Thoughts on labor unions

With the Democrats in power now, there has been talk that the Democrats might pass some laws to help out labor unions. Such as making it easier for workers to unionize. It's hard to say if Democrats are motivated by a genuine desire to help the country or are just looking to give something back to their union contributors without concern as to whether new laws would benefit the nation as a whole.

First of all, let's establish that unions do indeed benefit their members. Union salaries are nearly always higher than non-union salaries for similar jobs. The higher salary more than makes up for any union dues the workers have to pay. It shouldn't surprise anyone that union workers make more money, because unions equalize the bargaining power between employer and employee. In the normal non-unionized workplace, the employer can fire any employee, causing great pain to the individual employee with hardly any consequence to the employer. But when unionized, the workers can shut down the business, making employers feel the same economic pain that's usually reserved only for the workers. I wrote about this before in my blog post on the unequal bargaining power between employer and employee.

Some criticize unions as an interference with the free market, but they forget that big corporations themselves wouldn't exist were it not for government laws granting special recognition to the corporate structure. It's not clear why all sides having equal bargaining power is a worse market than one in which bargaining power is lopsided.

On the other hand, perhaps unions can grant workers so much bargaining power that the relationship actually becomes lopsided in favor of the workers who can extract money from the employer that they're not really entitled to. This could discourage investment, because people with capital may think "why should I invest money in some idea if the workers are going to unionize and steal all the profits if it ever becomes successful?" Perhaps the danger of discouraging investment cautions us to err on the side of more bargaining power for the employer.

As a way to help average Americans, the current union laws fall far short because they only help the 12.5% of workers lucky enough to be in a union. In fact, part of the animosity against unions is probably jealousy on the part of the non-unionized workers who envy how much the union workers get paid.

If unions are so great, why not mandate that all corporations deal with their workers through an employee union? I don't think it's necessary to change to laws to make forming a union any easier. Unions are already incredibly easy to form. All you have to do is get half the workers to fill out a union "card" (a term which probably goes back to the days of movable lead type--I once checked with the NLRB and confirmed that the "card" can be a regular 8.5 x 11" sheet of paper), and then the NLRB will hold an election, certify the results, and you have a union. What's strange is why so few workers take advantage of this easy way to equalize their bargaining power. Even when you get a majority of the workers to sign these cards, half the time they vote against the union in the election (which is why unions want to do away with the election requirement and allow unionization based only on signed cards).

The workers are obviously too stupid, or too afraid of change, to sign a card and vote in their interests. This is no doubt due to the meritocrization of society which has occurred since the union laws were originally created in the 1930s. Back then, there were enough smart motivated people stuck in crappy low wage jobs to make union organizing possible. Today, the low wage jobs are comprised of people who are dumb and unmotivated, or people who imagine (true or not) that they will soon move up in the world and don't care about or identify with the lifers.

Some of the low wage workers are also illegal immigrants who don't want to have their identity scrutinzed by government representatives. One way to strengthen unions would be for the Democrats to do something about deporting the millions of non-citizens working illegally.

It's also a mystery why white collar workers don't unionize. Maybe this is because unions are associated with low status jobs, so white collar workers are too afraid of lowering their status to vote in favor of higher wages for themselves. This is also related to the salary taboo because white collar workers don't even know if they are overpaid or underpaid, and perhaps they are afraid to find out by discussing salaries with their coworkers. If Democrats want to help unions and average workers, they would do something about ending the salary taboo.

Comments

[Peter]

One important thing that often overlooked is that unions have basically turned into a public-sector phenomenon. A high and increasing percentage of union members work for the government, or in the government-subsidized health care and nonprofit industries.

[Rich]

About 12 years ago I worked for a company at which there was a big push for unionization. Almost all of the workers were unhappy and thought a union would help, but it was very difficult to get anyone to actually sign a card. In almost every case they said they were afraid of retaliation from management. They were afraid they would lose their jobs and be unable to get new ones in the same field if they were known to be union supporters. The union drive fell apart in a couple of months.

[Frank N Stein]

I see no problem with workers organizing, and agreeing to pay dues to have a spokesman forward their concerns to the employer. I also see no problem with the Union organizing a strike, and union workers agreeing not to work until their demands are met (or some compromise is reached). So long as government does not mandate restrictions on the employer, preventing them from hiring non-union work during the strike, or government permitting unions to require union membership in order to work at a business (closed shop). Like in most things, there is too much non-market (government) influence on both sides, to reasonably talk about what kind of Unions would exist, and what power they would wield, in a free market. Although I will say that the solution to government regulations that benefit one group, is not government regulations to try to benefit the other group. The only winners in that case are bureaucrats who can sell their influence via special interest lobbying, raising the cost of transactions for everyone, employer and employee alike.

[Disgruntled]

Half Sigma,

Have you ever worked for a Union? I was a Teamster for a while. The Teamsters basically screwed workers over, at my cannery, until they gained tenure. I saw no great advantage to the organization. The higher salary was almost completely taken in Union dues and the working conditions were still poor.

[Eric Busboom]

Regarding why white collar workers don't unionize: for many professionals, the largest factor in the quality of the work environment is the quality of the people they work with, and they don't want to work in environments where incompetent people can't be fired.

[secret asian man]

It's pretty obvious. Neither the corporation nor the union desire to increase worker compensation. They only do so when it benefits either the corporation or the union.

Why don't white-collar employees unionize? Obvious again. Collective bargaining works only when productivity is roughly equivalent between people. If I am highly productive, why do I want to work for a shop where I get paid the same as someone who is incompetent? In such a situation, I'd leave and go bargain as an individual to gain compensation for my specific high skill.

This leaves all the incompetent people at the union or seniority-pay shop, which explains most government institutions.

[Uncle Kenny]

"It's hard to say if Democrats are motivated by a genuine desire to help the country or are just looking to give something back to their union contributors without concern as to whether new laws would benefit the nation as a whole."

That's not the least bit hard to say and even less hard to conclude the latter rather than the former motivation.

[The Engineer]

I'm with Peter. Unions almost don't exist in the private sector anymore (~7% rate). They're a public sector phenomenon almost exclusively.

I'd like to see HS rejigger his analysis for public employee unions. Personally, I don't see why they're allowed to exist. They're undemocratic.

[AllanF]

FWIW, Boeing engineers are unique in that they are unionized. Wish I knew what we lessons we can learn from them. I know absolutely nothing about them.

I will say this, having worked in the auto industry, engineers were relatively screwed. UAW did great for themselves, as obviously did the executive management. But I always felt it was saddled by the engineers and mid-level managers.

I now work in high-tech, where through stock options, labor and capital are the same person.

[anothercommenter]

Unions help on safety issues. White collar workers aren't worried much about being hurt on the job. Blue collar workers do worry.

Unions are corrupt. And not a little corrupt, either. Especially in New York City. Economists can look at the union wages and say that it is a great thing, but they don't see the kickbacks. If you are a union worker and work overtime, you get time and a half. But in order to be granted those extra work hours, you have to kickback part of what you get paid. Then add in the graft in the union dues and maintained furloughs and it is not a great living. A decent living, but not great.

[James Bowery]

People forget that "The New Deal" was basically about turning the United States of America into a big labor union which provided union benefits and protected the jobs of the Union members from foreign scabs.

The Immigration and Nationality Services Act of 1965 basically undid The New Deal and no one noticed since it was passed by Democratic congressmen and was put on page 7 of the New York Times when it passed.

Of course, the Immigration and Nationality Services act of 1965 was blatantly unconstitutional since it in effect replaced the posterity of the founders of the US with others and the Preamble of the Constitution makes clear that its entire purpose was to "secure the Blessings of Liberty to ourselves and our Posterity"

[David Alexander]

The Immigration and Nationality Services Act of 1965 basically undid The New Deal and no one noticed since it was passed by Democratic congressmen and was put on page 7 of the New York Times when it passed.

My family had come to the states under the 1965 act fleeing the spiraling conditions developing in Haiti. So, obviously, you can see how I feel about that act. Plus, isn't that the same act that flooded the country with all those Asians we've come to love because of their high IQ?

Useless Question: What's cheaper, foreign aid or pooling off the immigrants who can come here legally?

[Peter]

While it's a niche market, one area where unions are important is the movie industry, as they're the main source of health insurance. Let's say that you're a camera operator. During the span of a year you might well have multiple employers as you go from movie to movie - for instance, a month with Fox, then a couple months with Disney, six weeks with Paramount, and so on. You're never with one company long enough to qualify for any sort of benefits. Instead, you get health insurance and other benefits through your union.

[SFG]

"That's not the least bit hard to say and even less hard to conclude the latter rather than the former motivation."

Of course they're out for themselves. The question is which group of crooks serves masters with less odious purposes. I'd rather have a bunch of Teamsters skimming money off the top than oil companies ensuring we keep dumping carbon dioxide into the atmosphere. Your mileage (no pun intended) may vary.

Incidentally I'm pretty disappointed with the Democrats so far...they seem to be spending all their time fighting between themselves. Come on, guys, it took the GOP 12 years to get this pathetic.

[Kathleen Marie]

Historical there was good reason for unions. They were needed so people stand up and demand good pay, good working conditions, cut child labor, etc... Most of those reasons are relevant today.

[TGGP]

What is the difference between "bargaining power" and "supply and demand"?

[James Bowery]

TGGP: You obviously don't believe in antitrust laws or the existence of what classical economists called "economic rent" do you?

Are we all morally obligated to give our lives defending your property rights too?

[SFG]

TGGP: there is no difference! That's why unions exist, to decrease the supply of labor and drive up the price (=wages). Since in the era of megacorps there are relatively few buyers of labor, why not decrease the number of sellers too?

I agree with Jim.