Revisiting some numbers that you won't see the PLCB publish

I first posted Numbers, Numbers, Numbers (some State Store numbers that are always missing in the PLCB's annual report) three years ago. It might be good to have a second look to see if there was any improvement at the PLCB.  The original findings are (in parentheses).

1) The average amount of non-tax revenue returned to the state per unit (single bottle or box) of wine or liquor - $1.25 (73 cents) Beware: this is based on the so-called "profit" turned in to the General Fund, which has little to do with actual profit. It's simply the amount asked for by the administration. We know that reserves were dipped into for 2018, so this number is skewed even more than it normally would be.

2) Not counting the actual cost of the item, what the PLCB spends to put one item on the shelf - $2.91 ($3.06)

3) What PA spends to put an item on the shelf, including the average cost of the item - $10.78 ($11.40)

4) What it costs with taxes included to put one average item on the shelf - $14.48 ($15.21)
Note: While it looks like items 2,3, and 4 are an improvement...this is due to the huge numbers around just 3 items: Fireball 50 ml (+750,000 unitls) and Tito's 50 ml (+175,000 units) and Tito's liter (+380,000 units). When you increase mini sales by over 900,000 units, it skews the average cost and tax per unit. 
  
5) Average real estate rental cost per store (2018) - $1663 a week ($1432)

6) Industry average profit margin 8.1%; PLCB 2018 profit margin 8.9% (6%) The majority of this increase is due to the auction of the "Zombie" liquor licenses, not because of actual retail sales.

7) PLCB effective markup, not counting any taxes - 46.7% (45.36%)
This is because of variable pricing. Now that almost all items fall under that, expect this to rise even more next year.

8) State and federal government workers' average benefits as percentage of salary - 36.4%.
PLCB benefits as percentage of salary - 85-104% (as stated by Board members during the Appropriations hearings in the Senate).

9) Percent of sales actually checked for proof of age - Unknown. 
The PLCB did not include any information about carding in this year's summary. It is still probably under 2% as it has been in years past.

10) Retail Wine Specialists as a percentage of PLCB workers: 2.2%  (1.7%) - Only a gain of 20 in three years. Retail Wine Specialist as a percentage of Total Wine store employees - ~20%


Sources

1. - $185M returned to General Fund plus $30.5M for BLCE plus $5.5M for Alcohol Awareness programs plus $2.5M for Drug & Alcohol programs divided by 178.9 million unit sales. We were told "Modernization" will increase profits by $180M. Is anyone surprised that we're not seeing anything close to that? (Keep in mind that the $185 million is a very flexible number, mostly representing what the Legislature requires from the PLCB, whether it's actually "profit" or not.)
2. - Operating expenses (not counting the cost of wine and spirits) of $520M, divided by units sold. The lower this number, the more efficient the organization is.
3. - Operating Expenses plus Cost Of Goods Sold (COGS) = $1.928B divided by units sold 178.9M.
4. - Gross sales ($2.59B) divided by total units sold. $3.47 in tax for every bottle or box sold is the average of sales and Johnstown Flood Tax; more expensive bottles can be much more.
5. - Rental expense for all operating leases $52.2M divided by 604 stores. Of course, this cost will increase as the PLCB tries to move into higher traffic areas.
6. - IBISWorld, May 2013, Operating Income divided by Sales Net of Taxes. With increased pension costs, workers comp, salary, and benefits increasing, this won't improve any time soon.
7. - COGS divided by gross profit. This fat markup of 46.7% still isn't going to be enough to cover increasing operating costs as the PLCB had to go into reserves again to pay the $185M requested by Gov. Wolf
8. - US Dept Of Labor - Bureau of Labor Statistics, 2016 PA Senate Appropriations hearing.
9. - No information about carding is mentioned in this year's documents. You have slightly better than 98% chance of not being carded (compared to a 0.0% chance at private stores like Wegmans), and since the State Stores are never checked by police for underage compliance...how effective are they?
10. - 4999 (2/15/2019) divided by 111 (www.pennwatch) There appear to be no Spirits Specialists in the PLCB.
11. - Over 5000 employees and 800+ Wine Specialists (Total Wine wiki ). The PLCB has ONE retail wine specialist for every 5.4 stores, Total has SIX at each store.

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.

So I Went to the Pretty New State Store...

I went to one of the new State Stores. You know the ones, with a new color palette that supposedly offers a warm, welcoming atmosphere for consumers to browse the limited selection. I wandered over to what they call the focal point of the store; a new table, where customers can find staff to answer questions or provide recommendations. Just what I was looking for. 

I waited for somebody to come over to the table.
And waited for somebody to come over to the table.
And waited for somebody to come over to the table.

Did I mention that the table was the focal point of the store?

Looks kinda empty

Ah, a wine person! They wandered over and asked if they could help.
I said, I don't know. I have some questions.
"So what are you looking for?"

Answers.
"I'll do my best, what's the first thing on your list?"

Can you name one thing that has decreased in price in the past few months?
"Sure, pints of Nikolai vodka. We have a guy that comes in everyday, well, actually we have a few,  and is so pleased that happened.  Probably our happiest customer."

Anything go up that you noticed?
"A few here and there but when the wave of 400+ hits next month I'm sure I'll see a bunch of them"

Since this store was remodeled in the same location, did any increase in products on the shelf come with the remodel?
"Oh no, with the wider aisles, this table stuck in the middle and the plants and all there are less things in the store now then there was before."
Style over substance eh?
"I can't say."
So how long were you closed for the remodel?
"About 3 months."
Doesn't that seem like a long time to be closed? Didn't the Dollar Store close for like 16 days when they remodeled?
"The Dollar Store isn't run by the PLCB."

So is this 'modernization' thing working out, or should the Legislature have gone for more privatization?
"We aren't allowed to talk about privatization"
You aren't allowed to have an opinion?
"We can have an opinion, we just aren't allowed to talk about it."
So, the powers that be in Harrisburg don't have enough faith in you workers to offer a reasonable explanation why State Stores should still exist.
"Could be but I can't talk about it."

Can I ask if you belong to the union or just pay fair share?
"I just pay fair share, most of the people in this store just pay fair share. We have too, not like there is a choice."
So how long have you been here?
"I started as a Seasonal 6 years ago, worked part time while I was in school."
Do you think of this as a career after all that time?
"No way, I'm going to an online school for my Masters. Once I have that and a job lined up where I don't have to wear an apron, I'll let somebody else take this spot."
Maybe then you can talk to me about privatization.
"Yeah, maybe then, ha ha."

I can't talk about Privatization, the PLCB doesn't trust me.

What do you say when people tell you they bought ...whatever for less in Maryland, Delaware, New Jersey, Florida or wherever?
"I'm sure it is true sometimes but those chain stores or Mom & Pops don't have to have a store in Nowheresville, PA like we do. We have to support that somehow"
Why? Don't you think a grocery store would carry the basics if they could?
"You're talking about privatization again, so I can't comment."

The conversation above is semi-fictional. It didn't happen with just one clerk, but every question and answer did happen with multiple clerks over the past six months. I wish I could get managers to answer as truthfully as some of their workers, but they drink the Kool-Aid every day, and won't stand for it.

Why does PA think the PLCB has more value than the Military?

Back in August of 2014 I wrote about the supposed value of the PLCB workforce compared to the rest of the labor market. I said, "One can get an idea of how society values a profession by the compensation given." It's a fundamental truth of how the free market works...except in Pennsylvania, where the Legislature has denied reality for decades and inflated the value of PLCB workers to an extreme.

What do I mean? Try this. According to testimony at the State Senate Appropriations Committee meeting of 2 March 2017, the average value of benefits for a full time PLCB employee is 93.6% of salary; so for example, the value of benefits for a clerk making $30,000 a year would be 93.6% of their salary ($28,800), so their total compensation would be $58,800.

Now, for the actual average of a Liquor Store Clerk 2, that's a total of $64,060 in salary and benefits. Here's the rub. Compare that to a US Army Sergeant (E5) with six years in service, who these days may even have a couple combat tours under their belt: $55,233. (If you want to check my math...see below.*)

Really? Why are liquor store clerks worth about $9,000 a year more than combat infantrymen to the state of Pennsylvania? Is their job more stressful?  Do they work longer hours? Do they perform a greater service to the citizens?

I don't know who made this shirt but I want one**.

Of course, you can make this comparison with other jobs, and if you saw compensation like that the prices would probably be higher at that store or firm...but the State isn't forcing you to buy products from that person in that place under penalty of law. You have choices in the free market: you don't have to buy that product, and you don't HAVE to shop in that store. You don't HAVE to support a monopoly. But you do...if you're buying wine in Pennsylvania. (Yes, yes, with the exception of Pennsylvania-made wines bought direct, right.)

So the next time you have to go to the State Store, or have to settle for something because the bureaucrats in Harrisburg decided not to sell the item you wanted in their monopoly system, and they don't allow you to go anywhere else, stop for a moment. Ask yourself if maybe the state should be funding Veteran's care with the same zeal they fund state store clerks.

Privatization fixes that.


*pennwatch.pa.gov lists everybody and their salary who works for the state including those in the PLCB. Search under Liquor Control Board for Agency Name, then select Liquor Store Clerk 2 under the Positions drop-down menu in the results. There are 22 pages of data: add up the individual salaries, divide by the number of them to get an average, and then multiply that result by 1.963 to get the total of the average salary and benefits. For those working for Uncle Sam it is a bit easier.  They do it for you on this site (I used the PLCB HQ in Harrisburg zip code). I've just gone ahead and done the math on the PLCB compensation for you, but you can check my work.

** Buy the T-Shirt here!

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.

Credit where it's due: good service at Good Old Store #0909

Because I don't lie about reality like the PLCB Partisans... I just got some of the very best service I've ever had at Good Old Store #0909 here in Newtown. I had to get a quick couple bottles for a late dinner decision -- no time to run to Jersey! -- so I grabbed some prosecco (easy enough, though the sign for the section said "Champagne!"), picked up a big bottle of cheap cabernet (impulse buy), and then...realized I don't really know white wine outside of sauvignon blanc, riesling, and gewürztraminer.

So I see this younger woman in a clerk apron who I'd never seen there before, and I asked her: I don't really drink much white wine, and I need some dry white for a recipe; any advice? She put down what she was stocking and said "Sure!" (1st plus), and then asked me what I was cooking (2nd plus). I told her, and she said that just about any pinot grigio would do, and the Barefoot's on sale for $6. Done. (And please don't judge me -- or her -- about the Barefoot: I'm just deglazing a pan, and then we'll probably drink it as spritzers while sitting by the firepit. I drink better whiskey than you. Probably. Whatever.)

She was pleasant about it too, a lot more pleasant than I've encountered there before. The guy at the register was, I think, a trainee, or maybe the manager was just hovering over him to be a jerk. He got the stuff done, and I was out.

Like I keep saying: if they delivered better service, I wouldn't be making such a fuss about privatization. If they weren't so dead-set on standardized selection, I wouldn't be making such a fuss about privatization.

But...they generally don't, they certainly are, so I am.

Worth posting: a word from an (Anonymous) LCB clerk

This comment and my response from the post just below was worth posting here on its own to get more attention. I've edited my response a little just to polish it. This...is directed at the PLCB employees. It's about how to keep your jobs, and take pride in them.

Anonymous said...
Another word to my fellow LCB employees:
You cannot, and should not, expect anyone to choose sides on the privatization debate based on our losing our jobs. On the positive side, the thing we CAN do is educate ourselves about the products we sell. Product knowledge is a skill that will serve both to break the stereotype of the potable-ignorant LCB clerk AND also to give us a strong leg-up if we end up having to apply for jobs in the private sector.


My response...
Bullseye. The service at the State Stores isn't being talked about in the high-level debate in Harrisburg, for the human and political reason that no legislator wants to be quoted criticizing people's performance, but it is definitely discussed among the people who actually have to use the system.

I've said all along that the service I've received at the register has almost always been satisfactory, and often quite friendly. But the service out on the floor is distinctly sub-par, with a very few notable exceptions. I've been given to understand that there's no real program in place to increase product knowledge, and it shows.

Your union reps may tell you what a horrible work environment Total Wine is, but fail to point out that while their employees complain about their treatment by management, they almost never fail to admit that the training they receive in wine and spirits is exemplary...and they often use it to go elsewhere.

If you get motivated about what you're selling, and get excited about helping the people who need help...that's the very best thing you can do to stop privatization. Much better than the chanting and shouting that the UFCW encourages, much better than the flimsy "control" statistics, much better than allying yourself with anti-alcohol groups (because that just emphasizes the innate and bizarre dichotomy of the whole control/sell dual nature of the agency).

If you want a "modernization" program that could actually save your jobs, look to Sweden's Systembolaget, their state monopoly wine and spirits retailer. I've heard nothing but praise for it from producers (I was on a press trip with the Swedish brand manager for Pernod Ricard, and she never stopped praising it) and from consumers; a fraternity brother of mine now lives in Stockholm -- he's very picky about wine -- and he raves about the service and selection at Systembolaget...and as a former Pennsylvanian pities me for the State Stores.

Real modernization would include linking product knowledge and sales performance to advancement, would include a wine specialist and a spirits specialist at each premium store. It would give the local store managers much more training, and much more control over what's sold at their stores. It would take the control of shelf facings away from the people in Harrisburg and give it to you, the people who are actually selling, and seeing what your customers buy, and what they're not finding.

I don't think that's likely to happen, but if it did? It would go a long way to shutting me up on this issue. It would also help if some of your co-workers would stop trying to tell me that private stores in other states aren't as good as the State Stores, because I go there, and that's simply not true. Doesn't help your case. Instead, do what you can to make your service, your store better. Just do what you can, where you are.

I don't go to New Jersey for the prices. I go for the selection, somewhat, especially on spirits, because the State Store is, for whatever reason, scared of whisky. But the main reason I avoid the State Stores is the service. I get much better, much more helpful service at the private stores in New Jersey, New York, Maryland, and Delaware. Fact.

And let me add: I've already talked about how to change the State Stores and save them here. Add this stuff, and you've got a good formula for it. But...I still don't think it's going to happen. Because no one in the upper bureaucracy of the PLCB cares -- because their jobs aren't directly at risk -- and Wendell W. Young IV doesn't care, because up until now, shouting and chanting and yellow shirts and campaign donations have been all he's needed to just keep things the way they are. You're being encouraged to keep the status quo, but the status quo is what 60% of Pennsylvanians don't want (and remember: a large chunk of the 40% or so that says they're in favor of keeping the State Stores don't drink, and would really rather just have Prohibition). You can do better. You can do better on your own. Think about it.

State Store Stings?

I have a Facebook page about this subject, Abolish the PLCB -- Rewrite the Code! (feel free to join, if you haven't already), and there are some serious PLCB apologists who joined and post counters to privatization. I suspect they're PLCB employees (present or retired) or fellow union members, but I have no proof...and my suspicions are mostly based on my incredulity that anyone else would support the PLCB, I'll admit that.

Anyway, one of them was posting a number of news reports (from other states) about sting operations that had resulted in arrests of liquor store staff or owners making sales to minors. This would always be accompanied by crowing about how privatization would bring more sales to minors, and that the PLCB clerks never ever sell to minors. Well, that's probably not actually true, because I've noticed that PLCB supporters have just started saying that there were only two sales to minors in the past 7 years, but that's still pretty impressive.

Only...wait a minute. Just how cozy is the relationship between PLCB store clerks and Bureau of Liquor Control Enforcement agents? So I started responding to all his posts: "Hey, does the BLCE ever conduct stings on State Stores? Just asking!" Never got a response.

To tell the truth...I don't know. Do they? Because if they don't...it's a meaningless statistic. I'd say I'd like to see it happen, but honestly? I wouldn't, because the way the regs are set up, any PLCB clerk who sells to an underage purchaser loses their job and their pension. I wouldn't want to see that just to prove a point. But...in the absence of such stings, this is comparing apples and oranges. Stick a pin in this balloon.

A recent State Store experience

Forgot to tell you about this one. We had a nice bottle of wine back in the spring, an Alma Negra Bonarda Malbec, a dark Argentine red. It was so good I remembered it, and come December, when we were shopping for Christmas presents, I wanted to get a bottle for someone (and a couple for myself). I went to the State Store here in Newtown, and started looking.

No luck, so I whipped out the iPhone, and went to the PLCB's product search website to see if they even had it. They did, and when I drilled down further, I found that the local store (good old Store #0909!) had -- at that time -- 126 bottles of it. Couldn't find it in the Argentine section. So, against my better judgment, I asked a clerk. I'm looking for an Argentine Malbec called Alma Negra, I said (I'll admit my ignorance: I didn't know that Bonarda was a varietal. Malbec was all I recognized), could you help me find it? His very first words were "Oh, no, we don't have anything by that name." Very helpful!

Luckily, I still had the iPhone out, and I told him, Actually, the LCB website says you have 126 bottles of it! Maybe it's up front; it's a Chairman's Selection. And the guy says, "Oh, no, that's not a Chairman's Selection. We don't have any Argentine Malbecs as Chairman's." I was stunned, a bit, but rallied: Yes, it is, it says so right on your website. And I went towards the front of the store -- and almost tripped over the stuff. It was sitting in the middle of an aisle (among the domestics, far from the Argentina section...), four cases of it topped by an open case, with a Chairman's Selection sign on it.

Here it is, I said brightly, thanks! And he comes up, picks up the bottle, and points to the label, and says, "Oh, you see: it's a blend. It's not a Malbec." So I grinned, and said, You're right, I'm sorry. What else was I going to do? I was really, really sorry that I had to buy wine from people who clearly knew nothing about their stock -- and the guy's been working there for years -- and couldn't care less about helping a customer find a product.

See, this is why I grit my teeth when I read letters to the editor and comments on blogs where people talk about the wonderful service they get at the State Stores. Because while I'm sure there are at least some SS clerks out there who really want to help, and really know the products (there was a younger guy at #0909 who actually knew something about whiskey, although he was obnoxious about it), I have not had those kinds of experience. Cash register service? Just fine, no complaints. But advice? Guidance? Even common courtesy out in the aisles? You get better service at Home Depot.

And if this system went away, and we got private stores...I could just go somewhere else. But in PA? There's no point. And I'm literally forbidden by law to shop in New Jersey (and bring anything home, that is).

"There is no such wine."

David Falchek blogs about wine ("Empty Bottles") for the Scranton Times-Tribune, and does a nice job. He also...doesn't think much of the PLCB and the State's monopoly on booze sales. Read this classic tale of just what I'm talking about when I say that the State Store System doesn't exist to serve the citizens or to "protect" them through "control." It exists to serve the State and the employees; it exists to take your money.

"I love my job."

I got another response from a person who says they work for the PLCB today (the first one is here). There was no subject line, and I'll keep the name under wraps (to the writer: if you don't mind, or would like your name used, I'd be happy to add it, just let me know); the only thing I will say about the identity of the person is that their e-mail address ("willfulmissconduct") makes what follows a little suspicious...but even PLCB clerks like to have some fun, I guess. Until I have a better reason to believe that the following is a put-up job, I'll take is as genuine.

Here's what she had to say, my response follows:

Paid more than other clerks? I don't know how many years these high paid clerks have been in the PLCB, but I make 10.58 an hour. I have been here almost two years. I cannot even afford to pay my rent and bills on that, when all my taxes are taken out. I stay, because I love my job, I love my customers and I have the benefit of very reasonable medical insurance rates. What will happen to me if privatization happens? Will I get medicaid and food stamps? Sure, I can get another job. But.....it will probably cost me 500 to 600 a month for medical. Total Wine? Yeah, right. My friend used to work for them, and they do not even offer medical plans. When they do, it is so unafordable it is not worth it. My friend took a hefty paycut, but is happier at the PLCB.

We do a good job. It's not a matter of training people to do their jobs. It's a matter of firing those that do not. I spend my free time reading wine books and attending classes. Many of my customers thank me and come back and ask for me by name. It is not unusual for me to give my attention to a customer (or set of customers in a group) for 15 to 30 minutes. I love my job. I love my boss, I love the people I work with. We are all just like everyone else, trying to earn a living and support our families. The PLCB is the best thing that ever happened to me. I am a college graduate as well, IQ of 145, and not stupid, as you would like to have folks believe. I went through a horrible divorce and my child and I were homeless at one point. No one helped us. The PLCB gave me hope for a future, supporting myself and taking care of my child, instead of ending up on welfare or in a shelter.

I turn away many people every day who are underage or have no valid ID. Try seeing the same at most beer distributors, when the owner is concerned his or her profits are down. Go ahead.... buy your wine from a grocery store, when all you have to tell you about the wine is the tag on the shelf, put out by the company making the wine. Sure thing they are going to tell you their wine is "good." As far as restaurant markups, complain to the restaurant. It is their decision if they want to buy a wine for 8 bucks and charge 25 for it.

I love my job. I cannot state that enough.

My response to her:

I feel you deserve a response. I have said on the blog, many times, that the situation and future of the PLCB employees is the thorniest part of privatization. It's one of only two issues that really concern me, the other being how to keep the new system fair, insofar as how new licenses are created, approved, issued, and transferred.

When you say "It's not a matter of training people to do their jobs. It's a matter of firing those that do not", I could not agree with you more. I hear from, and about, people like you, who are genuinely interested in their jobs and try to learn more about the products. I recently talked to a young man in a PLCB store in the Philly area who is very interested in single malt Scotch whisky, has developed a nice collection of it, who aspires to travel to Scotland to learn more. People like him, and you, should be rewarded. The type of clerks I unfortunately run into much more often, who either mumble "I don't know," or predictably, cynically, point to the most expensive wine in the section and say "This is good," when I ask for a recommendation -- both of which I've had happen multiple times in the State Stores -- should be getting training and being evaluated on it.

As far as the pay, that's a simple matter of numbers. There is a study out there on salaries of retail clerks nationwide, I've seen it, and PLCB clerks rank rather high on it. That may be more a reflection on how poorly-paid retail clerks are than on how well-paid PLCB clerks are, but the fact remains that PLCB clerks are paid more than most, and "CEO" Joe Conti did say in the PCN interview that experience is not a factor in hiring, and seemed to be concerned about that.

But I take issue with you saying that I think of, or portray, PLCB clerks as stupid. I will say that I have run into some that are ignorant of their own products, or of any products that might not be on the shelves; I'd have to lie to say that hadn't happened. But I don't think the clerks are stupid, and I am always polite and friendly to them, and hopeful of their knowledge. I do think PLCB clerks are handicapped by the system, by the policies of the agency.

I also disagree with you about carding at beer distributors. I've seen carding going on, and I've seen people turned away. I did it myself when I worked beer retail in PA back in the 1990s. The people at beer distributors are just as conscientious as PLCB employees, and by so callously saying it is not so, you do them -- and yourself -- a disservice. It's a simple fact: most underage drinkers don't buy with fake ID. They get booze from relatives or friends who buy it for them, something that happens at State Stores and beer distributors, and nothing clerks do can stop it.

As for grocery store wine sales and restaurant markups... If I just want a bottle with dinner, and I know what I want, what's wrong with buying at the grocery store? Nothing. If I want better wine than that? Well, if I lived in a non-control state, which I have in the past, I would go to a store that specialized in better wines and service, just like I go to my local cheesemonger when I want something other than block cheddar. Choice. It's what private stores are all about.

Restaurant mark-ups aren't really the issue in Pennsylvania, either. It's about the price the state charges to the restaurant, and the lack of service delivered to the restaurant, and the lack of options. Why do you think Philadelphia has many more BYOBs than other big cities in America? One reason: Pennsylvania's archaic, overbearing, monopolistic liquor code.

The main point of your e-mail, though, is about your job, and I don't blame you. I don't want you to be unemployed. You sound like just the kind of clerk I'd love to run into. But the PLCB is not a jobs program. The state should not be in the retail business, any kind of retail business. There is no good reason for the State Stores to exist.

I'd love to see you get a severance package of loans and discounts from the State that would allow you to open your own wine store, maybe in partnership with your current boss and fellow clerks, that would let you run with your love and serve the people who appreciated it. Believe me, there would be so many happy wine-lovers to support you, your store would be a runaway success. And you'd be making a lot more than $10.58 an hour.

That's the way wine retail is in New Jersey, in Delaware, in Maryland. That's the way it could be, should be, in Pennsylvania.

Sincerely,
Lew Bryson

The PLCB is not a jobs program. The Turnpike Commission, maybe, but the PLCB is not. I have said from the beginning that the plight of the employees is the toughest part; here's what I said in a comment on my very first post on the blog, the day after I started: "The hardest part about writing this, getting people to see the problems with the PLCB, is thinking about the effect it could have on people's livelihoods if I were somehow successful." Since then I believe we've come up with some workable ideas on how to ease that transition, and I hope that some legislators take a look at them.

But...the PLCB is not a jobs program. Shouldn't be, can't be. It's bad enough that it's got the State in retail.

The Chairman (not the CEO) Responds

The following letter from PLCB Chairman PJ Stapleton to state Senators Orie and Eichelberger (who publicly questioned both the courtesy contract and its award to Solutions 21) was posted, in full, on the website of WGAL-TV and other places. I've re-posted here (in what I believe constitutes fair use, since this is a letter between two public officials) in order to comment on Chairman Stapleton's points; I've also added emphasis at times. It's an informative view into how the thinking on the other side of the issue goes.


Dear Senators Orie and Eichelberger:

Thank you for your letter regarding professional development at the Pennsylvania Liquor Control Board. I would like to take this opportunity not only to answer every one of your questions, but also to make certain you and all those who care about public policy in Pennsylvania understand that the PLCB is a careful and responsible steward of the resources entrusted to us. We know that the taxpayers of Pennsylvania expect nothing less than our very best in managing those precious resources – particularly given the vulnerable state of our nation’s economy.

Unfortunately, the media coverage that led to your inquiry was profoundly misleading. A $173,000 contract on teaching manners – as has been widely reported – would be ridiculous. It would also be unnecessary, as our employees already are widely regarded as being welcoming and polite to our customers.

• (No offense to the clerks, but this is news to me, as in, I've never seen that reported. I've generally found State Store employees to be adequate at best, and at times mulishly uncooperative. I have heard from a few people about exceptions to that average. If there is a more scientific survey available, I'd be happy to report on it.)

But that’s not what this contract is about. The contract is a 65-page document covering a host of professional development priorities aimed at giving our employees the resources they need to be even more helpful when interacting with our customers

• (There's about two pages in the document that deal with those priorities; the rest is boilerplate).

Specifically, the contract requires the contractor to: (I've located the amended RFP for this contract (and Solutions 21's proposal, and the contract) at the PA Treasury site if you'd like to have a look.) Provide for 24 training sessions for more than 2,800 clerks plus training for more than 800 managers (a cost of about $2 per employee per session) (which kind of looks like a lowball bid for a a company used to training heavy hitters like Pfizer and Heinz, doesn't it?). The training subject matter includes improving sales skills, improving customer service,

• ("1. Improve basic customer service skills, such as greeting customers appropriately, servicing customers, and completing sales with professionalism and courtesy." (Yet Stapleton says characterizing this as 'teaching manners' is "ridiculous.") "2. Promote a positive atmosphere and attitude towards customer service in the PLCB stores; one in which providing excellent, knowledgeable customer service is celebrated and encouraged.")

complaint resolution, creating a positive atmosphere in the workplace, improving product knowledge (and this is where we depart from complete accuracy; what the RFP actually required on "product knowledge" training is this: "Improve sales skills, including the ability to translate product knowledge into relevant and effective conversations with customers that result in increased sales and increased satisfaction among customers." Not the same thing as "improving product knowledge," and there is no further mention of improving product knowledge; in fact, the overview of the PLCB in the contract makes it sound like they've got that whole product knowledge thing well under control), internal communications, and training on other LCB initiatives such as dealing with minors and dealing with visibly intoxicated persons;

• (nothing specific about this in the contract either, just a vague "Encourage engagement with the PLCB's current agency-wide initiatives..." and something about "managing difficult customers.")

Train LCB employees to continue the training process after the contractor has left; Provide all the training materials for the training sessions; and Provide a mechanism to evaluate - and to evaluate - (interesting phrasing...) the effectiveness of the training provided.

• (So the party providing the mechanism of evaluation of the contractor's product...is the contractor, not the PLCB. Sweet.)

This contract is appropriate – both in its content and in the way it was awarded. I am eager to share with you those facts. And we would welcome the opportunity to sit down with you or any of your colleagues in the General Assembly to discuss this issue in further detail.

• (And I hope the Senators take him up on this, and do their homework first.)

Our professional development program for our retail employees is a key component of our effort to deliver on Governor Rendell’s mandate to transform the PLCB from a prohibition-era government bureaucracy into a 21st century business that puts the customer first. (It is not, and cannot be, a business!) That is our focus today and will be tomorrow, as it will ensure that this agency gives Pennsylvanians the service they deserve while continuing to responsibly grow the revenues that we transfer to the General Fund, revenues that help millions of Pennsylvanians.

As you know, the Liquor Control Board operates 620 Wine & Spirits stores, which had sales of more than $1.7 billion in 2007-08. These sales generated some $428 million in 2007-08 for the Commonwealth’s General Fund in taxes and profits (please keep in mind: the taxes are about 3/4 of the take, and would be the same -- or more likely significantly larger -- under a private store regime). This makes us a significant retailer, whose successful financial management has a tremendous positive impact on the Commonwealth. The most successful retail business leaders know that creating and maintaining first-rate customer service is vital to their survival and success. So like our retail colleagues in the private sector, we are making this critical investment in our business. The fact that the LCB is a monopoly does not diminish this imperative. Our customers and your constituents still deserve a top-notch retail experience. (As we have for years -- still waiting -- and could have had with a privatization resolution.)

Our customer surveys have shown that our 3,000 union store employees generally provide good, and at times exceptional (I'd like to see the measures and definitions used), customer service to the citizens of this Commonwealth – a perspective that was repeatedly reinforced in much of the television news coverage this week. But it is our desire to provide excellent customer service consistently to all customers -- all the time. So, for the first time in many years, this program endeavors to give our hard-working employees the education and tools needed to provide our valued customers the superior service they expect and deserve.

This initiative is not news. In May 2008, we announced a series of steps to transform the shopping experience both inside our stores and online. It’s part of our comprehensive effort to put our customers first. At that news conference, which was well attended by the media, I announced that our efforts would include a fresh, new and welcoming look for our stores and, yes, more training for store staff to give them the tools they need to offer customers an outstanding shopping experience. Investing in such training is standard operating procedure in retail environments nationwide.

Consider:
Training Industry Inc., which monitors employee training trends, reported that U.S. companies spent $129.2 billion last year on the sort of professional development we have planned. A recent survey by the National Retail Federation found that more than 40 percent of retailers spend at least $500 per employee, per year, on training. The contract in question here amounts to less than $50 per employee (again: lowball bid? Too little to be effective?). Other state agencies have also recognized the importance of educating their employees to provide the best possible customer service.

Investing in improved customer service is a proven way to sustain sales – and thus sustain our support of the Commonwealth’s General Fund – during an economic downturn. Publications such as Business Week have reported that some companies are fighting to preserve customer-service initiatives during the recession while others are adding to these programs. If our customer-service initiative raises our sales just 1 percent for just one week – or $339,706 based on 2007-08 figures – it will have paid for itself more than twice over. (By increasing the gross by that amount? Doesn't ROI work on net? And...how will you know the increase came from the training? By using the measurement tools Solutions 21 designed?)

To fulfill the policy we announced last May, the LCB in November 2008 posted a public Request For Proposals (“RFP”) to solicit proposals for a contract under which the winning bidder would provide professional development training to the LCB’s retail store employees. Further, the winning bidder would provide leadership training to allow supervisory employees to continue the professional development initiative once the contract has expired. The LCB received five (5) qualified bids that were evaluated by a committee chosen for this task. The bids consisted of a technical submission and a cost submission, which are evaluated separately, when determining the winning proposal. After review of the technical submission of the proposals and in accordance with the Procurement Code, the cost submissions of the three highest scoring bids were reviewed. The winning proposer, Solutions 21, submitted a bid of $173,000. The other two bids were $453,521.76 and $1,212,175.00 (wow, that Solutions 21 bid is low). This fact has been left out of every news report on our awarding of the contract to Solutions 21. The only inappropriate use of our resources would have been to reject a qualified proposal to pay two-and-a-half or even seven times more.

I would also take this opportunity to address the unfair implications of media reports involving a devoted and long-term LCB employee, Susanne Hobart, who is married to the president of Solutions 21. Ms. Hobart is the regional manager for our stores located primarily in the western and northern part of the state. Neither Ms. Hobart, nor any of the employees she supervises, was involved in the procurement process. Neither Ms. Hobart, nor any of the employees she supervises, were part of the committee that reviewed the bids submitted under this RFP.

The State Adverse Interest Act prevents a Commonwealth employee from influencing or attempting to influence the making or supervision of any contract with the Commonwealth in which the person has an adverse interest. The Act defines an adverse interest as being a party to such a contract or having an interest in a party to such a contract. Ms. Hobart does not have an adverse interest, and she was not involved in the making or supervising of this contract. She is not the contract administrator, nor does she supervise the contract administrator. Her only involvement in this contract is that she and employees she supervises will receive training under the contract (and spending the money Buddy brings home?). Similarly, the Ethics Act, which deals with the awarding of contracts to state employees or their family members was not violated through this public procurement process. We believe that any fair review of the process will find that both the Liquor Control Board and Solutions 21 acted appropriately at all times. We would wholeheartedly cooperate in any such review. (I would hope so. And I hope it is a full review.)

Finally, and despite media reports to the contrary, the awarding of the contract for professional development did not involve taxpayer money (Of course it did). As you are aware, the LCB is self-supporting and spends no tax money; as stated earlier, it generates several hundred millions of dollars each year for the Commonwealth General Fund in terms of taxes and profits. (And any money spent out of the PLCB's gross to support this training is money taken from the taxpayer that never gets to the general fund. The LCB takes in millions in tax monies; are we to believe that the money is not fungible? Of course it is.)

Thank you for giving me this opportunity to address the issues raised in your letter. If we can provide additional information in this matter, please do not hesitate to contact me again.

Very truly yours,

Patrick J. Stapleton, III Chairman, Pennsylvania Liquor Control Board


Perhaps the most "ridiculous" thing in this whole letter is the talk about the product knowledge of State Store System employees. Yet it is fairly widely believed that State Store employees are not allowed to make recommendations, and never specific brands. Not the kind of reputation you'd expect in a system full of subject matter experts.

I'd say this training was desperately needed...only what's desperately needed is privatization. This is embarrassing, this is frustrating, this is ludicrous, and it only points up how ridiculous the entire system, the entire concept is. Take this albatross from around our necks. Abolish the PLCB.