Sunday, July 24, 2005

The Death of Unions

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Organized labor is in the midst of being an afterthought. Throughout the union heyday of the fifties and sixties, a member of a union was guaranteed a reasonably steady income with a retirment package that would sustain them through their later years. It was good deal for the workers.

It was such a good deal that employers felt like they were getting a bad deal; rising costs forced the unions to increase benefit costs; which were then passed on to employer. Employers were courted by nations in Asia and elsewhere and realized that their bottom line showed a greater profit if they moved manufacturing overseas. China and Taiwan replaced Evansville and New London.

In the meantime, the unions banked on there good will with the Democrats who at that point were entrenched in power. They supported the Democrats blindly and the prospective candidates bowed down to the AFL-CIO and AFSCME's power. So much so that local unions in Philadelphia, northern New Jersey and NYC had election day written in their contracts as paid days off. The union's to this day will send battallion's of members to drive people to the polls and get out the vote. Sometimes legally, sometimes not.

While enjoying the sunny glow of shacking up with incumbent politicians (generally Democrats), the union's failed to see the US working environment changing. Instead of manufacturing, the US became a service oriented country. Lots of small businesses started up and the bigger corporations were centered on high technology manufacturing and research and development. The workers in these types of occupations were not the under educated type that led to the rise of unions, but well-educated people who were paid good money right out of college and didn't want or need union affiliation.

For those who don't understand how unions operate, here's a short primer. Let's look at the labor-type unions. Generally, a laborer will join a local and be placed on a list. A construction contractor will win a bid to erect a new building, such as a library. The contractor will call the local and request 10 workers. The workers will be put on the payroll of the contractor after the contractor signs an agreement with the local. The contractor will pay not only the salary of the worker, but also into a benefits fund. The benefits portion is 1/2 to double the salary portion. This is a huge added expense to the contractor, but more so to the corporation or municipality who is paying for construction.

The laborers work at the site and get paid every week, which is another burden on the contractor as they must expend time and resources on collection and disbursement of payroll checks.

When the work is completed, the laborers are laid off and they return to the hall. Some of the better workers will be carried by the contractor and utilized on other job sites.

If the construction sector is going full-bore, as was the case over the last few years, the hall is generally empty and everyone is working. When things slow down, the hall fills up and a waiting list is employed that determines who works and when.

Now, unions are being tossed aside as smaller construction firms, such as those who build homes, are utilizing skilled, non-union labor. These workers tend to work for less money but receive benefits such as health insurance and vacation time that is paid for by the employer.

Here is a good, if somewhat dated, synopsis from 1998:

New employment legislation has made it easier for workers, without the assistance of a union, to challenge unsafe working conditions, job discrimination, workplace harassment, and unjust dismissals. Compensation provided through unemployment insurance and welfare benefits can also replace traditionally union-provided benefits and services. Some evidence suggests that increased government expenditures on social services have created less of a perceived need for unions in the workplace.4 Furthermore, federal deregulation and the 1948 Taft-Hartley right-to-work provisions have transformed the organizational climate facing unions.

Here's a pro-union blog that seems to be updated often.

Getting back to unions and politics; where I live in the northeast, unions have immense pull and their backing can almost ensure that a candidate wins an election. The problem arises when they have to repay their debt. An great example was when Jim McGreevey was elected Governor of New Jersey, one of his first acts was to force contractors who win state work to use union labor.

The New Jersey Business and Industry Association summed it up thusly:

"Without so much as one public hearing on the issue, Governor McGreevey has gift wrapped billions of taxpayer dollars and given it to the labor unions," Stoller said. "This order will create a virtual monopoly for labor unions. It will effectively shut out hundreds of qualified contractors and thousands of nonunion workers from participating in state public contracts. Every public works project impacted by this order will cost taxpayers more."

That order still stands even though McGreevey is long gone.

The public, however is becoming hip to the fact that using union-only labor increases costs dramatically. The aforementioned smaller contractors are making a lot of noise and that noise is slowly being heard.

This post is not meant as pro or anti-union, it is meant to comment on the state of organized labor in the US. The power that unions once held over state politicians is slowly eroding away and with that erosion will come a new day where unions will be forced to compete on a level playing field or they will die.


MaoBi said...

Not sure how it works but can't a contractor (small) with sayyyyy for example 5 employees group together and call his shop a union? Maybe requires some kind of registration and then voila....everyone's a union.

scott said...

Yes, but the bigger unions will want a piece of the action and force the little union to join them.

The big unions are part of a national union such as the Teamsters and so you would have the same situation as today.

This happens all the time with small businesses, the unions try to et them to organize.

In alot of cases, the owner of the small business will shut down operations and start anew elsewhere.

Erich said...

I'm a union member and an organizer. Your article is matter of fact, in most ways; and not pro or anti union, as you say. However, your example is focused on trade unions. There are more public unions in the USA that, I think, have a different situation altogether. Their issue centers around their profession; ie, police, fire, public works, hospital workers (nurses, custodial workers, and some levels of professional and skilled workers like x-ray technicians, etc), teachers, office and administration workers, college and university employees as well as student unions supporting staff at the universities. In these cases, layoffs don't occur in a cyclical manner like contractors and trades. Some never get layed off. Their function is always needed because their skills are necessary to the continuation of the city, town county and state infrastructure. These jobs cannot be done by sparsely trained; unevenly educated employees, yet... State, County, City, Town and Village municipalities are all facing 'consolidation' of servcies because of pressure from the voters to reduce costs and taxes. The many 'never union' folks are usually the same ones making the loudest fuss. They blame unions for the bloated government, and therefore believe that those jobs are not worth the service they provide. Little do they realize, that if the goals of union decimation are acheived in the public sector; the collapse of local governmment and infastrucure will commence. No one is prepared for that inevitability; even after acknowledging that the big corporate private sector has all but disappeared from the tax rolls of those same states, counties, cities, towns and villages. What's left is solely the burden of the indiviual property and home owners. They simply can't bear that weight.
The publics works can no longer function, and those property owners discover that they can't even afford to pay for water, sewage and electricity. With government almost completely ineffective and on the verge of disappearance; the villians of the WWII era and anti-democratic past, fill in the vaccum with promises of 'saving' everyone from endless despair. Surrealistic scenario? No. It's happening right before our eyes.

dispatch said...

Hmmm i guess policemen nurses and firemen. Cant fight crime. Put down fires. Or heal people without the magical union powers.... who would have known?