Categories: Business, Steve Maich

Are labour unions a blessing or a curse?

U.S. Congress is pondering a historic shift in labour law

by Steve Maich on Wednesday, February 11, 2009 11:10am - 25 Comments

Then you have Reich, who states, correctly, that union workers earn more on average than non-union workers. What we need now, he says, is to get more money into the hands of the working class. Tax cuts, rebates and government spending are fine, but nothing will be as effective as a renewed surge in unionization. This simple logic is seductive, but it totally misrepresents the roots of this economic crisis and what it’ll take to fix it.

Look around and you’ll see the most heavily unionized industries (think automotive, construction and media) are the ones that are now in the most desperate financial trouble and where jobs are disappearing. Besides, union membership in the U.S. has been going up for the past two years—739,000 new members have joined a union since 2007. So, the labour movement was growing just as the economy was faltering—not exactly a ringing endorsement for Reich’s thesis.

Despite arguments to the contrary, this economic muddle wasn’t triggered because ordinary Americans don’t make enough money or because they lack adequate job protection. It wasn’t sparked by big businesses being saddled with high labour costs or debilitating strikes either. Our problems are rooted in the fact that ordinary Americans spent wildly beyond their means for more than a decade, and big business rode that debt-fuelled spending boom until it crashed. Now that the banks are stuck with billions in bad loans, even healthy businesses lack the funding they need to keep expanding.

Where do labour unions fit in that picture? They don’t. They are a footnote at most, and arguably irrelevant to our broader economic illness. But that won’t stop the combatants from trying to use this situation to advance their own agenda before Congress. The problem with the debate is that it’s not about economics, it’s about ideology. Both sides start with a preconceived belief about whether unions are good or bad, and then work backwards looking for data to support their point. The question before Congress is a political one, and so will be the answer.

Are unions a blessing or a curse for our troubled economy? Chances are you already have an opinion on that question, and you can pick and choose statistics and examples to back your position. But it’s a trick question. The real answer is neither.

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Tags: economy, Labour, unions

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David Lay

Thank you Steve for being brave enough to take the middle ground. Now like all moderates you can expect to be assailed ffrom both sides.

My own view is that the present situation is the logical progress of post-colonial global economics, temporarily accelerated by the credit-fuelled spending spree to which you allude. Or we might think of it as addressing global poverty by spreading the wealth around. While economic growth is not a zero-sum game, if the global manufacturing workforce is expanding faster than consumer spending capacity, average wages must fall. Unions are but part of a complex set of structural barriers to that process, ensuring that the pain will be administered in a very uneven way. The recent announcement of wage cuts by General Motors is a remarkable exception to the usual rule, where businesses and worker organizations self-destruct rather than cut compensation. The physical and psychological suffering of the affected GM employees would be greatly cushioned if this sort of solution was more widely applied. Not that I expect to to see that happen any time soon.
madeyoulook

Are unions a blessing or a curse for our troubled economy? … The real answer is neither.

Right enough, as far as it goes. But within any given industry, is the presence of a union an uplifting support towards success or a heavyweight anchor sinking the ship? No doubt the answer is it depends. No doubt the Big 3 (can we come up with a new name?) have many problems besides the sclerotic collective agreement rules and regs bogging them down. But are the unionized shops or the non-unionized shops in the most trouble in the auto industry right now? If I work the line at a carmaking factory, would I be more secure working for GM in Oshawa or Honda in Alliston?
David Fraser

Both.

What do I win?
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Hilary Smith

Unions are the only reason we ever had a middle class. Every CEO enjoys the safety of a contract and so should every janitor. No person’s access to resources should be precarious and nobody should be disposable. The Employee Free Choice Act will make it easier to form a union (which means the ability for workers to bargain for better wages, job security, healthcare, retirement). That’s the reason business people hate it. When was the last time the business community went out of it’s way to stick up for the rights of workers? Good thing most of us have become wise to their shtick.

Craig O.

Whether or not unions are good, doesn’t this legislation essentially undercut the basic democratic process in unionization? If a worker truly does not want to be part of a union, he or she will now be subject to open pressure by his or her coworkers. With secret ballots, even if pressured, employees can vote the way they wish and have deniability to both sides – the company and the unionists. If this is truly about employee rights, why shouldn’t an employee’s right to democratically choose whether or not they want to be unionized be protected as well?

Scott G.

As a graduate student at a State school in the US, I have had some first hand experience with unionization efforts. Last year the UAW attempted to unionize student employees at my school. Their tactics were deceitful (such as telling workers that they were signing a card for “more information” when in fact it was a unionization card) and they were invasive (after being interrupted from from their research for the 10th time, many colleagues chose to sign cards just for some quiet). There is nothing wrong with requiring a secret ballot, and absolutely nothing to be gained from allowing card only registrations. Card only registrations enable unionizers to focus their annoying tactics on those that hold out against unionization.

Jason Townsend

“Is [social and moral issue] good for the economy?” is an incomplete way of examining an issue. I’m grateful that centre-left parties are increasingly recognizing the many ways unions build a better country and I hope the EFCA passes in the US. Hopefully the long, slow decline in North American unionism – and the ills that came with that decline – are correctable.
JimD

I think unions are very important, but they can create problems when they run out of urgent things to worry about. Sometimes they can be weakened by their own effectiveness.
Craig O.

Before unions, the power of a company was almost entirely in the hands of its owners and managers, with the workers being practically impotent. The introduction of unions shifted the balance, giving more powers to the workers and serving to stop employee abuse. This was, undoubtable, a good thing for the workers and the economy due to the unions’ contributions towards expanding the middle class.

However, since then labour laws have been strengthened and many companies have accepted that happy, healthy employees are not only good for the employees, but good for the company as well. Thus, the major benefit of unions, ensuring employee rights, is largely taken care of by the legal system and standard western corporate thinking. So, what do unions do with the extra power in their hands? Most just hold the status quo – they ensure that their workers are paid adequately for their services and that they are treated well in the workplace. However, the odd one abuses that power. The CAW is notable here – representing overpaid employees who do simple, but soul-crushingly tedious work and refusing to give up anything significant even as the companies their members represent risk going under.

However, the overarching point of this article is correct – unions are a minor aspect of the current recession. At worst, they’ve put more pressure on the Detroit Three, but it was still the companies who put themselves in that situation. At best, the good ones have ensured that the middle class was strong enough that those who didn’t splurge and buy stuff they didn’t need with money they didn’t have will be able to ride this thing out without a problem.
Mike T.

It’s an unanswerable question because we don’t know the extent and speed with which business will erode current worker rights.

Mike T.

…if unions were eliminated.

http://www.lichtman.ca Jeremy Lichtman

Glad I’m in IT. I’m not anti-union, but everything said and done I like being in an industry where union vs management doesn’t factor in so much.

Lincoln

I wonder if the people at Nortel who are being laid off are feeling good about being non-unionized…

Bluescot

Being laid off is a negative regardless of union affiliation. It is normal for companies to fail & new ones to replace them. It is not normal for governments to adopt the "too big to fail" attitude & prop up companies that the free market have determined to be failures. Unions are gouging away the rights of individuals who have made employee/employer contracts that are then supplanted by union labour takeovers. How quickly you toss that aside & talk about a gang of marxist thugs forcing an employer to pay wages he does not agree with. You are no better than organized crime.

Bill Simpson

I live through the height of union power in the UK in the seventies and it was not pretty. At the time it was easy to bash unions and I joined in.

But on reflection, I have come to the conclusion that the health of any particular company is actually not related to the presence or absence of a union. And when I say “health”, in include a relatively content workforce with a mutually acceptable level of compensation.

The main factor is the management of the company. Well managed companies get along fine with unionized workforces as well as ununionised workforces. The ability of the union to help or hinder the company and to help or hinder the interests of its members is entirely dependent on its relationship with the management, and since management always sets the tone, then it is management that drives this relationship.

So the question you pose is the wrong one. Unions are just one of the variables in a company that management must manage. Bad management will make this one of the curses the company must suffer, good management will make it one of the blessings it enjoys.
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http://www.clac.ca Dick Heinen

A polarising debate on the pros and cons of unions reflects the outdated attitudes of many businessman and Old Labour union leaders towards labour relations. It completely misses the fact that there is a “third way”. It is a model of labour relations that modern and progressive labour unions such as CLAC have employed to great success.

Based on principles that promote the values of respect, dignity, fairness and integrity, CLAC’s approach to labour relations stresses membership advocacy, collaboration and the long-term interests of the workplace community. We focus our attention on our members’ needs, not in telling them who to vote for or spending their money on partisan politics. Where possible, we work collaboratively with management because that achieves the best results for our members.

It is precisely in these current troubled times that unions become more important than ever, especially for protecting workers from the effects of change and leading their participation in the solutions that inevitably need to be found.

In this rapidly changing world, with corporate bailouts, growing bankruptcies and rising unemployment, unions have to act in the best long-term interest of their members, not focus on short-term gains alone. Change needs to be directed and managed to meet the best interests of workers.

Unions are in a unique position to tap into the workers’ knowledge of the workplace.
Unions are the ones who need to lead because they have the confidence of the workers and the trust necessary to make change occur.

Unions are an important part of a free enterprise democratic society. The real question for workers is not whether they should join a union but what kind of union best represents their values and can provide the best representation for them.

Bluescot

What a crock. A company is not a collaborative system unless you all own equal shares. The company risks their money, they get to call the shots. Good companies attract better employees with better production and do well by it. But eventually, the union demands it have a say in things that are none of it's concern. There is no reason for a union. Don't like the working conditions, leave. Start up your own company and then let everyone decide how they will run your company. Good luck with that.

hosertohoosier

“Before unions, the power of a company was almost entirely in the hands of its owners and managers, with the workers being practically impotent. The introduction of unions shifted the balance, giving more powers to the workers and serving to stop employee abuse. This was, undoubtable, a good thing for the workers and the economy due to the unions’ contributions towards expanding the middle class.”

Isn’t this argument rather ridiculous? Most professionals are non-unionized, and yet do just fine thank you. Indeed, 70% of Canadians are not in unions, as are similar proportions of Germans, Brits, Americans, Japanese and so on. All of those countries have a middle class,

Unions only seem like a good idea on the micro level – you could imagine that in your specific situation a union negotiates a better wage. However, unions also limit the flexibility of the labor force – often making unemployment higher than it would be otherwise. That is part of how, for instance, TTC drivers in Toronto can make over 100,000 dollars – the union restricts membership. In the United States, organized labour also played a rather significant role in excluding African Americans from the workplace. As for those higher wages – they result in higher prices. When everybody gets “higher wages”, and then higher prices, all you get as a result is inflation.

Should unions be banned? No. But resorting to 19th century-style elections is hardly a proud day for democracy or for the labour movement.
Kevin

If politicians believe that card signing is a better replacement for a secret ballot, why don’t they hold elections this way? This is a ridiculous idea that will punish workers who don’t want a union, and allow unions to become omnipotent. Example, “Sign this card or I’ll beat you.” “Ok, where do I sign?” Then when you don’t sign and the union comes in anyways, you are ostracized at work. And what do you get for that? The opportunity to pay someone like Ken Lewenza 2.5-3% of you wages as union dues. For this they will “fight for the rights of workers”. Unions are neither a blessing nor a curse. As someone mentioned previously, well managed companies work well in either environment. As for auto workers, their wages and benefits do play a portion in the the cost of a vehicle. However, isn’t that what most people aspire? Good wages and benefits? No forced Management to acquiesce to the demands of the union. A child will ask for everything in a store, it is the parents responsibility to say NO! So blame management, it is their job to make sure a company remains viable, not workers.
Rob

Well I think the real danger without unions, is that an employee has no recourse if abused or treated badly. Without a union, an individual would have to get a lawyer and do the paperwork to go up against the offending company, something most if not all lower class or even middle class workers would not be able to afford, or bother with.

So I think the danger is, we'd slide back to the way they did things in the industrial revolution, with sweat shops etc., albeit very slowly.

Everyone assumes people are nice, we aren't…we will abuse eachother for gain, and even to a criminal level if not monitored.

I wish it wasn't this way, and that people respected each other, but we don't. Companies in a non-union world would pay the same rate for overtime, work people to death, and underpay them…and indeed would probably expose them to dangerous situations.

Since there is no recourse for the average person (what are they going to do sue? They don't have the money for a real lawyer or to survive if they leave their job). So they are basically forced to just quit, and the company that is endangering it's workers continues on, with nobody willing to say anything.

Humans are trash, from top to bottom, and only with constant vigilance and regulation can we keep abuse from happening. We will eat eachother alive if given the chance, and step on eachothers skulls to get where we want to be…end of story.

Bluescot

Whining will not change anything. Try growing a pair and take responsibility for yourself. Let the losers work for that loser company. Go out and get a better job or start your own.

Nickelthrower

Greetings,

I am of the opinion that we should not take this author seriously. This author's errors of omission are so staggering as to render the entire blog as irrelevant. The most glaring is "Our problems are rooted in the fact that ordinary Americans spent wildly beyond their means for more than a decade. . ."

Americans have been going deeply into debt because wages have been falling since the early '70's. Americans are not spending wildly but borrowing money to maintain the standard of living they had in the '60's when a household had only one wage earner. For example, my father worked for G.M. and we lived in a very nice home and my sisters and I went to private schools. My mother didn't work and we were able to afford yearly family vacations. We lived no better than any of our neighbors.

The truth is that the rich have been getting richer, much richer as a matter of fact. The top 10th of that 1st percent of richest Americans could easily pay off our National Debt with the LIQUID Assets they have accumulated. Furthermore, Wall Street paid itself 135 Billion Dollars in Bonuses at the end of 2010. 135 Billion would be more than enough to make up our state deficits. We see our parks closed, our fire stations shut down, our teachers fired and our prison populations forced to live like animals all the while these guys pay themselves billions with the money they stole from us.

How dare the author put any of the blame on the American people. We're not a nation of economists. Everyone from the President all the way down to the lowliest Real Estate Agent fed us a lie in order to enrich themselves. We were set upon by a hoard of thieves.

Someone tell me I'm not correct? I dare you.

Bluescot

Stop the whining and stop worrying about how everyone else is doing. People keep buying what some people are selling & they are doing well. Don't buy from people who are not offering you any value. Elect politicians who will not promise to give you everything you want. Your country is headed to the toilet for the same reason every other country is. Huge bloated bureaucracies of over-compensated workers with more benefits and pensions than the people who support them. You pay $1 in tax for .50 worth of service. Municiple leaders spending money outside their jurisdictions then demanding money from the feds to do their sewers and roads. The voters voted in the leftists and their ideology. This is what you are paying for now. Get used to it. Tell your governments to fund essential services only or be prepared to go without.