Free Markets, Free People

So why are private unions in decline and government unions still strong?

If you haven’t figured it out yet, it has to do with competition in one area and none in the other.

How so?  James Taranto sums it up pretty nicely on the private union side of things:

The trouble for private-sector unions is that the global economy vastly increases the supply of labor, diminishing their bargaining power. If it’s too expensive to run a factory in the U.S., companies can simply move their facilities to other countries.

Or, labor isn’t worth what it once was thanks to globalization. We call that “economic reality”.  Back in the good old days for unions, they were getting wonderful pensions, outrageous benefits and $20 bucks an hour for a guy to open and close a blast furnace door.  Now they can make and ship steel across the Pacific Ocean and truck it to its destination in the US cheaper than we can make it.  Thus the shift of the industry from here.

The bonus for these companies?  No labor negotiation hassles, lower wages to pay (comparatively) and the option to move again if the costs again become onerous (and the steel industry has done that a couple of times).

However labor hasn’t yet allowed that lesson to sink in – well, at least unions haven’t.

Taranto points to a very recent example of the point as well as some union members who “get it”:

Last May, after contract negotiations stalled, nearly 800 IAM-represented employees walked off the job at Caterpillar’s hydraulic-parts factory. After a few weeks, more than 100 returned to work, fed up over the lack of progress in the talks and pinched by the union’s $150-a-week strike pay, some workers say.

When an agreement was reached in mid-August, the contract provided less than the one before it: The IAM gave in to an hourly pay freeze for veteran employees, an end to pensions, a doubling of health care premiums and a one-time ratification bonus of $3,100 instead of $5,000 under the previously proposed pact. The terms were almost identical to a Cat contract ratified by the UAW [United Auto Workers] a year earlier.

Doug Oberhelman, chairman and chief executive of the Peoria-based heavy-equipment maker, acknowledges that the givebacks hurt employees. But, in a recent speech in Chicago, he explained that management compared compensation to factory hands across Illinois and around the world and concluded that to be “market competitive,” Caterpillar had to insist on the concessions.

100 of the members of the International Association of Machinists apparently saw the handwriting on the wall, figured their family came first and returned to work.

So much for solidarity.

Hostess is another example of out of touch private sector unions.  When the Teamster’s union confronted Hostess over its claims it couldn’t afford their demands and giving into them would cause the company to have to liquidate, the Teamsters examined Hostess’s books and agreed.  They backed off.  Not the Baker’s union though.  Apparently their union chief never bothered to examine the books or negotiate.  He just advised his union to strike.  The result is well known and, by the way, the Teamsters were livid – not at Hostess, but at the Baker’s union.

Meanwhile a few facts have surfaced about the Baker’s union boss that should make members of unions everywhere recognize at least this guy for what he is:

BCTGM boss Frank Hurt encouraged the strike (knowing it could shut down the company).

As BCTGM membership has fallen 30% since 2000, Hurt’s salary has gone up nearly 45% to over $260,000

The bakery industry union pension fund is less than 50% funded ($10 billion in liabilities), yet bakery union bosses have their own fully-funded (100%) pension plan — funded by members.

Bakery union bosses Hurt and the Sec.-Treasurer both have their kids on union payroll.

We often hear complaints about CEOs who get pay raises while their companies go down the tubes.  I wonder if the left is willing to apply the same criticism to a guy who raises his own pay 45% while losing 30% of the membership and funds his own pension 100% while shorting the union member’s fund by over 50%?

Unions also tend to play at stupid games that simply frustrate people trying to run a business and make a profit.  In this case it is two different unions fighting about who gets to plug in and unplug refrigerated containers.

A federal judge has been forced to intervene in a dispute between two unions over who is in charge of plugging and unplugging refrigerated shipping containers at the Port of Portland.

Oregon district court judge Michael H. Simon ordered the International Longshore and Warehouse Union (ILWU) to abandon its efforts to snatch the responsibility of manning the outlets from the rival International Brotherhood of Electrical Workers (IBEW).

“[The ruling] simply means that the same people who have been doing the work since 1974 will continue to do it,” said IBEW spokesman Norman Malbin.

Absurd.

The ILWU’s reaction?  It said the contract with the electrical workers represented a “lost work opportunity” for members.  Of course it was a job they’d never had nor had when they tried to take it over.  But these are the sorts of things private unions are reduced too these days.  Stealing each other’s jobs.

As we’ve covered here, the great Wal-Mart walkout wasn’t a spontaneous event or even an event demanded by the workers of  Wal-Mart.  In fact, as mentioned, only 50 of 1.4 million Wal-Mart workers even walked out.

It was a union event using the front group “OUR Wal-Mart (Organization United for Respect at Wal-Mart)”, it was all set up by the United Food and Commercial Worker’s Union.   And if flopped, hideously.  In fact, the real reason the UFCWU tried to make this happen is because their stores are uncompetitive with Wal-Mart grocery stores.  If you can drive up salaries and benefits, you’ll eventually drive up prices.  You?  They couldn’t care less about you, Mr. and Ms. Consumer.

Those examples all deal with private unions.  Competition and the cost of labor are driving the reality of today’s wages.   Unions can’t deliver on the big promises anymore.  Many have not done a good job of managing their members benefits either.  Smart companies make it clear that they will willingly provide good wages and benefits without unions.  Tack on tough economic times and the need for a union becomes even less apparent.  At one point paying union dues was considered to be a positive thing.  Workers got something for the dues that they felt was greater than the cost of the dues.   Today?  More and more are seeing those same dues as a liability.

Finally, government unions.   They remain strong because there is no competition.  And, their bosses are in bed with them, negotiating with your money, not theirs.  Government’s don’t have to make a profit to stay in business, do they?

But perhaps even their act is wearing a little thin.  Take the LAX protests by the SEIU:

At LAX, although a large crowd of union members came out to protester, CBS LA notes that ”the majority of them [the protesters] were not airport workers.” They were other members of the SEIU.

So troubled were the airport workers by the Thanksgiving Day protest, the Associated Press reports that according to a press release from former union members, “a majority had signed petitions to leave the union and called upon the SEIU to cancel the demonstration.” One former union member Fred McNeill admitted to CBS LA that it had gotten “personal” for the leadership of the SEIU, “And that’s just not right.”

Another woman, who CBS LA interviewed through her car window at the airport, said she she was a union member (she did not specify which union she belonged to), but even she didn’t agree with the way the union was blocking traffic on one of the busiest travel days of the year.

Unions on both sides have become short-sighted and petulant because their golden age is demonstrably dead.  Economic reality and a changing world have dealt them severe blows and instead of looking at ways to shore up their base and maintain their presence, they’re reduced to throwing tantrums and thumbing their noses at the very people they need to suppor their cause.

Government unions can still get away with that.  Private unions can’t.   And the only reason that difference is made is because competition and economic reality rule one side and monopoly and government protection rule the other.

~McQ

14 Responses to So why are private unions in decline and government unions still strong?

  • And the only reason that difference is made is because competition and economic reality rule…

    Not if Lil’ Dick Trumka can suck up to Pres. Not Optimal sufficiently.  Remember the classic fascist economic model has three legs…one being big, compliant unions.  Whether they appear private or not.

  • “But, in a recent speech in Chicago, he explained that management compared compensation to factory hands across Illinois and around the world and concluded that to be “market competitive,” Caterpillar had to insist on the concessions.”
     
    I wonder if they did a comparison on executive compensation, too.

    • You can bet they DID!  Would you pay more for talent than you needed to pay?!?!?

      • Ahem. If I am doing an analysis of myself, then of course I am worth every penny, and probably deserve a raise and a bonus.
        There are plenty of over compensated executives in the world.

        • Do you figure Caterpillar executives set their own pay, and do their own evaluations?  Really?  Please…

          • Of course not. I am sure it is done by thoroughly qualified objective outside consultants who really do not care about repeat business and whose conclusions and recommendations  are adopted unquestioningly by management.

  • When the money runs out people are going to wonder why the fats$$ window clerks at the local DMV, teachers in underperforming schools, and various other undeserving bureaucrats and the like have a pretty sweet salary, perks and retirement deal, while they have to slave away into their 70s to fund it….and it won’t be pretty once that particular pandora’s box is open.
    Faster please. Let it burn.

    • To say “…it won’t be pretty” is an understatement.
      When folks see these folks, their neighbors, retiring in their 50s in luxury, when they have to work into their 70s to make ends meet, “UGLY” is going to look pretty good.

      • I have been seeing some small amount of backlash against teachers, firefighters,and police, but not as much as there should be.

  • The bonus for these companies?  No labor negotiation hassles, lower wages to pay (comparatively) and the option to move again if the costs again become onerous (and the steel industry has done that a couple of times).
    Additionally, the bonus for their customers (either other companies or consumers)? Cheaper input materials, and thus lower prices and increased margins.
    Hell, it’s only been since Ricardo that the idea of comparative advantage has been around – and yet people still think autarky (buy local!) is a means to prosperity.

  • “The trouble for private-sector unions is that the global economy vastly increases the supply of labor, diminishing their bargaining power. If it’s too expensive to run a factory in the U.S., companies can simply move their facilities to other countries.”
    This statement, while true, is only part of the truth and it helps the lefties claim that companies move overseas for their own profit. The fact is that often the US company does not move overseas at first, but faces ever increasing competition from foreign companies and then either is forced to close, move overseas, or become an importer from overseas and cease local production.
    Its important not to gloss over the “close the company” part because that hurts workers too and brings zero benefit to the owners, and it happens a lot. Not every business owner wants to fly to China and possibly live there to keep in existence.
    Being forced to become an importer is also very different than actively investing overseas, and its hard to blame a business for doing this, when the other choice is to close down.
    I would say that a huge portion of jobs “shipped” overseas actually are not sent to factories owned by the US business, but instead or being made by Chinese or Taiwanese owned factories, who then gain all the skill, experience, etc., while the US companies whither to become mere distributors. Though, its probably a huge relief to many business owners to out source the headaches of running a factory, especially the red tape. This is why Silicon Valley happily votes for Dems, carbon taxes, more regs etc. – they have already sent the production out of reach of California and Washington rules.
    My point is that “moving the factory overseas” is only one of the options and probably happens the least often.