UAW Strike at GM

[bpesta22]

But if the company was already struggling, and needed to scale back its pension plan in order to remain in business, the alternative would have been for the employees to look elsewhere for retirement benefits anyways when their company goes bankrupt.

the federal government's PBGC has these pensions insured and will have to pay them if GM can't. It won't be 100%, but still that's a lotta money.

I think we'll see the government save GM before it goes under.

 

[bpesta22]

I think people give unions too little credit. I teach lr in sections of various management courses. The best data show that being in a union results in about 10% better wages and 20-30% better benefits relative to control group / non union firms.

Plus, unions indeed give people job security. Even stupid policies like "we're going to fire you if you even smoke at home" are legal in employment at will settings but would have to be negotiated in a union shop.

Plus, labor law has been fairly well anti union lately-- most people here probably know that the striking UAW workers can be permanently replaced as soon as they decide to strike.

Also, unions seem to insulate corporations from liability as many complaints are handled cheaply through the grievance procedure rather than in a court (so much so that many non-union firms are adopting union-like gp's to resolve their disputes in house / fast and cheaply).

Also, who's to say the auto worker is making too much money. Ask them if they are? Granted in the long run a ripple effect of foreign competition might ruin GM, but would the average worker (here or in the UAW) be more concerned about the long term effects of the union on the company's ability to be competitive or how much money's gonna be in my pay check this week?

It seems to me like worker's engaged in concerted activity to bargain over better wages, hours and working conditions is not inherently evil.

 

[Francesca R]

It seems to me like worker's engaged in concerted activity to bargain over better wages, hours and working conditions is not inherently evil.

It isn't inherently evil. It is anti-competitive, but most economic agents would seek to remove the element of competition from their own endeavours as much as possible.

It is not correct to assume that (for example) a unionised worker seeks to maximise compensation and minimise their own effort, any more than it is correct to assume that a corporation seeks to extract maximum worker-output and minimise wage costs. The value of the ratio (compensation/input) and (output/wage cost) is not as important to either side as is maximising the numerator. Thus, a company wants--above all--the "best" workforce and may be happy to compensate above its competitors, and an employee wants--above all--a high income and may be happy to work harder than her peers.

Mediocre workers gaming the union system are in the same category as mediocre companies attemtping to save money by paying peanuts and withdrawing benefits. A stong bargaining position for either of these groups can be regarded as "not a good thing" from the perspective of their above-mediocre equivalents

 

[Segnosaur]

when the UAW manages to raise wages for their workers... it will cut the amount of profits that are returned to my mutual funds (and thus I will be financially poorer on retirement), and it will increase the cost of any vehicles I choose to buy in the future.

There's no absolute requirement that it do either.

Do you think the extra money that union workers earn (over and above what they'd earn if they weren't unionized) gets created from thin air? Does the extra money magically appear?

If you increase the costs of making a product, then something has to change... either reduced profit (and lower dividends, including for future retirees like myself) in order to maintain a constant price, or higher prices in order to keep the profits constant. The only other option is to try to reduce costs elsewhere which has likely already been done, since companies have a desire to maximize profits anyways, or for the jobs to be sent to another location where labor is cheaper.

 

[Segnosaur]

I think people give unions too little credit. I teach lr in sections of various management courses. The best data show that being in a union results in about 10% better wages and 20-30% better benefits relative to control group / non union firms.

Nobody is claiming that people in Unionized jobs don't earn better wages/benefits, or have better job security. The question is whether having those unionized workers earing those wages/benefits is A) morally fair, and B) better for society as a whole.

Heck, people in the Mafia probably earn better wages than non-mafia people; that does not mean that the existence of the mafia is somehow better for society.

Plus, unions indeed give people job security. Even stupid policies like "we're going to fire you if you even smoke at home" are legal in employment at will settings but would have to be negotiated in a union shop.

And if an employee's skills and/or productivity are so great that it is worth employing them (despite the fact that they smoke at home) then the company that does fire them will suffer, and the employee should be able to find employment at a smarter company elsewhere.

Also, who's to say the auto worker is making too much money.

The laws against collusion.

A company may want to offer $10/hour to work on an assembly line. If nobody wants to work for those wages (perhaps because the job is dangerous, or boring) then the company will increase its offering (to lets say $20/hour) until it can get enough people to fill its necessary positions. That's the law of supply and demand.... that's how much money that should be considered a 'fair' wage.

If unions get involved, they may demand $30/hour. That's more than what the market wanted to pay, and its more than the work is worth (from the perspective of the free market.) Unfortunately, because of labor laws, the company may be forced to hire people at that rate because they do not have the option of hiring outside the company.

Put it this way... look at how many people accuse the gas companies of price fixing. Seems like everyone wants that investigated because they don't think people providing something should work together to artificially inflate their prices. So why are we accepting such price fixing from labor unions who are artificially inflating the prices of their labor?

It seems to me like worker's engaged in concerted activity to bargain over better wages, hours and working conditions is not inherently evil.

Hey, I have no problem with workers banding together to bargain over better wages. What I do have a problem with is companies being forced (through labor laws) to hire unionized labor.

If a group of workers felt that they had skills valuable to the company and decided to band together during their negotiations, I'd find that acceptable. However, the company should also have the option to decide whether those workers (as a group) had skills valuable enough to hire them all, or whether they think they can get better productivity (work accomplished per dollar spent) by hiring individuals outside of the union.

 

[JoeEllison]

Do you think the extra money that union workers earn (over and above what they'd earn if they weren't unionized) gets created from thin air? Does the extra money magically appear?

If you increase the costs of making a product, then something has to change... either reduced profit (and lower dividends, including for future retirees like myself) in order to maintain a constant price, or higher prices in order to keep the profits constant. The only other option is to try to reduce costs elsewhere which has likely already been done, since companies have a desire to maximize profits anyways, or for the jobs to be sent to another location where labor is cheaper.

Somehow, you managed to avoid one glaringly obvious place to save money... you, and everyone else who buys into the whole "free market" nonsense.

 

[Segnosaur]

Somehow, you managed to avoid one glaringly obvious place to save money... you, and everyone else who buys into the whole "free market" nonsense.

Once again... please explain where you think this magical money will come from.

 

[JoeEllison]

Once again... please explain where you think this magical money will come from.

There's no magical money. I'm talking about slashing paychecks and bonuses and stock options and retirement packages... for the executives. The executives are to blame for the company's losses, and yet they have benefited while losing money and slashing jobs and benefits.

 

[Segnosaur]

There's no magical money. I'm talking about slashing paychecks and bonuses and stock options and retirement packages... for the executives. The executives are to blame for the company's losses, and yet they have benefited while losing money and slashing jobs and benefits.

Ah, that old myth... that somehow slashing executive pay will somehow make everything better...

Lets see... according to the American Federation of Labor, the CEO of general motors earned approximately $11million. Sounds like a lot (and hey, I'd have no problem if his compensation were greatly reduced.)

But lets put that into perspective: There are 73,000 UAW employees at GM. Even if the CEO earned nothing, that would only give UAW employees an extra $150 per year. The average wage of a GM employee is $26/hour. That works out to a pay raise of only about 0.4% per year.

Or here's another way to look at it... 73,000 employees earning $26/hour, 7.5 hours per day, 200 days/year comes out to $2.8 billion. (And that doesn't include health care or retirement benefits.) The CEOs compensation is $11million. That works out to 0.4% of the total salary cost.

So, before you go assuming that somehow slashing executive salaries will allow companies like GM to give high union labor while keeping prices low, think again... the numbers aren't in your favor.

http://www.aflcio.org/corporatewatch/paywatch/ceou/database.cfm?tkr=GM&pg=1
http://www.lsj.com/apps/pbcs.dll/article?AID=/20070918/NEWS03/709180311/1001/news

 

[bpesta22]

The closed shop-- you must be a union member to get hired-- has been illegal since the taft hartley act of 1947.

The only rule today, and this applies only in non-right to work states, is that anyone can be hired, and you don't have to join the union, but to keep your job, you must pay dues.

So, I don't think it's true that any company in america has to hire only unionized workers.

 

[ZirconBlue]

The closed shop-- you must be a union member to get hired-- has been illegal since the taft hartley act of 1947.

The only rule today, and this applies only in non-right to work states, is that anyone can be hired, and you don't have to join the union, but to keep your job, you must pay dues.

So, I don't think it's true that any company in america has to hire only unionized workers.

So, you have to pay dues, but you don't have to "join"? Ooookay. Why would anyone do that?

 

[bpesta22]

So, you have to pay dues, but you don't have to "join"? Ooookay. Why would anyone do that?

To keep their job. There's only one way a union can ever get you fired (which if you think about it, is most odd since the U represents the workers, not management). That reason is for not tendering dues.

My employment is covered by a union. I have no right to bargain over wages personally (it technically would be an unfair labor practice for me to ask my boss for a raise!). I don't represent myself, the union does. That said, I'm not a member of the union.

To keep my job, I must pay dues. I don't get to vote on the contract, or be an officer, but I will not be fined by the union if I ever speak out against it, or try to decertify it down the road. Unions have been pretty good lately at suing members who don't pay fines, and securing judgments against them.

Another potential benefit to not joining-- though I don't do it-- is to request to pay only "fair share fees". This would be some amount less than regular union dues (as unions can only charge non-members dues related to $ the union spends on negotiating and organizing, but not political activities).

This arrangement also lets people who are philosophically opposed to unions opt out. The right to refrain is as important as the right to form unions. But, that creates a free-rider problem-- a few non dues paying members would get all the benefits of collective bargaining, paid for by other employee's dues. To avoid the problem, SCOTUS has ruled that in a union shop, if you want to keep your job, you don't have to join the union, but you do have to pay at least fair-share dues.

The Taft-Hartley, though, gives any state the right to be more strict here, and so about half the states have passed right to work laws which remove union security. In a RTW state, the union can't force you to pay dues as a condition of employment. Unions aren't very strong in right to work states...

I think you might be slightly confusing the terms: In a closed shop, you can't even apply for a job unless you are already a member of the union. This is illegal (except in construction).

In a Union/Agency shop, anyone can apply for the job. Once you get hired, you have 30 days to join the union (or at least pay dues) or the union can get you fired. This applies only in non-right to work states though.

 

[JoeEllison]

Ah, that old myth... that somehow slashing executive pay will somehow make everything better...

Lets see... according to the American Federation of Labor, the CEO of general motors earned approximately $11million. Sounds like a lot (and hey, I'd have no problem if his compensation were greatly reduced.)

Sounds like $11 million too much, considering the fact that the company is struggling. Why is he making double what he made a few years ago? How many years of sort of compensation across the board, that could have been invested into benefits and improvements that would have kept the company competitive?

 

[Segnosaur]

Sounds like $11 million too much, considering the fact that the company is struggling.

Hey, if you want to argue that some executive salaries are way too high, I'd probably agree with you. (Although the GM executive is far from the worst case I've heard of.)

But your argument was that unions don't necessarily increase costs/decrease profits since they could recoup those losses through executive salary cuts. What I've done is demonstrated that that is not the case since executive salaries (as large as they are) are simply not significant when compared to the wages/benefits paid to the workers of a large company.

So, lets face it... you made a claim (without facts), I provided the facts that showed you were wrong... time for you to either admit your mistake or actually provide facts supporting your claims.

 

[Segnosaur]

The closed shop-- you must be a union member to get hired-- has been illegal since the taft hartley act of 1947.

The only rule today, and this applies only in non-right to work states, is that anyone can be hired, and you don't have to join the union, but to keep your job, you must pay dues.

I did recognize that you don't have to actually join the union in a lot of places but would still have to pay dues. (I'm in Canada, so the labor laws are a little different.) In fact, in a previous post I pointed out how I was in just such a position; a government job I worked for was covered by a union (and I had to pay dues), but I did not join the union because of my philosophical disagreement.

However, to many people, the fact that they still have to pay union dues does provide more union power than they should have.

Secondly, even though union membership is optional, in practical terms the unions do have the ability to shut down production. So while the company may not be a "closed shop", many places still virtually function like one.

Lastly, are you sure that paying union dues is the only restriction? Any place I've worked that has been a union shop, the employer could not offer alternative wages/benefits to non-union members. (In other words, they had to follow the contract layed out by the union even though some people were not union members.) You yourself said that you have no right to bargain over wages... that seems like a pretty significant restriction. (After all, part of my criticism over unions is that it limits the ability of employers to base pay and benefits on the basis of merit.)

 

[bpesta22]

Good points Seg-- I dunno anything about labor law outside the US.

The union, when certified, is the exclusive bargaining agent for all employees in the unit (which would include both union and non-union members). So, the union speaks for you, even if you don't join.

But, the union has a duty of fair representation (or risks a potentially costly lawsuit)-- for example, they have to fairly process grievances filed by non-union members.

I agree too that some unions may be strong to enough to influence the whole industry in terms of who gets hired. The UAW might be the best example. I'm pretty sure their contracts with the big 3 now contain clauses like: Ford agrees to buy parts for production only from other union firms.

So, if you're a small company making rear view mirrors for ford, you likely can't risk losing ford as a customer, and you are welcoming union organizers in with open arms.

Since Union membership has declined big time over the last 50 years (from a high of about 35% in the private sector in the 1950s til about 9% today!) union leaders are starting to come around. Many unions now will negotiate pay for performance type deals (whereas in the past, all employees were considered equal and seniority ruled the day). Unions prefer gainsharing type plans where the bonus-- if reached-- is awarded to all the members equally versus, individual level incentive plans that id who is a good worker and who is not. Also, seniority now alone typically might get a worker only to the midpoint of his/her pay grade. If you want to make more than the market wage, you gotta perform.

I didn't join my union because I'm in the department of management, and it makes no sense to me for Management to be in a Union, in any context. Plus, I think our specific union is weak.

I probably would classify myself as pro-union though, because I think most people vastly underestimate the good that unions have done in terms of wages, hours, working conditions, benefits and job security. Employment at will scares the hell outta me!

 

[DaChew]

Hey, if you want to argue that some executive salaries are way too high, I'd probably agree with you. (Although the GM executive is far from the worst case I've heard of.)

But your argument was that unions don't necessarily increase costs/decrease profits since they could recoup those losses through executive salary cuts. What I've done is demonstrated that that is not the case since executive salaries (as large as they are) are simply not significant when compared to the wages/benefits paid to the workers of a large company.

And it's also important to remember that much of executive pay, this certainly applies to Rick Wagoner, is through the stock option vehicle. There is no outflow of money from the company to the executive unless the stock performs. The base salary for execs is typically far lower than anything their performance bonus plans return.

That really doesn't mean a lot anyway. Back in the 80s when Chrysler melted down, Iaccoca took no salary at all and still made millions.

 

[Francesca R]

And it's also important to remember that much of executive pay, this certainly applies to Rick Wagoner, is through the stock option vehicle. There is no outflow of money from the company to the executive unless the stock performs. The base salary for execs is typically far lower than anything their performance bonus plans return.

Really? I thought it was in the shares themselves (restricted for varying periods so they can't be sold straight away), with a relatively small part coming from options.

If executives are paid in shares, there is a "flow" (a real expense) to the company regardless of whether the share performs.

 

[Segnosaur]

The union, when certified, is the exclusive bargaining agent for all employees in the unit (which would include both union and non-union members). So, the union speaks for you, even if you don't join.

Don't you think this is a rather significant rule? You claimed earlier that under the Taft-Hartley act the only requirement is that non-union members must continue to pay union dues. But if the employers must legally treat non-union members exactly the same as union members (when it comes to wages/benefits), then the advantage to both the employer and non-unionized employee are greatly reduced.

But, the union has a duty of fair representation (or risks a potentially costly lawsuit)-- for example, they have to fairly process grievances filed by non-union members.

Seems like a rather 'artificial' benefit of unions to me. Is there any guarantee that complaints from non-union members will be treated fairly compared to union members? Or that the involvement of the union won't cause additional overhead when trying to solve problems?

...Many unions now will negotiate pay for performance type deals (whereas in the past, all employees were considered equal and seniority ruled the day). Unions prefer gainsharing type plans where the bonus-- if reached-- is awarded to all the members equally versus, individual level incentive plans that id who is a good worker and who is not. Also, seniority now alone typically might get a worker only to the midpoint of his/her pay grade. If you want to make more than the market wage, you gotta perform.

These ARE beneficial developments, but the questions are:

A) do unions actually support them or are they just putting up with them? (If they don't support those developments, even though they're beneficial, that doesn't exactly give credibility to the union)
B) do the changes go far enough? Granted, tying bonuses/wages to performance is a good start, but does management still have enough flexibility to hire/fire people? Is the lower end of the salary scale low enough?

I probably would classify myself as pro-union though, because I think most people vastly underestimate the good that unions have done in terms of wages, hours, working conditions, benefits and job security.

Again, the idea of 'good the unions have done' has to be questioned... good for who? I'm sure there are plenty of stories of unions successfully fighting for wages/benefits from employers. However, the silent stories you won't here are:

- People who could have purchased product X, but could not because union-negotiated wages put the cost of the product outside their reach, or who could afford the product but end up with less money in their pockets because of it
- People who might have been hired by a company, but were not because the union-negotiated demands were too high for what the company felt they were worth
- People who have the desire to make additional efforts at their job (in the hopes of getting higher wages) but cannot because contracts negotiated with the unions will not reward their efforts (This is something that affected me personally...)

Put it this way... how exactly is having unionized auto workers/government workers/etc. a benefit to me, when I'm not a member of any union (and not even working in a union shop)?

 

[jimbob]

Firstly, I work at a site where there is a union membership, but I am not a member of that union. In Britain in the 1970's I would say that unions were too strong.

Fnord, Balrog666, et al. would you say that Unions have ever been forces for good?

I would.

I would say that the Tolpuddle Martyrs were right, and were fighting economic oppression.

Even in the US in within the last 100 years, I would say that unions have been beneficial to society.

The operation of counterveilling power is to be seen wih the best clarity in the labour market where it is most fully developed. Because of his comparitive immobility, the individual worker has been highly vulnerable to private economic power. The customer of any particular steel mill, at the turn of the century, could always take himself elsewhere if he felt he was being overcharged. Or he could exercise his soverign privilege of not buying steel at all. The worke had no comp[aritive freedom if he felt he was being underpaid. Normally he could not move and he had to have work. Not often has the power of one man over another been used more callously than in the American labour market after the rise of the large corporation. As late as the early twenties, the steel industry worked a twelve-hour day and seventy-two-hour week with an incredible twenty-four-hour stint every fortnight when the shift changed.

From "American Capitalism The concept of Counterveilling Power" by JK Galbreith (revised edition 1956, pelican imprint 1970 pg 128)

"As late as the early twenties, the steel industry worked a twelve-hour day and seventy-two-hour week with an incredible twenty-four-hour stint every fortnight when the shift changed."

That has to have been pretty unjust, and a social wrong. (And I'd guess that implies that any accidents must have mainly "damaged" workers, but not equipment or downtime).

I'm sorry if I am attacking a strawman, but my reading of some of the posts suggested an attitude that "Unions are wrong", so please correct me if that is not the case.


BTW: the key point of "American Capitalism" is that it was successfull because there was not untrammeled competition, but "oligolpolies" where strong market positions allowed investment, but these were kept from monopolistic power abuses by (more or less effective) counterveilling systems (legislation, competitors, large buyers, etc).

He also mentioned (footnote pg 144) that "the concept of a 'buyers' and a 'seller's' market 'has' [had?] no place in classical formal economics."

I imagine that this has changed since then.