I Hate The Idea Of Labor Unions, But Maybe We Need Them
I've always hated the idea that we need labor unions.
Why?
Several reasons.
- Unions create an "us versus them" culture within companies, instead of putting everyone on the same team.
- They create a culture of entitlement.
- They restrict flexibility and hurt competitiveness.
- They drive companies to move jobs out of the country, to places where there are no unions.
- They can become career employment for their leaders, who sometimes pay themselves better than the workers they're representing.
- They maintain ludicrous compensation and benefit levels for jobs based purely on seniority (some bartenders in one of the New York hotel unions, for example, apparently make ~$200,000 a year).
- They force companies to treat all union employees equally, regardless of the relative skill and value of particular employees — thus reducing incentives for people to do a great job.
- They often behave as though industry trends are irrelevant, thus preventing companies from adapting rapidly to change.
- Etc.
And all those are indeed negatives.
But we've now developed a bigger problem in this country.
Namely, we've developed inequality so extreme that it is worse than any time since the late 1920s.
This inequality contributed to the Occupy protests a couple of years ago, and it's fueling the fast-food workers' strikes now. And it is exemplified by fantastically profitable companies like McDonald's choosing to pay employees so little that they have to live in poverty.
Aside from basic fairness, the trouble with this behavior is that it's hurting the economy. One company's wages and investments are another company's revenues. America's big companies currently have the highest profits in history, while paying the lowest wages in history. The recipients of those low wages--American consumers--are strapped, so they don't have much money to spend. Until companies can be convinced to pay people more and invest more aggressively, this stagnation will continue (If you don't believe this, check out the charts at the bottom of this post).
When you suggest that companies should share more of their wealth with the people who create it, though, this is often regarded as lunacy. Companies should pay people as little as possible!, the shareholder advocates roar. Employees are just costs!
In other words, America's "owners" seem to be taking the view that unless or until they are FORCED to, they will never share their wealth with the people who generate it.
So maybe there's no solution other than forcing them to.
A look at the impact of labor unions over time, unfortunately, suggests that this may be the case.
Although correlation is not causation, the chart below suggests that labor unions might be able to help induce companies to share their wealth, at least in some industries.
This chart is from EPI. It is based on the work of Piketty and Saez (the deans of inequality research).
The chart shows the correlation between the share of the national income going to the to 10% of earners with membership in labor unions. What it suggests is that, as unions have declined, income inequality has soared.
Again, right now in this country, we have the painful juxtaposition of the highest corporate profit margins in history, combined with one of the highest unemployment rates in history. We also have the lowest wages in history as a percent of the economy.
That's not good for the economy ... because the richest Americans can't buy all the products we need to sell to have a healthy economy (they can't eat that much food or drive that many cars, for example).
Healthy capitalism is not about "maximizing near-term profits." It is about balancing the interests of several critical constituencies:
- Shareholders
- Customers
- Employees
- Society
- The Environment
It's time more of our business leaders and owners started to understand that.
SEE ALSO: Sorry, It's Not A "Law Of Capitalism" That You Pay Employees As Little As Possible
Photo: Mai Le/Flickr
Looking to train and give back.
11 年When did burger flipping at McDonalds become a career? If you want more money, get a job that pays more. I can teach a 14 yr. old kid to make a perfect hamburger every time. You want a career? Learn to do a job that requires you to think and move forward. You don't deserve a raise because you showed up to work on time and didn't fight with anybody today. The little man wants to do as little as possible and then complain that they have a poor job. The opportunities are out there. They just are not handed to you at your door.
Experienced Service & Operations Manager | Automotive & Heavy Equipment Specialist | Technical Support & Team Leadership
11 年There seems to be confusion why labor unions exist. Poor working conditions, the work week being 40 hrs, fair pay, and child labor have all changed because of people standing united and creating change. Employers or CEO's do not care for your well being, only profits and more bonuses for them. I agree that some auto makers have failed to negotiate realistic incentive plans and caused the demise of companies. This was negotiated by all involved, we seem to forget this. The mafia isn’t running the unions any longer; strong arm tactics were not at play.
Writer of Men's Studies & Owner of Rod's Gardens
11 年This discussion is more an issue of dependency than anything else. The capitalist begins a business on his own, works it and profits by it. Something happens and he wants more, he becomes dissatisfied with his own production and seeks help. He arranges for another man who lacks a vision of self employment to work for him at an agreed or forced wage. The new employee has often no choice. He becomes dependent upon the owner. Yet the owner is dependent upon the worker to show up and work. This mutual dependency is rarely acknowledged. They need each other, yet treat each other as enemies. We live on a beautiful blue ball floating through space yet all we do is create enemies. One has to ask, is there really an enemy?
El Residente at Woodford Corp Housing Co-Op
11 年Henry, I think you're off on the first reason. There is always an "us vs them" problem between management and workforce. Unions didn't create it. It's existed since the first day a boss added a minion to create a "them." The fact that it's a hierarchy always puts the worker at a disadvantage in the relationship, which is why American unions came about in the first place. As for the concept of team, it can tend to be just a management smokescreen. In big business the team is usually NOT any kind of a real group effort at better business, but usually just a kinder, gentler take on a bunch of coaches bossing players around.
RETIRED from Praxair, Inc.
11 年The post from Jason T has the "right of it". Pay for good performance, reward productivity etc. In other words COMPETE with the other parts of the world to WIN the businesse. There are three components of our ability to compete in busines..LABOR, MATERIAL, OVERHEAD (LMO). Businesses use that input to price products for short term profit, and reinvestment in the business. It is that simple of an equation. To thrive and grow, our US production will either be absorbed by US consumers or exported. Consumers must accept the price that is the result of our LMO. To the degree our US consumers will not pay a higher price for US produced goods than those imported from China, Vietnam, Bangladesh we cannot grow a major section of the manufacturing base. Service business, yes. Technicians, yes. Energy and related, yes. But, not the goods that require the old middle class worker.