The Union Problem

I have always defended private unions on the ground that workers have a freedom of association just as much as anyone else.  I think the government has tilted the playing field in the union's favor too much, but I will leave that aside for today.  I will also leave aside the problem of public unions, where there is no one really representing the taxpayer on the other side of the table in negotiations (many politicians in union states owe their jobs to union support).

Leave all of that aside.  The economic problem with unions tends to be that they are such a conservative (little c) force in an economy that needs dynamism to grow and expand wealth.  Here is a great example:

The University of California last week tentatively agreed to a deal with UC-AFT that included a new provision barring the system and its campuses from creating online courses or programs that would result in “a change to a term or condition of employment” of any lecturer without first dealing with the union.

Bob Samuels, the president of the union, says this effectively gives the union veto power over any online initiative that might endangers the jobs or work lives of its members. “We feel that we could stop almost any online program through this contract,” Samuels told Inside Higher Ed.

I have said for a long time that negotiations for pay and benefits (in private unions) tend to be the least problematic union activity (different story in public unions, where the relationship to management is not adversarial).  Longer term, union imposed work rules and restrictions tend to be much more costly.  The reason I think is that corporate executives can easily value the difference between various pay and benefits packages, but have a hard time valuing flexibility and dynamism.  If union rules cut off potential future as-yet-unknown growth and cost reduction efforts, the cost of these rules can be huge but equally they can be almost impossible to value (more like options pricing than straight cost-benefit).

  • NL_

    Private-sector unions are not really private entities. They are gifted monopoly privileges by the NLRB to be the sole bargaining unit for a class of workers. That's why the union election is so important. A union is a private entity run for the benefit of its members, but if it wins an election it is granted a special dispensation by the government to be the monopoly supplier of labor for a given company (or portion of a company). So it's not about free association; the government forces the company to negotiate only with the union,.

    A privately organized union, which held no special governmental powers or privileges and had to rise or fall on the strength of its ability to market members, would look something like Manpower or Kelly Services - a giant labor pool desperate to promote use of its workers for a cut of the action.

  • andre

    All university towns should take note: Watch Detroit closely. You will be there soon too. Maybe you'll learn some ways to deal with those problems.

    Because innovation is a fickle thing. You may not like it. The change it brings may be uncomfortable to you, even painful. You may protest. You may even have some success in stopping it locally. But nevertheless, it goes on, whether you like it or not.

  • RandomReal[]

    NL_:

    My thoughts exactly. About a week ago, I was talking with some undergraduates that I know about unions, and I pretty much described what you are suggesting. I know that Kelly and the like have been called "temp" agencies, but there is a great advantage to small and medium size businesses to hire workers through such agencies, the primary one being that much of the administrative overhead could be handled by the union/agency (Health care, tax withholding, etc.). A small business need only to sign a contract and give one payment to the agency. If there were several competing agencies there would be pressure to deliver the best product (human capital) at a competitive price. It would also make sense on the part of the employee for several reasons. If say during an economic downturn or for other reasons, the employee were to be laid off, the union/agency would be a natural vehicle for the employee to get hired again, given that the union/agency has many more contacts than a single person could ever imagine.

    I know of two situations in which something like this is going on: nursing and government scientists. Most of the postdoctoral fellows at NIH, some of the technicians, and all the IT people are "contractors". I am not quite sure how this came about, but I think that it arose from large physics/space projects which have a definite end date. At the end of building a satellite or coming to the end of a large experiment, the worker's contracts would end. This got around all of the rules and regulations associated with federal workers. Unfortunately, the bureaucrats associated with the project were government employees and their jobs are forever. So the people who contribute the most have the least job security. C'est la vie.

  • http://www.austincontrarian.com Chris

    Could it be that UC doesn't want to offer online courses? Online instruction is a serious threat to its highly-profitable core business model. It may want to bind itself to the low-volume, high margin stuff rather than the high-volume, low-margin stuff. There may be political reasons to do this -- e.g., warding off interference from the state legislature.

    UC can get away with this if it has sufficient market power, which it might have if its "product" is sufficiently differentiated that many customers do not believe there is an equivalent substitute. Or perhaps it is simply underestimating the chance that online instruction will take off, which fits your explanation.

    When the Big Three were a tight oligarchy, they (arguably) didn't resist work rules that made it impossible to build low-margin, small cars because they preferred to build high-margin, large cars. They could get away with agreeing to those work rules because they knew that once one of them agreed, the union would insist that the others agree. That was the UAW's negotiation strategy -- bargain with one and use that agreement as a template for the others.

  • Dan

    The public transportation unions here in Chicago are up in arms because the city no longer wants to pay workers for their extended coffee breaks and for the time they spend actually getting to work.

  • http://sunbreaks.typepad.com Anna

    This is a very interesting issue with respect to education. In one Pennsylvania school district, students used to be able to take whatever language class they wanted. If it wasn't offered at their school, they could get credit for online language classes. A flexible, student-centered solution. Naturally, the teachers union filed a grievance, which was upheld and the program shut down. You can read more about it here: http://sunbreaks.typepad.com/sunbreaks/2011/03/all-about-the-kids.html

  • drB

    Chris -

    let me tell you how the online courses will be organized. After replacing ten faculty with one pre-recorded online course with the same or higher cost to students as before (technology fees), the lecturers will be fired and will be replaced with even more administrators than UC has now. The cost to students will not decrease but the ability to ask questions and have office hours will go to zero. This is what I see so far in almost every school that offers online courses. And market will be able to sort it out just as well as it is able to sort out abnormal tuition raises now meaning it will not sort out anything under current system. The only solution is to abolish federal guarantees for student loans - then the administrations will have to decrease education cost.

    Please see the trend here:

    http://keepcaliforniaspromise.org/469/soon-every-faculty-member-will-have-a-personal-senior-manager

    Most of money is spent on administrators and so firing lecturers will do little for containing costs at universities.

  • drB

    And I am obviously not denying that there exists a gigantic education bubble and I am not in principle against online classes. But at the root of the bubble is federal guarantees for student loans and the fact that they can not be disposed of in bankruptcy. If the root cause is fixed everything else will fall into its place.

  • Dr. Alligator

    There are too many uneducated BA degrees being issued to people that really don't need them. The education system has become a production system. I know far too many BA students that do not know what the "Bill of Rights" are. I had one tell me it was something that Moses brought down on tablets... Need I say more?

  • Noumenon

    I have said for a long time that negotiations for pay and benefits (in private unions) tend to be the least problematic union activity (different story in public unions, where the relationship to management is not adversarial). Longer term, union imposed work rules and restrictions tend to be much more costly.

    Just as regulation is much more burdensome than taxation, but tax rates are easier to change visibly.

  • el coronado

    Yeah, we can all whine & bitch about those darn uppitty unions for daring to try and strike the best and most advantageous deal for themselves and their members (like they're - you know - obligated to) in contract/work rule negotiations. Then we can snivel piteously about the poor quality of their work output. Hell, that's been the party line for decades now, right? And MAN, I'm getting sick of hearing it.

    Because the key sentence in that little story is "The U.of CA tentatively *agreed to* a deal", etc etc.

    Managing a unionized workforce is actually quite simple. It's not EASY by any means: you have to work your ass off to do it, and never ever let any mistake go unchallenged, as you'll be setting a precedent. But it IS easy. 5 little steps is all.

    1) Muster up a set and say "no". Say it a lot. Try NOT *Agreeing to* a bad deal for a change.
    2) Hold the unionized employees accountable. Audit and document everything, on a regular and irregular basis, and always carry out your threats.
    3) Realize that in contract/work rule NEGOTIATIONS, they're going to try and get the best deal they can for themselves. Just like you are. That's what "negotiations" *means*. If you don't like their proposals, see rule #1. Crying about it means you think human nature should only apply to YOU, not THEM. Good luck convincing anyone with half a brain of that.
    4) This means you're going to have a lot of confrontations with your workforce. That's life, Mr. Manager. Deal with it. Practice. Get better at it than they are. See rule #2.

    The iron law of management/administration is that, ultimately, *you're* responsible for *everything* in your shop. So if you have overpaid employees with goldbrick work rules, slowly pumping out substandard crap, whose fault is that exactly? Hint: it ain't the employees fault. They're just doing what you let them get away with. Look in the mirror, "Boss". Which leads to the most important rule of all, #5.

    5) Whining about how hard it is for you or blaming the employees, the guys *you employ*, isn't going to solve the problem, or excuse managerial incompetence.

    I've noticed that union-bashers like to point out the pathetic excuse for cars that heavily-unionized Detroit beshat upon America in the '70's as the catalyst for all today's problems. Bear in mind, though, that those lazy shiftless UAW SOB's that built the gawdawful Chevettes, and Novas, Vegas, Gremlins, Pintos, Pacers, Mustangs 2's, Chrysler Cordobas "weeth fine Corinthian Leather", etc etc....they assembled those cars to *management* specifications, with Mgt-supplied parts, tools, assembly techniques, tolerance parameters, in factories built by and entirely controlled by The Management. The same Management that said "It'll do" at final inspection, and shipped those steaming loads out as quick as possible before they could start disintegrating on the factory lot.

    As for the "fact" that teacher unions 'have to be handled more delicately than mere proles', it's always instructive to see who made federal public-employee unions possible, thus making state pubsec unions inevitable. Who did that, I wonder. It wasn't famously union-friendly FDR....'cause FDR said "All government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service." So who did it? As a post-election payoff via presidential Executive Order? That wouldn't be the sainted JFK, would it? Why, yes, I believe it WOULD! (Executive order 10988, 17 Jan 1962.)

    There have been 5 (count 'em) 5 Republican Presidents since JFK got his sociopath butt whacked. The (oddly unstated) position of the GOP is they're anti-union, as unions inconvenience their corporate masters. Also, freedom, choice, rugged individualism, and whatever other buzzwords the pollsters say to go with this month. Interestingly, though, not one of 'em have tried to rescind this EO. Even though they, too, had EO power. Nor have any of this year's GOP contenders even suggested it, to my knowledge. Why is that, do you suppose?

  • A. E. Ames

    I agree with el coronado that public employer mismanagement is the largest cause of the problem with public unions. Elected boards, commissions, committees, etc. are usually not competent to hire professionals able to properly oversee their employees, so most public enterprises are poorly managed. Poor managers can and do wield their power inappropriately, so unions are needed as counterbalance. The only solution is to outsource all public employment through public bidding, including education and road maintenance (and of course parks and recreation) , so elected officials are left with only policy issues.

  • GoneWithTheWind

    Do you defend unions when they blatantly use their massive amount of money to buy special rights? YOU as an individual do not have the rights unions have and they are not even individuals they are merely an organization. They acquired these special extra-constitutional privilages throught fraud, intimidation and buying politicians. They don't deserve our praise.

  • caseyboy

    Sorry, I'll never understand the "public" sector union. Why would people from the community need a union to protect them from their employers, other people from the community? Coyote hit one thing right on the head. No one sits at the bargaining table to represent the public's interest. The "silent" negotiation is how much political support will you give me in exchange for meeting your workplace conditions? Which by the way are back end loaded so I don't have to deal with them the next election cycle.

    URGH!

  • el coronado

    Certainly I defend unions, GWTW. Unions, perhaps more than any other single factor, paved the way for the thriving and upwardly-mobile middle class of the golden era of 1946-1985, plus or minus. Why is the notion of an employee making a wage good enough to support himself and his family, live in a decent neighborhood, and allow the Mrs. to stay home and raise the kids properly (instead of farming the job out to uncaring, slack-jawed daycare workers or strident political-agenda-driven indoctrinators at public schools or the almighty TV) why is that somehow unAmerican? Who wrote THAT memo?

    As far as "buying special rights" goes, yes, unions are doing *precisely* what any other organization of size does: trying to buy and/or manipulate political influence to their benefit. (as for "intimidation", are you really naive enough to think other large groups don't play hardball? just unions?) They're just like the various political donations, fundraisers and PAC's you'll find in any corporation of any size; or - say - the ATLA. Or even the sainted NRA, for instance. But we don't hear quite so much whining about that, do we. Just those evil monolithic unions, who should by God have the rights that are available to EVERY OTHER organization REVOKED!! Permanently! Ever wonder why that is? Ever wonder who came up with that narrative?

    Don't misunderstand: I'm to the right of Attila the Hun; I hate big (or any) Government with a passion; and in a perfect world, we shouldn't need unions. But this ain't a perfect world - it's the real world. Public-sector unions are an abomination/cancer that should never have been allowed to come into existence - way to go, JFK. If only he'd visited Dallas in 196*1* - and should be EO'd to death like, *yesterday*. But as for *private*-sector unions....would you rather see your son/daughter go to work & start a career with a unionized company where their rights and interests are at least (forced to be) considered by management? Or would you prefer to see them end up at a large multinational where they're considered faceless 'headcount'; cannon fodder to be fired by the tens of thousands when the CEO needs to bump up the quarterly numbers to make his bonus? (Google "Chainsaw Al" or "Neutron Jack" sometime.) Which scenario would better serve them and their family?

  • ruralcounsel

    It makes sense for private labor to be able to organize to represent itself, though it should not be allowed monopoly labor rights. In that sense, right-to-work states have it correct. Competition in all things, even labor. And unions should have to compete with non-union labor. They need to justify to a business owner why union labor is better for the business. What is their competitive advantage? More skilled? More stable? More efficient? It needs to be something other than extortion and intimidation, if they want my support. In the early labor wars, the companies were the illegal aggressors, using private security and even state militia to get their way. The unions were just looking for a fair shake. Nowadays, businesses and labor unions have switched roles. And it doesn't buy any sympathy for the unions.

    It should not be up to the labor unions to decide for the business owner what business the owner will own and operate. The deal should only be about whether or not to supply labor to the business the owner wants to run, and under what terms of compensation. Owners should be free to dissolve their businesses, alter their businesses, or start up new businesses, without the by-your-leave of labor unions. If that isn't the business that the union wants to represent the labor for, then they should go find the kind of business that they do want to work for, and represent those workers.

    Only a very stupid employer would agree to being hogtied to prevent making decisions about what kind of business to be in, what kind of technology advances they were allowed to implement, what kind of efficiencies they would be allowed to create. It seems entirely predictable that we would see this in such an egregious form in a public union scenario. The taxpayers and clients (students) are not being adequately represented in these negotitations. Whomever is negotiating for the college should be held personally responsible; they need some skin in the game. I hope the OWS students who want free college educations think long and hard about this and the "support" they are getting from labor unions.

  • me

    Challenging topic - Generally, systems ought to be minimally regulated and have agreements established at the lowest possible level. Any case (be it legislative load, union contracts, required reviews by established authorities, rent-seeking like pharmacies/doctors) in which distant entities add complexity to negotiation is typically counterproductive. The one exception would be regulating the commons, but in this case the stakeholders should negotiate in council...

    That said, the only practical approach I see is the one el coronado mentions - don't give in, take the strong counter position and push the hell back.

  • caseyboy

    el coronado, it is worth pointing out that the time frame you identify coincides with US economic domination post WWII. Things worked pretty well for our business and workers when we were the only game in town.

    Now we face a global market where capital is very mobile. Investors seek the best return for their capital relative to cost and risk. The US business environment has become fairly hostile of late. The NLRB punishing Boeing is just the latest example. But we shouldn't forget the union bailout, I mean auto bailout at GM & Chrysler. Add to that the business choking regulations and walla, you get an economy that is failing.

  • Smock Puppet, Piloting The Economic Seas Betwixt Scilla and Charybdis

    >> I have always defended private unions on the ground that workers have a freedom of association just as much as anyone else.

    As long as everyone has the Right to Work outside of the union -- to be a non-union employee in a mixed shop, this is correct and reasonable.

    In my experience, it's a lot like Islam, however -- as the percentage of representation rises, the "reasonableness" of their position and attitudes plummet in indirect proportion.

  • Smock Puppet, Piloting The Economic Seas Betwixt Scilla and Charybdis

    >> Audit and document everything, on a regular and irregular basis, and always carry out your threats.

    Hey, good idea, let's add to the paperwork overhead of dealing with union employees. That'll help businesses GROW GROW GROW!!

  • el coronado

    All true, caseyboy. And yet....and yet...yet heavily-unionized UPS saddled with the teamsters, only one of the most militant unions there is - somehow manages to not only survive, but thrive in today's global this and competitive that blah blah blah. I spent a few years working for those guys, both as a union driver and then into management. That's where I learned the '5 simple steps' delineated above. It's pure UPS holy cant, especially the "You're responsible for EVERYthing, Mr. Manager" part. UPS pays guys who - in some cases - can barely write their names $80K a year to deliver their parcels, and that comes with a full and extensive bennie package, for them and their families. (or it did, anyways, back when I was with 'em.)

    Yet somehow they kick ass. Ever see a UPS guy at work sometime? Odds are, he's busting his ass, *even though no one's watching him*. That's what good management will do for you. Yes, UPS now has a 2-tier wage structure for their FT and PT people, and yes, they've got non-union people in their storefront shops. Even though the union didn't like it. Know how they did it? They *negotiated hard* for it, that's how. It's the secret of their success: they fight hard at contract time; they manage their asses off to see that their (very high) work performance standards are met and kept; they immediately confront (in a variety of ways)(ways they TEACH to their sups & managers) those who don't measure up, even if only for just a single DAY....and they succeed wildly.

    The one thing they DON'T do - at least to the point that it becomes an acceptable excuse for nonperformance - is whine about 'global competitiveness' or 'mobile capital' or 'hostile regulatory environments' or anything else. It's a tough business, yet they succeed, and do it with promoted-from-within management at that. Ergo, it's a viable business, and those that fail, fail because their management is too lazy/gutless/incompetent to get the job done. Same with airlines: back when oil was $140/bbl, every airline on earth moaned about the cost, and bled red ink. Except one: the one who'd had the foresight to lock in cheap oil prices via futures/options back in the 'cheap oil' days. Southwest. They ALL could have done it, but only one did. Ergo...all the other airline managements are incompetent.

    As for the UAW bailouts, all they did was ask - I.E., they looked to make the best deal they could for themselves. Just like our dear friends on Wall St. did. The fact that Bush and Obama were stupid/corrupt/gutless/venal/whatever enough to say "yes" makes it THEIR fault....not the unions. One last question: who's more responsible for our failing economy, do ya think: Unions? Or short-sighted, corrupt politicians and their (non-union) TBTF banker masters?

  • Ted Rado

    Unions were a strong force in getting rid of the robber barons of yesteryear. Much good was done. Since then, overreaching union demands have, at various times, almost destroyed the steel, auto, coal, and other industries. Weak management has given in to excessive union demands.

    The basic point is that a business must be competitive to survive. If unions make unreasonable demands, they will in the long run destroy their own jobs. Labor must work in harmony with management to attain a competitive business that can survive and pay their workers a fair wage. It should not be an adversarial system (which it now is).

    From the consumers point of view, a competitive economy results in better products at a lower cost. The unions made the advent of Japanese cars possible by driving up costs, with huge benefits to the consumer. We now have better, cheaper cars. Before and for awhile after the war, the UAW had a strangle hold on the US car market. The auto workers were essentially stealing from the public by way of inflated wages and benefits, and incompepent management (all three auto companies in collusion) went along with it.

    The curret USPS fiasco is partly due to a "no lay off" contract with the postal workers. Management must have the ability to control costs, including reducing the work force. Fortunately, it appears that the US public, and many workers, have awakened to economic reality, and there are many non-union factories.

  • me

    Back in highschool, we had a full semester of history on the dynamics of revolution... you'll see the same pattern over and over again: something bad needs addressing, established interests see no cause, get overthrown, the new regime fixes things, often commits some atrocities in establishing their power base and ten years later, they are the cause of much of the issues which start this cycle again. Overthrows always tend to come at a high cost (disruption of basic economic cycles). The best you can do is to keep as much power out of the hands of whoever is on top at a given time, which of course tends to be a losing battle (as those folks tend to not only have a vested interest in growing their base but also disproportional control of the means)

  • Smock Puppet, Piloting The Economic Seas Betwixt Scilla and Charybdis

    >>> One last question: who’s more responsible for our failing economy, do ya think: Unions? Or short-sighted, corrupt politicians and their (non-union) TBTF banker masters?

    A: All the above. Because you forget the short-sighted politicians who have their own union masters doing things like the whole "Union first" crap that the Fed did with GM's creditors.

    Then there was the whole set of idiots that have enabled the endless Ponzi schemes that the Fed and state governments use as "aid" -- pay in and maybe we'll give you something back out at some future date: Social Security, Medicare/caid, Unemployment, and so forth. It is blatantly obvious to anyone with any semblance of rational sense that, if you're going to demand that everyone have their own "pension plan" that the one the Fed came up with is about as retarded a notion as you can possibly come up with.

  • Smock Puppet, Piloting The Economic Seas Betwixt Scilla and Charybdis

    >> Back in highschool, we had a full semester of history on the dynamics of revolution…

    They missed the part about using a triad to deal with the issue, apparently, since you didn't mention it. One of the more effective schemes to limit power and its growth is to set up a rigidly separated triad of power groups, with good controls over each other -- if one of them threatens to get too powerful, the other two combine to cut it down to size.

    The unfortunate problem nowadays in the USA is we've allowed them to intermix and intermingle far too much of the power between the legislative and executive branches -- not only is it allowable in all too many cases to have a job in both camps (be, for example, a bureaucrat working for the NEA and also a consultant for the Senate committee on Higher education or the like), but also we've allowed the Congress to delegate its rule-making abilities to executive-branch bureaucrats: An executive branch organization can publish rules in its "area of expertise" in the FedReg and, if it's not challenged within like 90 days it gains full force of law. This being rather obviously unConstitutional as a clearly unallowed delegation of Congress' lawmaking capacity, it's a major cause of the rot. One reason there's so many pages of regulations is that Congress hasn't passed most of them. Even with their Omnibus bills they couldn't pass that many pages of legislation, they don't have the manpower to even write it... but the millions and millions of executive branch bureaucrats, well, they are Legion.

    The net result is that each of the three branches colludes too much to allow real and clear violations of the Constitution to slip.

  • GoneWithTheWind

    Good! Then let unions have no more and no less constitutional rights then you and I. If unions are as good as you claim they will do just fine without all the special rights they bought from criminal politicians.

  • ErisGuy

    “We feel that we could stop almost any online program through this contract,”

    I think this is terrific. I--and the rest of the nation--have suffered from idiotic California educational fads for decades. I hope the union stops all online courses in all California schools.

    It's win-win. California gets a new fad (stopping online education) and rest of us get to watch the impoverishment of California schools. Hooray!

  • GoneWithTheWind

    Considering that unions achieve their contracts through coercion, threats, intimadation and violence are these contracts enforcable? Could I force my nieghbor into an enforcable contract in my favor by breaking into his home, beating him and his wife and holding him hostage?

  • http://www.ianrand.com Ian Random

    Freedom of association and unions, give me a break. How can forcing someone to join or loose their job be that?

  • el coronado

    again, boys, you're falling for the propaganda put out by the WSJ and our corporate masters.

    1) do unions use intimidation to achieve their ends? Being human, the answer is of course, "sure they do". Where might they have gotten that idea from? How about the American Legal System? You know, the system that - should you refuse to bow to their almighty authority and not pay that parking ticket; or refuse a cop's (unlawful) "order" to 'quit filming me as I beat this handcuffed guy!'; or decide not to allow the building inspector onto YOUR property - the system whose M.O. in these cases is to "Escalate the conflict until you win, and/or the miscreant is dead". IOW, (ultimately) kill the guy if he resists or does not comply. BTW, that is precisely the standard orbat of the USMC, which is....telling. Who frames/perjures against/kills more people every year? Union goons, or cops and federal agents?

    2) "Freedom of association"? "Forcing someone to join", etc.?? Uh-huh. Can a regular old US citizen opt out of Social Security? or Medicare? Or decline to have withholding taken from his paycheck? No? Why not? I don't seem to recall the word "mandatory" anywhere in the US constitution, do you? Can he even get a bank account, or go to school, or open a business, or get insurance if he doesn't have a SS#? "How can forcing someone to join or lose their job (and so much more) be freedom?"

    Goose/Gander/Intellectual Honesty, and all that, lads.

  • ZZMike

    Why is it that we have "rights" for all sorts of things - except a right to work (without joining a union)?