Workers Unions

I will start by saying that I believe Unions have a valuable place in society and in the development of the United States into the successful nation that it is today. This does not mean that I believe Unions are perfect. I believe that they have their place and their time and then they seem become a burden to society and a detriment to further progress.

What is the role of a union? It is to get the best deal for the workers and look after their interests. American laws grant unions exemptions to the monopoly rules so they can represent the entire workforce of a single company or many companies.

When a group of workers is being exploited this is a required tool. The hotel maids and office building cleaning staffs are an area that has seen a lot of activity as of late. These employees are paid very low wages and are frequently immigrants who have little or no knowledge of American law. With their education levels (frequently basic at best) and lack of English language skills they are easy prey for large corporations. Unions are able to band these employees together and provide them with basic knowledge of the law in the US, making sure they receive what they legally deserve and helping garner them better wages.

This union power can also be extended too far. The Autoworkers Union is a classic case although far from the only example. As the US auto industry dragged itself into oblivion the union kept demanding more and refusing to give up anything it previously received. This is good for union leaders since the members like getting more and vote to keep them in power. Only recently while the automakers have been choking to death have the unions been forced to surrender some benefits. In prior periods the Union could threaten to strike and the companies were at a point where they were losing money but not as much as during a strike so they would cave. Now a strike would send a company into bankruptcy so the union's hand has been called. They have lost the power to hurt the company without killing themselves in the process.

Despite my blaming the union it should be noted that the management of the auto companies shares the blame for their current problems. Unions just capitalized on the weak and ineffectual management. US automobiles are boring and generally pieces of crap that die around 50,000 miles if they make it that long. Japanese autos are just getting their first tune up at that point. My last car was a Chevy Blazer, the handle used to adjust the angled of the seat back had a habit of breaking off. I hadn't realized this until both of mine broke off and I was talking with a friend who also had a Blazer. Their handles had broken off once, been fixed at a cost of something like $300 each and then broken off again. Once while the drivers seat was reclined and they were not at home. Despite this clear driving hazard there was no recall and Chevy would not replace the seats. This and other issues led me to trade it for a Toyota and to cancel my GM Credit card since I would not be using the rebate offered as an incentive. I digress.

Garment worker unions are another group that killed themselves and their industry with the help of corporate management and cheap overseas labor. Once they reached a certain level there was no coming back so they rushed over the precipice.

Over the holiday I was flying coast to coast and had the luxury of being held captive to a viewing of 'A Perfect Mind'. I can't help by tieing the theory from the gentleman in this movie to unions. The theory is that if everyone takes a little bit less then perfection then everyone comes out ahead. If you saw the movie the depiction was that if all the men went for the prettiest lady she would reject them and when they rebounded and approached her less lovely friends they would reject them as well since the ladies were a second choice. Meanwhile, if the men all went for the less lovely women they would be accepted and everyone would have a date except the beauty and thus be ahead over all even though no one scored the beauty.

I think Unions need to follow this logic a bit more. It isn't frequently in their long term best interest to get the absolute maximum for their members at every point in time as this robs the company of flexibility and should their be a downturn everyone is hurt - the company loses money to the point of bankruptcy and the union loses jobs weakening itself.

I propose that employee compensation needs to be tied more closely to corporate profits. Employees should receive a base compensation package that is comfortable but not overly generous. At the same time they should receive bonuses of a certain percentage of the corporate profits on a periodic basis (one year being the longest period). When a firm is doing good the employees profit and when things are tight the employees share in the pain. This type of alignment could be utilized to improve the corporations operations as employees strive to maximize profits to maximize their profit sharing.

I think this solution would also help with employee moral during good times as too frequently corporations strive to maximize their profits on the backs of the employees, especially those not unionized. There is the risk of demoralization during lean times but this would tend to happen when the economy was in a dip so staff defections should be controllable and the base compensation will keep them from financial ruin.

Many workers will find this situation uncomfortable, they are used to fixed paychecks and don't like the uncertainty of profit sharing. What they should think about is that this is how management is paid, although at a much higher level I admit.

I also think companies should tie workers bonuses to management bonuses. If the boss gets a 200% bonus so should the workers. How often does the boss actually do something that directly leads to the improved profits - usually it is a result of the workers doing their job and not much more. If I sit and punch keys on a keyboard all day and the corporate profits double I deserve a reward just like the senior executives. They did exactly what they were supposed to do and so did I, why should their compensation be any different when it comes to bonus percentages?

Socialism here we come.