Labor Unions’ Greatest Enemy
Labor unions blame their decline on a myriad of causes. In the eighteenth and
the nineteenth centuries, factory workers endured harsh working conditions.
Laborers collectivized into unions in order to improve their lives. These
efforts were met with severe resistance that included violence and murder. The
union members retaliated and eventually brought about desperately needed
changes. Laws were passed to protect workers and their collective bargaining
rights. Unions continued pressing for less work for more pay and benefits. Labor
unions have declared capitalism to be their greatest enemy; but in reality,
labor unions are their own greatest enemy.
Many union supporters rationalize their beliefs in strange ways. Progressive
Living posted an editorial blaming the off shoring of jobs on conservatives,
corporations, and capitalism in general. Conservatives have continually promoted
free trade agreements that caused job losses and slow job growth. NAFTA and the
World Trade Organization are conservative inventions to help large corporations
save money and destroy domestic jobs. Corporations prefer overseas production
because of the lower taxes and labor costs. And above all, President George W.
Bush is to blame for just about all of this. Tariffs and trade restrictions must
be implemented to stop further globalization. To prevent businesses from sending
jobs overseas, corporate taxes must be increased and domestic wages must be
increased through more union power. According to the editorial:
The US should return to steeply progressive income taxes. When the
ultrawealthy have nothing to gain from the process of globalization, the process
will soon slow. This would also set the stage for desperately needed, and
effective, trickle-up economics. When you put more money in the hands of working
Americans, that money finds its way into the economy quickly. (“Offshoring”)
These claims are delusional. A punitive tax system will not convince anyone
with business overseas to bring the business back to where it will be taxed more
and neither will higher domestic wages. Highly progressive income taxes punish
success, take money that could be invested in job creation out of the economy,
and eventually reduce tax revenues. Tariffs and trade restrictions are not
viable options. Not only would they violate the NAFTA and the World Trade
Organization treaties that were signed by President Clinton, tariffs and trade
restrictions are generally met with retaliatory tariffs and trade restrictions.
Some claim that unions protect businesses from import competition, but the
reasoning behind that claim is highly suspect. A study, published in 2002,
addresses the effects of import competition on unionized and nonunion companies.
When import competition is introduced, unions immediately and voluntarily reduce
their wages to slightly more than nonunion wages. The nonunion firms fold
because they cannot compete with companies that have slightly higher labor
costs. This increases unionization percentages allowing unions to demand higher
wages (Shippen 134). This entire study is based on the premise that union labor
is more efficient and that higher labor costs are enough of a competitive
advantage to keep a business going when faced with import competition. Union
planners rely on these studies for reliable information, but higher labor costs
are a not business advantage and unions rarely agree to wage reductions. This
report only tells union planners what they want to hear, not what they need to
hear. If the predictions made in this study were true, a higher percentage of
nonunion manufacturing jobs would be lost compared to union manufacturing jobs.
According to statistics from the U.S. Bureau of Labor Statistics from the year
2000 to 2010, twenty six percent of nonunion manufacturing jobs were lost while
fifty percent of union manufacturing jobs were lost.
Globalization coincides with the decrease in unionization percentages, but is
not necessarily the direct cause. Free trade has no bearing on service sector
unions and can increase union bargaining power in supply chain jobs. Despite the
apparent connection between global competition and decreased unionization global
competition is a not a major factor. Worker and employer opinion of unions,
direct domestic investment, and the better productivity of non-union facilities
are the biggest causes of the reduction of union influence. Griswold surmised:
The inescapable conclusion is that unionized companies in the United States
have performed poorly relative to nonunion companies. To the extent that output
and resources are mobile, poor union performance has led to a shift of
production and employment away from unionized industries, firms, and plants and
into the nonunion sector or to producers overseas. (Griswold 193)
Unions have simply priced themselves out of competition. No employer wants to
pay more for less productivity. The extra labor costs must be passed down to the
consumer. Nonunion manufacturers are able to offer an equal or better product
for less money. Consumers don’t like to pay more for less, either. In the end,
the unions lose.
Union influence has changed from direct negotiation with employers to
political and legislative strong arming. According to Thiebolt, early unions
relied on direct negotiation and lobbied for labor laws that were favorable to
collective bargaining. While most of the laws they promoted were much needed
worker protections and fair collective bargaining privileges, some were strictly
self serving measures including union exemptions from anti-trust laws. Almost
forty years ago, the Supreme Court granted union members immunity from
prosecution for violence and extortion to achieve union objectives. Unions have
relied more on political influence recently. Politicians relying on union
campaign support have been promoting the Employee Free Choice Act which
eliminates secret ballot voting for unionization (Thiebolt 38). Public
perception of unions plays a large role in unionization decisions. Unions are
often associated with violence, political corruption, and organized crime and
for good reason. The violence and corruption are completely legal and no-one
knows whatever happened to Jimmy Hoffa. Few people want to join a group of
greedy, lazy thugs and even fewer want to employ them.
Occasionally, a union will do something out of the ordinary and not be an
enemy to them self. For the last several years, Ford, General Motors, and
DaimlerChrysler have been losing money on the cars they make. Pickup truck sales
have kept them in business but sales have been declining. Shortly before this
last recession, all three entered into intense negotiations with their
respective local United Auto Workers unions. McCracken reported that one local
chapter accepted necessary changes. The head of that union, Jerry Sullivan,
agreed to many concessions. Pay was not be reduced but overtime was all but
abolished. The rules for sick days were changed drastically and local contracted
outsourcing was allowed. In order to keep the car makers in business and most
the union members employed, The United Auto Workers union was forced into severe
concessions. McCracken stated:
Mr. Sullivan didn't have to look far for a worst-case scenario. He also
represents 3,000 workers at nearby Rouge Steel, a steelmaking operation spun off
from Ford that began bankruptcy proceedings in 2003. ‘Bankruptcy is devastating.
People's pensions and health care can just be lost, taken away,’ he says. ‘We
understand our work practices weren't the best. We know how dire it is.’
Two years after these negotiations, Ford was the only domestic auto
manufacturer not in bankruptcy. Mr. Sullivan acted in the best interest of all
involved while his counterparts at the other two automakers took a selfish
position that was in not in anyone’s best interest. Children who eat all their
Halloween candy as soon as no-one is looking exhibit similar blind selfishness.
Just like a child with no candy, a union with no employer has no-one to blame
For the most part, unions have outlived their usefulness since labor laws have
replaced unions’ original purposes. Not content with biting the hand that feeds,
unions’ war on capitalism has chewed off the entire arm and more. A business
cannot remain competitive with its labor continually extorting more pay for less
work. This extortion is legal. The business is left with no options but
bankruptcy, folding, or both. When a parasite kills its host it must find a new
one or die. Unions are running out of new hosts. Until unions start embracing a
wider view than their current narrow selfishness, they will remain their own
Griswold, Daniel “Unions, Protectionism, and U.S. Competitiveness.”
Cato Journal 30.3 (2010): 181-196.
McCracken, Jeffrey. “Tough Talks: Desperate to Cut Costs, Ford Gets Union’s
Wall Street Journal 2 March 2007: A1.
"Offshoring American Jobs: An Ongoing Economic Catastrophe." Editorial.
Shippen, Ben and Allen Lynch. “How International Trade Affects Union Wages: New
Evidence.” Journal of Labor Research
23.1 (2002): 131-144. Print.
Thiebolt, Armand. "Unions, the Rule of Law, and Political Rent seeking."
Cato Journal 30.3 (2010): 23-44.