Class Warfare Blog

December 30, 2012

It’s Time for Labor Unions to Get Off Their Asses

Because I may ruffle some feathers I feel the need to establish my bona fides, as it were. I have been a union president, a union chief negotiator, and held other offices in two locals, and won an award for organizing, so I am not criticizing unions as an outsider. In fact I am not criticizing at all, but I will be offering strong advice.

I have written about the New Deal a number of times, but I haven’t mentioned how President Roosevelt managed to pay for all of the public service programs he created in the midst of a massive depression. He did it by taxing the rich and the corporations. (If you want to know where the 90+% top marginal income tax rate came from, look no further.) And more than a few Republicans went along with this. Why? Roosevelt used fear as a motivator. The fear was that with 25% unemployment, the labor unions, the Socialists (real ones, not like we have now, that is figments of Fox (sic) News imaginations), and Communists were going to revolt and demand a new way of doing business. The only way to hold off the barbarians at the gate, as it were, was to address their needs. So, in the middle of the depression, we got Social Security, we got unemployment compensation, we got government jobs (via the WPA, etc.), and unions got more say.

Everything was as we say, peachy-keen and then this happened:

Graph of percent change versus hourly compensation and pructivity showing that productivity has continued to climb since the 1940's in a regular way and wages kept up until the early 1970;s when they went flat.

This corresponded with a severe decline in the numbers of Union jobs. In the 1960’s, about a third of all jobs in the private sector were union jobs. Now, there are less than 7% of all jobs are union jobs. And what have the unions done? Well, they have hoped for more help from the Democrats but most recently even with Democratic control of both houses and a Democrat in the White House, unions couldn’t even get a bill passed that allowed them to get certified with a card election, which was the standard procedure in the past.

So, I have to ask: how’s that hopey, changey thing doing?

The big problem with government granted rights, is the government can take them away. And after the New Deal, the Captains of Industry and the Monied Interests began working to roll back all of those changes. Gone are the Socialist Party and Communist Party as viable organizations. (Yes, they had significant membership in the past.) Gone are the high marginal income tax rates for the wealthy. Gone are the higher corporate tax rates. Gone is labor union power. And what is currently under attack? Answer: Social Security and Medicare and unemployment compensation. And when they are done, we will be welcome to all of the crumbs from the table and the New Deal will live on only in memory.

And the labor response? Wishin’ and hopin’ and prayin’ and not much else. Currently management uses threats to unions of plant closings, outsourcing of jobs, etc. to extract wage and benefit concessions and our unions, fearful of their loss of power and, yes, fearful for the welfare of their members, cave in. They aren’t alone, businesses bully state and local governments for tax concessions to “keep them where they are” or to “entice them to come into their communities.” They don’t have to bully the federal government, they’ve bought all of the legislators off.

The Captains of Industry and the Monied Interests created think tanks (in the 1970’s, look at the graph again) and developed a plan and then worked the plan (look up the Powell memo if you haven’t heard of it; the “conservatives” liked it so much it was worth a seat on the Supreme Court for Powell). The unions? No plan, just wishin’ and hopin’.

It is time to realize that we have a bad hand and we are playing with a short deck. In order to be successful, either the rules have to change (that ain’t happening, at least not in our favor) or we need to change the game.

What to Do, What To Do?
Simply put, leverage can be had by going into competition with said businesses. American workers are the most productive in the world. If Company X wants to take their jobs to China, how should a union respond? It has all the workers. It has capital in the form of a strike fund, which can be leveraged to finance a business, it could buy up the abandoned assets of said company and run that enterprise, all the while pointing out that the former company took their jobs to China and your company is making not just Union-made but American-made products (with lower shipping costs, too).

Frankly I don’t think most unions are competent to run business in the American model and to do so would be just trading one “Man” for another . . . as “the Man.” But, what if the new business were run as a co-operative/joint venture by the workers? The union plays the role of capitalist, that is it provides the money or leverages a loan from a bank (it would be nice for the union to own a bank, but that isn’t required). The workers would own the company and run it. Certainly, the costs of executive compensation would drop substantially, as would siphoning money off to pay to pay shareholders. Fewer managers would be needed and workers would have to take a much, much broader interest in the company than in just “punching a clock.”

The competitive advantages are immense: highly productive workers, American-made products, low shipping costs, lower management costs, etc. The cost of labor might be higher, I won’t say “will be” because if you hire a worker half as productive for half the wage there are no labor savings. Our labor costs more but is more productive. (Germany has even higher labor costs and somewhat lower productivity, yet is the #2 exporter of manufactured goods in the world (behind China)! manufacturing is not dead!) And think about what will happen to productivity when everybody has their mind in the game!

This is not magic, this is a fracking co-op! We have done these since Revolutionary times. We are good at it and with guidance and some education we can get better.

And imagine the leverage the union will have at the bargaining table for its ordinary business if Company Y threatens to take its jobs to Mexico. The union, after full consideration, might just look at the situation and ask “Will you be selling the plant? We can use it.”

Napoleon Hill had a precept that went something like “do each job with the intent of making that job obsolete.” Putting yourself out of business sounds scary, but it is a way to the future. The union business as it is currently framed is nonfunctional. But there is a role for a group who is willing to lead labor to a new future and there will be a role in that future for labor unions. There is more training of workers needed, business, advice, counseling, financing, etc.

It is change or die time. What do you want to do?

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11 Comments »

  1. I’m impressed! Made an enemy in the costumed clergy yesterday and now this morning you’ve got organised labor AND captains of industry no doubt searching for your address to muzzle you forever. You, sir, are a brilliant provocateur! And what’s more, I can’t find a single fault in your thinking.

    Comment by john zande — December 30, 2012 @ 8:49 am | Reply

    • Lordy, lordy, you be turnin’ mah head!

      Thanks, John, praise from the praiseworthy is always of value.

      Steve

      Comment by stephenpruis — December 30, 2012 @ 8:54 am | Reply

  2. What is this graph representing exactly? Productivity generally? Productivity specific to union-heavy sectors? GDP? How are they measuring it? In dollar terms? In raw product numbers terms? You do realize that if “production” here (whatever the hell that is) represents a certain skill set (or combined skill sets) that the graph would make sense. New technology allows us to increase productivity without needing to raise wages at the same rate. This opens up new markets for people with other skills. It makes the world progress faster.

    Comment by jonrmack — December 30, 2012 @ 9:29 am | Reply

    • So, you are saying that new technology can be operated with no more skill than the old technology, that the workers needed need have no more education to work that new technology, that you can pay them the same old wage, like a CadCam operator being paid the same as a lathe operator or a draftsman? Are you saying that for the decades in which productivity and wages were in lock-step, that there was no new technology?

      Comment by stephenpruis — December 30, 2012 @ 9:35 am | Reply

      • It depends on what the graph represents. And statistically, just according to the graph, the lock step seems to be the oddity here, as it is present for only less than half of the time. I’m not claiming to know what wage is right. I think the markets do. All I’m trying to figure out is what data this graph is representing. Also what organization did it come from? I can go into Excel and whip up my own little chart in about 5 minutes. Like I said, What is the data behind the lines, and who put it together?

        Comment by jonrmack — December 30, 2012 @ 9:42 am | Reply

        • I can’t put my fingers on the source of that graph, so I attached another one that has similar information and is sourced. Sorry for the problem.

          Steve

          Comment by stephenpruis — December 30, 2012 @ 9:58 am | Reply

  3. I disagree with you a lot here, obviously, but I will say this. In 100% agreement that this is a true statement
    “The only way to hold off the barbarians at the gate, as it were, was to address their needs.”
    Social safety nets need to be in place. I think we’d go about it in very different ways, but I agree that society can’t function well if poverty steadily creeps in.

    Comment by jonrmack — December 30, 2012 @ 9:47 am | Reply

  4. I would think that co-op model would work only for a smaller group of people: with fewer people, each shares more of profit, and impact of each person’s hard work has greater impact on the income. With a large group, impact of each person becomes negligible, and the incentive to work “for yourself” wouldn’t be any different from working for any regular boss. And the union, on the other hand, will find itself in the position of having to fire underperforming employees, instead of having to protect the interests of every worker.

    Comment by List of X — December 30, 2012 @ 8:28 pm | Reply

    • There is one operating in northern Spain which has over 100,000 employees. The technique is to make sure that each functional unit is relatively small and then the units colaborate.

      The union does not run the businesses, they are simply the financier and consultant. The workers do their own hiring and firing. This is being done all over the US currently. If the union is the financier, the only way they could be come invovled is if the business doesn’t service its debt properly, just like any bank would.

      Cheers,

      Steve

      Comment by stephenpruis — December 30, 2012 @ 10:35 pm | Reply

      • That’s an interesting example, and would be even more interesting to see it work here. I think there may have been something similar in the San Francisco area where workers bought out a business (I am trying to remember what it was), but I don’t know if this can be easily replicated. If a union does not actually run the business and hires managers to do that, it may work. But there is still an inherent conflict of interest between the union as entity which wants to keep the business profitable (at least not losing money) and as an entity which is in charge of negotiating compensation and benefits for its members.

        Comment by List of X — December 30, 2012 @ 11:59 pm | Reply

        • The union does not hire managers, the *workers* manage the place. If the workers think a manager is needed, they hire one, or one of them takes that role. The union would have no ownership responsibilities. The businesses you may be thinking of are the Yellow Cabs of SF and there is a bakery co-op also in SF. Since the workers set their own salaries, there is no need for the union to negotitate their contracts, as everybody is an owner at that point. This was the point of the Napoleon Hill quote. In a co-op, unions in the traditional sense as collective bargaining agents aren’t needed.

          Cheers,

          Steve

          Comment by stephenpruis — December 31, 2012 @ 7:36 am | Reply


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