Labor’s Love Lost — 16 May 2011

These are not the best days for the labor union movement.  Union membership among private employers is at a 70-year low, at less than 7%.  Their principal hope for turning those numbers around, the “card check” bill – which would have effectively stripped workers of a secret ballot in voting for union representation – failed to become law even after labor spent billions and rallied the troops to help elect an overwhelmingly friendly (that is, Democratic) administration and Congress.  In other political efforts, they also spent millions trying to unseat incumbent Blanche Lincoln in the Democratic Senate primary in Arkansas, and failed at that, too.

And, of course, their obstreperous efforts in Wisconsin to stop Scott Walker’s reforms not only failed, but similar reforms have been enacted in Ohio, Indiana, and elsewhere – even in Massachusetts.  Back in Wisconsin, labor’s follow-on efforts to place a labor-friendly judge on the state Supreme Court failed by a considerable margin, despite an all-out campaign.

One might ask whether unions no longer serve a purpose.

There are three principal functions served by labor unions.  The first is to protect workers from exploitation.  Back in the early days of industrialization there was a real need for this.  Factories needed workers with strong backs and little education, and among the ranks of ignorant country boys and immigrants one was little different from any other.  So businesses paid as little as necessary, and wasted little money on amenities such as safe working conditions.  Unions helped persuade bosses that they needed to pay more and to offer benefits such as weekend days off.  This was good.

But times have changed, and managers no longer operate according to the philosophy of “the beatings will continue until morale improves!” Enthusiastic, cooperative workers are key to productivity in a competitive world.  Moreover, workers in today’s economy are no longer interchangeable – skills and talents are a worker’s best guarantor of job security.

So unions have changed from protecting workers’ lives to protecting their livelihoods.  And as any student of Econ 101 will tell you, protectionism – of whatever economic agency – leads to lower growth and dynamism.  Again, talented workers will succeed without union representation.  As one reformed labor organizer found, “many unions operate under the assumption that all workers contribute equally and that no employee can be lazy, incompetent and stupid,” and that as a result, they will “will reward the underachievers and punish hard workers.”

The second main purpose of unions is the reverse of the first: to exploit the employers.  When times are flush, unions bargain hard for a larger piece of the pie, and businesses often are willing to buy labor peace by conceding – particularly if the price is to be paid for in the future, such as pension benefits.  The problem is that flush times that might justify generous benefits are not permanent – but the obligation of promised benefits is.  And sure enough, those industries where unions have been strongest and most successful – airlines, steel, automobiles – are the very ones that have flirted with bankruptcy for decades.

The principal reason union representation in the private sector is in decline is global competition.  Companies that are shackled with union obligations, not just salaries and benefits but restrictive work rules,  constraints on layoffs and the like, are not nimble enough to survive.  So when liberals complain about companies shipping jobs off to China, they and their union allies ought to look a little more closely in the mirror.

One sector in which jobs cannot be shipped to China, or where an employer cannot fail and be replaced by a stronger provider, is the public sector.   It’s no surprise that that is where union membership remains strong, with a penetration of about 36%.  Until recently, moreover, the disconnect between the ones receiving the largesse and the ones paying for it, the taxpayers, was large enough that over-generous offerings went un-remarked and without protest.  Who, after all, doesn’t support teachers?

But even here, flush times lead to promises that can neither be kept nor justified, and when a fiscal tsunami hits like it did starting in 2009, the sleeping giant rouses itself and finds to its horror that it should have started saying “no” a couple of decades earlier.

The third principal function of a union is to represent workers’ interests in the halls of government.  I have no problem at all endorsing enthusiastically a union’s right to lobby governmental officials – it is a Constitutionally protected right, and it applies to the AFL-CIO as much as it does to the Chamber of Commerce.

But when the Democrats treat K Street lobbyists as if they are inherently corrupt, they ought to save a bit of their indignation for the union lobbyists, for not only do they have every bit the access to the corridors of power that businesses have, they are far more than that.  They are the foot soldiers of the Democratic party.

And the bankers.  According to the Center for Responsive Politics, ten of the top fifteen organizations donating to political parties between 1989 and 2010 were labor unions, and they gave between 80% and 99% of their cash to Democrats.  The top ranking donor to Republicans, the National Auto Dealers Association, came in a lowly 17 overall, and even they split their donations 67-32%.  And this doesn’t even count the in-kind value of union members who canvass door-to-door – some on paid time – on behalf of their Democratic causes.

And yet, when the Obama administration proposed new rules for government contractors, declaring that they had to disclose all donations of the companies and their employees not just to candidates but to PACs and political groups, unions were exempted.

The White House has done other favors for labor, despite the fact that card check failed in Congress.  They have stalled for over two years to push for ratification of trade agreements with South Korea, Panama, and Colombia, despite the fact that these were fully negotiated by the Bush Administration and would have passed an up-or-down vote.  They also included various unions in the first round of waivers to the Obamacare legislation’s limits to administration costs for insurance plans.

But the biggest favor that Team Obama has offered labor is the unprecedented ruling by the National Labor Relations Board against Boeing.  The NLRB, headed now by Craig Becker, a former counsel to the Service Employees International union and a recess appointment (that is, unconfirmed by the Senate), has ruled that Boeing has to scrap a multi-billion dollar assembly plant they are just finishing in South Carolina and relocate it to Washington State.  South Carolina happens to be a right-to-work state, and Washington is union.

The reason they give is that Boeing mentioned, in describing their plans to analysts, that the history of labor strikes in Washington – three in the last fifteen years – raises the cost of doing business there.  This the NLRB has construed as illegal “retaliation” for those strikes, despite the fact that these were all to be new jobs, and that Boeing has also increased their Washington work force by several thousand in the last few years.

If Craig Becker and the NLRB can tell businesses where to set up shop and where not to, then labor has a good friend indeed in DC.  According to some other opinions voiced by Becker, there might even be ways to introduce card check through the back door without having to bother with actual legislation.

So we can sum up: of the three purposes of labor unions, the first fosters mediocrity, the second is ultimately self-destructive.  That leaves the third: to elect friendly politicians and to extract favors from them.  Labor may be down, but they are certainly not out.  At least, not as long as Barack Obama is President.

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