Observations on Trade Unions

Observations on Trade Unions

February 19, 2014

George Will, Pulitzer Prize winning conservative journalist, lambasts trade unions, particularly the UAW, which just lost an important vote in Tennessee, in today’s Washington Post (http://www.washingtonpost.com/opinions/george-f-will-breaking-the-grip-of-the-unions/2014/02/18/39beb794-98d4-11e3-b88d-f36c07223d88_story.html).

Steven Pearlstein, also a respected journalist for the Washington Post, presents a contrary argument in his February 14 column (http://www.washingtonpost.com/business/will-a-new-new-south-emerge-from-the-showdown-in-chattanooga/2014/02/14/9a1d4bd6-9362-11e3-83b9-1f024193bb84_story.html).

It’s certainly true that unionism in America has displayed a number of troublesome elements in the past, resulting in most business managers fearing the arrival of the union on their turf.  It’s understandable that there have been many aggressive tactics developed to counter the unions. Actually, on both sides of union votes, there have been inappropriate, illegal, and deadly behaviors used to try to secure the outcome opposing sides desire.

Among the past problems among some unions have been mafia connections, corruption, misspending of union dues, catering to the needs of only certain established segments of labor represented, and, most importantly, failure of the unions to focus on how to make the company more productive and more successful–i.e., focusing only on trying to get more wage and other benefits, sometimes resulting in the bankruptcy of the enterprise, if the enterprise’s costs are highly labor dependent.

So I don’t fault George Will for his concerns, due to the troublesome history we have experienced.
However, he misses several important points in his diatribe against unionism: First, he fails to recommend any approaches to unionism which might make it more palatable, even helpful to American capitalism. Thus, he essentially can be read to view any form of labor representation on a collective basis as inappropriate. He doesn’t say that, but his failure to call for any specific types of union reforms does suggest that.  In that, he chooses not to acknowledge the nature of this particular union vote, as explained by Pearlstein:  It is supported by Volkswagen management, who have been very successful in working with unions in Germany; the UAW has agreed to deep wage cuts which make its Volkswagen wages comparable to non-union foreign auto plants in the US; and the UAW has agreed to turn over future benefits decisions to a council including management.

Will and others on the conservative side fail to see that in certain other parts of the world, such as Germany and other countries in Europe, unions have joined with management to come up with ways to improve productivity–and have sometimes agreed to tie their wages to achievement of increases in productivity. After all, if engaged with management, doesn’t the input of labor add significantly to how to make the production line move faster? Who knows better than the workers?

The other point, perhaps the most important point overlooked by Will and others, is that a major element in the frightening development of high levels of inequality in the US across the last 30 years, is the loss of voice by labor.  If inequality is allowed to continue to increase, or even to sustain at today’s high levels, there are serious risks ahead for the US in sustainable economic development–a problem not only for the poor and the middle class, but also a big problem for the wealthy.

Take a look at Timothy Noah’s The Great Divergence, chapter 8 entitled “The Fall of Detroit.” Noah carefully explains how the Wagner Act and the subsequent Taft-Hartley Act, and especially the Presidency of Ronald Reagan and subsequent Republicans, have been major contributors to stagnating wages for the middle and lower classes across the last 30 years, and the attendant rapid increase in share of income and wealth of the highest earning classes.

Unionism has a ways to go to regain the confidence of Americans, but America needs to create a level playing field for collective bargaining by employees. Who can realistically argue that the power of a giant manufacturing company is equaled by the demands of a single employee acting alone?  That’s a ridiculous match–akin to a sumo wrestler facing off against a 6 year old–the employee will get crushed if she/he doesn’t have the power of collective bargaining–and this is especially true during times such as the last six years, when it was a buyers market for labor. Some argue it’s been a buyers market for the better part of 30-40 years, when offshoring and technological advances have so accelerated.

And, unionism needs to display more effectively just how it can work with management to improve productivity and results, so as to keep us competitive in an increasingly globalizing world.

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