring in 25 years.

All those new employees will have the time to read the labels of everything in stock and pass that expert knowledge onto the customer as long as the customer doesn't want to know how it tastes. Can't have clerks tasting the products, that would be promoting alcoholism and the PLCB won't allow that. New spirits specialists with intricate knowledge of all 14 different orange flavored vodkas will be placed at every store as soon as we can get them to buy all 14 different orange flavored vodkas and try them. Local economies will benefit as Courtesy Training centers are expanded to all counties with more friends and relatives employed truly making the PLCB one big happy family. 

I am also proposing a Wine Kiosk Museum to showcase the technological innovations the PLCB has done over the years. This will have a staff of at least a dozen and be headed by Joe Conti the foremost expert in Wine Kiosks in the state. All profits from the $20 admission fee will go to the state general fund further improving the lives of all Pennsylvanians.

These 6,000 new members will see the need for a strong union, a union they can be proud of and a union that will do everything it it's power to keep things exactly how your parents remembered because a link to the past is part of the chain that holds the FUTURE!


*(Taken from notes found in the parking lot of  the PLCB and inspired by an actual union representative so who knows....it may be coming soon)