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  • Unions for the 21st Century

    Posted by Shannon Love on November 17th, 2004 (All posts by )

    In this post, Lexington Green talks about the Retro-Left’s infatuation with old-style labor organization and law. Unions are a 19th and early-20th century solution to the problem of protecting workers and enhancing overall social and political stability. One can argue whether they represented the best solution in the past, but I don’t think that in the modern economic climate anybody can argue that they remain the best solution going forward.

    When I was young a small business owner gave me a really good piece of advice when I headed out to get my first job off the farm. He told me that even though I would be working for somebody else I should always think and act as if I was running my own business that sold labor to my employer, whom I should think of as my business’s customer. Thinking of the employer/employee relationship this way changes the entire psychological dynamic. You view your employer more as an equal and you begin to think of ways that you can add value to your services instead of thinking of ways to wheedle more benefits from your feudal overlord. I’ve always thought of myself more as president of Shannon Love Inc., fine provider of scut labor than as an oppressed peon.

    The real problem with unions in the contemporary world is that they are basically an economic drag. Traditional unions do not add any value, in fact, they seek to reduce the value of labor by driving up its cost. This works best when the employer is a monopoly (like government) or a quasi-monopoly (like mid-20th century automobile manufactures), but it fails miserably in a competitive environment. Unions need to evolve into a form that protects workers while adding value. They need to make union labor more valuable to employers, not less.

    I think unions should think of themselves as employee owned companies that sell the labor of their members. These neo-unions would be self-contained HR departments like some temp firms are now. The neo-unions would be paid like vendors and in turn would provide salaries and benefits to their members. They would be in charge of hiring and firing of their own members. Members would be protected from employer abuse while at the same time being accountable to their fellows. Poor workers would get ejected from the neo-union while good workers would prosper and command higher incomes. Better yet, such neo-unions could function in the free market without resorting to government coercion and threats of violence as old-style unions must.

    Neo-unions could start small, perhaps by functioning like bonding agencies. Individual workers could increase their value in the market place by “bonding” themselves, by submitting to things like drug tests, background checks, credit and work-history checks, all performed by the union before the individual went looking for a job. Right now a reliable person with a good history has no way of distinguishing himself from a bullshit artist in the market place. Neo-unions could help with that a lot. Over time they could acquire more functions.

    Traditional unions were based on the idea that workers shouldn’t have to compete in the market place. Competition was for owners only. That era has long since passed. People interested in bettering the lives of the working class need to move on as well.

     

    23 Responses to “Unions for the 21st Century”

    1. Lex Says:

      Shannon, this is a cool idea.

    2. Ken Says:

      “I think unions should think of themselves as employee owned companies that sell the labor of their members. These neo-unions would be self-contained HR departments like some temp firms are now. The neo-unions would be paid like vendors and in turn would provide salaries and benefits to their members. They would be in charge of hiring and firing of their own members. Members would be protected from employer abuse while at the same time being accountable to their fellows. Poor workers would get ejected from the neo-union while good workers would prosper and command higher incomes. Better yet, such neo-unions could function in the free market without resorting to government coercion and threats of violence as old-style unions must. ”

      That’s pretty much how my union… er, consulting firm works.

    3. Paul Bixby Says:

      I have wondered about this for some time. I got into a discussion with an aunt of mine and separately with a co-worker about their refusal to shop at Wal-Mart and Sams because they are “hostile” to unions. They accepted as axiomatic that unions were the best answer to employee/employer relations.

      Because of those conversations, I was trying to come up with a value-addition for unions today. With so much motion toward information technologies in the labor market, which are often treated as management-level employment to exempt the workers from union-eligibility, I see unions as decreasing in value rather than increasing.

      The problem is that most non-small businesses offer tremendous benefit packages as a draw for employees. This is a result of organized labor’s efforts for sure, but with the standard set, there isn’t much left for the AFL-CIO to do other than impede business flexibility and increase the cost of employment (why would a business move toward offshore employment again? Gee, I have NO idea). I think the risk of backsliding is fairly small, once the standard of benefits has been achieved. Organized labor did such a fine job, in fact, that companies now compete for labor using the benefits package as a temptation.

      So now, the benefits package is a negotiation point when Company X is trying to enter into a contract with Shannon Love, Inc. or Paul Bixby Enterprises, LLC to provide the service of employment. I think the corporate culture has already subconciously shifted to think in the terms of dealing with employees as separate businesses and to operate in good faith as such.

      As for the Neo-Unions, as you point out, temp agencies already work this way, but so do largescale contracting companies like Prostaff, TekSystems and Comsys. When I got laid off in November of 2001, I was actually contracting already and my very first action was to sign up with as many contractors as possible. I was entering into agreements with these companies to provide my services to their clients on an as-needed basis (6 months to open-ended long-term). I was working at a Major Insurance Provider, but I was being paid by ComSys and was getting medical and other benefits from ComSys’s provider-partners. I was whiz-quizzed and background-checked by ComSys before I could interview with MIP. I was not allowed to go to MIP-meetings, employee events or to work from home because I was a contractor. However, at the end of 7 months, MIP wanted to hire me. I ended my contract with ComSys and entered into a new one with MIP (by becoming their employee). First ComSys bought my services and resold them, and then MIP cut out the middle man and bought my services directly from the manufacturer. With such a big move toward independent contracting (see the Household Labor Survey compared to the Payroll Survey) and with at-will labor, companies have already been conditioned to believe that they are in competition with other companies for the services provided by employees. If a neo-union can tap into this unstated mentality, it will prosper. However, I think what you describe as a neo-union is actually a contracting firm.

      In any event, I agree with you that Old Labor has probably out-lived its usefulness and very few real laborers actually buy into the Marxist Dialectic anymore. We have come a long way from mandatory 80 hour workweeks and 5 cents an hour pay.

    4. incognito Says:

      Fantastic idea Shannon. Maybe the free market will evolve temp agencies into quasi neo-unions as you outlined – ie give benefits to its employees much like a consulting firm as Ken pointed out. The problem is of course unions tend to target lower skilled labors, and these temp agencies would have to balance the cost of giving benefits vs profitability.

    5. mondello Says:

      Unions are a lot like organized crime in that they don’t like competition. Sometimes unions vote their leaders out of office, and sometimes they arrange for other forms of retirement-if you know what I mean.
      Competition can be retired in the darndest ways!
      But the idea is great if you have somebody liasing with established unions to head off sneak attacks.

    6. Wade Says:

      I like the neouninon idea – among other features it would help reduce the cost of finding talent, a service which is needed by companies as demonstrated by the fees they pay to headhunters.

    7. Jonathan Says:

      I don’t get it. Take away the govt-sanctioned labor cartel, and the license to use violence to enforce it, and what’s left — an employment agency? They already exist in a variety of forms, providing different packages of services in different business sectors for different groups of workers. What you’re arguing for is the abolition of unions, which is fine by me but let’s call it what it is. Transforming unions into employment agencies after they cease to be unions is a separate issue, desirable though it might be.

    8. DS Says:

      Organized labor is an old, bad idea that needs to be thrown onto the trash heap of history with it’s big, bad brother communism.

      It’s ironic that somebody mentioned unions and the mob in the same sentence…..

    9. Wade Says:

      Jonathan – maybe that’s why the idea seems so appealing – ha!

    10. Shannon Love Says:

      Jonathan G ewirtz,

      A neo-union would differ from an employment agency in that the employees would own and manage the union. The neo-union would provide the traditional protections of union against employer abuse while at the same time protecting the employer from the risk and liability of bad workers.

      I can think of other solutions. For example, with the internet it would be easy to maintain web sites that track the employment practices of individual businesses. Perhaps we could create a system that tracks complaints against the employment practices of businesses in the same way we know track their credit rating.

    11. incognito Says:

      On the other hand, if you turn unions into quasi temp agencies, you still have the problem of who will lead. When you get a consensus driven feel good project, I always get a bad feeling there’s plenty of room for failure/abuse. Consensus is a terrible way of going about starting something new. You need someone with a vision to really drive it, which leads to ownership problems. Someone will want to lead, and someone will feel slighted. Then you worry about profit sharing, etc etc. It’s part of any new partnership, but then again something like 90% of partnerships fail.

      Profits will also determine how successful any neo-union is at providing benefits. If you canít stay in the green, you canít provide the means. Traditional unions work because they have a monopoly on labor. Regardless of organization, benefits are an added cost of doing business. In a free market, youíll always have guys who try to undercut or scalp a few points. Added to that, Iím guessing the guys who are good will be tempted to strike out on their own. Ultimately they will look at the bottom percentile and think of the productivity advantage they have. They go it alone, and the union is left with the under achievers.

    12. mls Says:

      One can argue whether [unions] represented the best solution in the past, but I don’t think that in the modern economic climate anybody can argue that they remain the best solution going forward.

      You clearly have much more faith in the left than I do. I think the left would call your idea outsourcing.

    13. Michael Hiteshew Says:

      Traditional unions were based on the idea that workers shouldn’t have to compete in the market place.

      Actually, I think traditional unions were based on the idea that there is power in numbers.

      Think about it. Employers keep track of the market rate being paid for a particular job. In those years and those locations where they were the primary employer, they could ignore even that moderating influence and offer jobs, at whatever pay and under whatever conditions they set on a ‘take it or leave it’ basis. They use the power of numbers, by way of market conditions, to minimize labor expenses. They simply played one potential employee against another. How hungry are you? How little are you willing to work for to feed your wife and kids? Don’t get sick or you’re fired.

      By unionizing, workers were seeking to balance the power of employers by banding together and setting minimum labor rates and working conditions below which they as a group would simply refuse to work.

      I won’t argue that once empowered, some union members and leaders became corrupt. What’s new about that? Show me any group of people holding power where corruption hasn’t existed. Show me any group of people holding power where the leadership doesn’t seek to maximize their financial return.

      I’ve never belonged to union but I don’t kid myself as to the reasons they came into existence.

      It seems the real question is whether unions are economically viable in a worldwide economy. If a computer can be built as easily in Indonesia as Illinois, the folks in Illinois are going to have a hard time demanding higher wages than Indoneseans. What effect does that have on our economy? Well, certainly people get cheaper computers. That’s a plus. But the folks previously employed in the computer manufacturing business may longer be able to afford one. It’s easy to say, “Gee, tough break for them, but good for me, eh?” What makes any of us think, though, that what we’re doing cannot be done far more cheaply by someone in Argentina or Liberia where the wages are only a few percent of what they are here?

      Thing is, I know this phenomenon has been ongoing since the market existed. What’s new is the ease with which goods and capital can move around the globe. With countries like China and India emerging into the global market we could see massive shifts in the standard of living of the West as a new balance is struck. Wages in China and India will climb and wages in the West will fall until a new equalibrium is truck. It ain’t gonna be pretty. Inevitable, yes. Pretty, no.

    14. Ken Says:

      “Think about it. Employers keep track of the market rate being paid for a particular job. In those years and those locations where they were the primary employer, they could ignore even that moderating influence and offer jobs, at whatever pay and under whatever conditions they set on a ‘take it or leave it’ basis.”

      Which is, of course, the market rate. Without cheap and fast transport, the market rate for a job can vary wildly from place to place.

      “They use the power of numbers, by way of market conditions, to minimize labor expenses. They simply played one potential employee against another.”

      Yep. We call that “competition”. Happens all the time, in every market.

      “By unionizing, workers were seeking to balance the power of employers by banding together and setting minimum labor rates and working conditions below which they as a group would simply refuse to work.”

      Assuming, of course, that they were able to lock out competitors; otherwise, they’d refuse to work and the competitors would take their place. The effort to lock out competitors took the form of “labor unrest”, which was of course a euphemism for terrorist campaigns to discourage employers and non-union competitors from trading and thereby give themselves a captive market for their labor.

    15. Michael Hiteshew Says:

      Assuming, of course, that they were able to lock out competitors

      Ken, I know that occurred. Most of the folks I know who joined unions, though, joined voluntarily and happy to be in them. And of course there was pressure to join, so what? Is there not equal pressure within a business not to hire or pay anyone beyond the minimum possible rate? How is that different?

      “labor unrest”, which was of course a euphemism for terrorist campaigns

      That’s painting with a rather broad brush. All labor unrest is terrorism? It happened, sure, but union organizers and members were also occasionally targeted for violence by powerful business leaders and politicians.

    16. TangoMan Says:

      Traditional unions do not add any value, in fact, they seek to reduce the value of labor by driving up its cost.

      You’re shifting your frame of analysis here. Unions add plenty of value for the employees. We are all economic actors, and all on this blog fully know Smith’s maxim:

      …every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.

      I’m not a union member, and never have been, but I’m fully aware that there has to be a tension between employer and employee. Too much power in the hands of one side leads to a lot of problems.

      I think a lot of union bashing, and I’m not saying that that is what’s going on in this post, has to do with people misaligning their economic interests as consultants and employees to that of being an employer, and also having feelings of superiority. These are played out in the form of advocating cut-throat efficiency while they are benefiting from their marketable skills and being in the game. Being successful in the economic game some tend to think that the losers deserve no pity. What was interesting for me to watch was the economic comeuppance of many former highflyers I knew in Silicon Valley, who were the biggest libertarian, social darwinists I’d ever come across, as the forces of outsourcing started to sweep through the land. You live by the sword and you die by the sword. The tune of many has of late become more “nuanced.”

      Before you get any ideas about my being anti-survival of the fittest, take a look at where I usally blog.

      Anyways, I support Micheal Hiteshaw’s comments in that he brings a fuller understanding to this analysis.

      Don’t get me wrong – this very union bashing (they’ve provided plenty of fodder for people to bash as business has for its detractors) is part of the dynamic that I think is necessary but woe the day that unions are totally eliminated for then the economic power of the employer will be used by their advantage against the employees in another version of asymmetric conflict.

      I don’t think the analysis can be as simple as union=”competitors will eat your lunch” versus non-union=”competitive”. Bloomberg and BusinessWeek touched on this a bit last summer, and here is a site that reprints the BW article on the Wal-Mart vs. Costco comparison.

      In closing, unions, if properly managed, are in the economic self-interests of their members and are a valuable and necessary counter-balance to the economic and power concentration found in the hands of business. Compeition is good isn’t it? Competition isn’t defined as occuring strictly between businesses; it’s everywhere in our lives and that includes between management and labor.

    17. Robert Schwartz Says:

      Shannon: I don’t want to rain on your parade, but I have the feeling based on my hazy misundestanding of federal labor law, that your idea is not currently feasable. Which does not mean that it is not meritorious.

      The current sturcture of laws ans intitutions was built for a world that existed from the 1880s to the 1980s. It was a world where big companys ran big factories that employed lots of blue collar workers to make things.

      It is fading away now. The steel business has been liquidated. The airlines are going. The automobile companies will go soon.

      The unions were a political response to this world. In the modern world they seem to be clumsy and unappealing.

      The intermediary services that unions provided to employees are still needed. They need a new format and a new political expression. But, the laws that charted the old unions will have to change.

    18. Yehudit Says:

      Shannon is describing the way many job shops/temp agencies work now. I have freelanced as a graphic production artis, sometimes working for a job shop which hired me out to a large corporation. I went in to work at the corporation every day for 8 hours (sometimes more), filled out a time card for the job shop. They paid me by the hour, plus overtime if applicable, but made deductions as if I were employed (FICA, etc.) and if I worked for them for 6 mos. straight I would become eligible for their health insurance.

      They did not do as formal and lengthy an interview as if I were being hired fulltime, nor drug testing, but I assume some do.

      Lots of IT contract jobs work this way too.

    19. dick Says:

      Tango Man,

      I don’t think anyone really has a problem with unions that are properly managed. The problem is that for a long time unions have not been properly managed and have set up such an adversarial relationship with their own employees that they end up going against the wishes of said employees. Look at the political contribution situation. The unions are doing all they can to keep their own members fromhaving any say in what the union supports and what it does not. As a result you have the union supporting one candidate and most of their members voting for the other.

      Look at the things union officials get away with at the expense of their members. Remember the union official down in Florida who had his apartment and car all paid for by the union and also got a salary of over a million dollars besides. His union was teh Service workers union made up of the lowest paid employees in the workforce. Look at the positions the teacher’s union takes. They are in themselves probably responsible for more ill-educated adults than almost any group in the country and they are still out there pushing for protection for their least able teachers. Should that be the duty of the unions you support?

    20. TangoMan Says:

      Dick,

      There are people who feel that the collective power of unions runs counter to their worldview of meritocracy, so they are indeed advocating against the concept of unions. I think the ideal would be to have a meritocracy but when I look at the way of the world I think that there has to be a tension between labor and capital, simply for pragmatic reasons.

      As for the union abuses you document, they are indeed troublesome, but no more so than interlocking board directorships which reference each other with regard to compensation committess to create ever-rising conditions for executive pay. How often have we read of boards jigging the strike price on options that are underwater? How about political contributions and lobbying that take place on the corporate side of the equation? Both of these situations don’t favor my interests as a shareholder and are akin to the same disconnect that you mention about the union rank and file.

      My point is that unions serve the interests of their members, not the public and not the employers. Damn straight that there’s lots of featherbedding and inefficiency in the union ranks but the unions will have to survive or fail on how well they negotiate with the employers. Too much power in union hands will drive employers out of business and too little power will allow employers to squeeze employees harder. The power balance is crucial.

      I just think it odd to attempt to redesign union mandates from the perspective of the capital class.

    21. A Scott Crawford Says:

      The right of groups of individuals to assemble and form associations to promote or undertake a common cause is one of the most basic tenents of our political system. This includes labor unions.

      There is some confusion here, I think, over the nature of organized labor in the US.

      At heart there is a distinction to be made between the right of men to form organizations to promote their common exploitation of their own labor, and the corporatization and professionalization of said organizations. Organized Labor in the US today is way way way more than collective bargining… it involves a huge array of professional support services and tasks undertaken ON BEHALF of a unions dues paying membership BUT NOT by the members themselves.

      In this sense, Organized Labor has become independent of its membership. In fact it’s basically best understood as indistinguishable from an institutionalized service industry catering to various types of laborers who pay a percentage of their salary to a Union for a basket of professional services. Organized Labor is itself just a service industry, albeit one which holds a unique place in our socio-economic and legal system.

      The problem is that the white collar professional class that runs Labor Organizations has become institutionalized to the point that it no longer acts in the best interest of its membership, but rather in the best interest of the “Union” (with a capital ‘U’). So lets distinguish between “Unions” and their membership, especially regarding the big National and Internationals and Public Sector Unions, which are perfect examples of Orwellian Swine.

      The big issue in the Unions today is that they’ve been unable to keep up with other service industries, as well as with the corporations whose workforces they’ve patently misrepresented. Corporate America split off non-core divisions into new companies and adapted to technological and political change a decade or two ago. The Unions have yet to follow suit, which is why they seem like anachronisms.

    22. MatyaNoBaka Says:

      I think the biggest issue with unions today is that they are unaudited. They get to receive money directly from the workers they provide services for, and solicit donations from non-members. But how is the money used?

      There is a law that says union members must be given the opportunity to opt out of the political contribution portion of their union dues. But how much is that? How many are actually allowed to go through the procedure?

      Closed shop (cannot work here without the right union card) was once the biggest issue, because that really was a coercive power rather than the right of free assembly.

      But now the abuses stem mostly from total lack of accountability. Like any kleptocrat, it doesn’t matter how much they have the membership’s well being in mind. If no one can see the misappropriation of funds, there will be some misappropriation.

      It’s OK if the teachers’ unions promote wrong headed ideas on education, so long as their membership knows what is being said, for how much, and can gracefully decline to participate in that speech. It’s even OK if they back Terry McAuliffe’s property speculation. Provided the membership can find out how much was spent, and have a way to say no, probably by voting out the leaders who mis-appropriated the funds.

      Matya no baka

    23. Luke Lea Says:

      Damn! I’m really mad that I missed this discussion. My two bits are these: instead of negotiating hourly pay scales (which don’t specify the amount of work to be done) negotiate a share of the net product of the firm or facility in which the labor group works (net product is the sum of what currently includes profits and total employee compensation)with individual workers being rewarded by hours and a purely “nominal” hourly wage rate. That way, once the contract is struck, both labor and capital think alike: they want to produce as much value, with the least waste, in the shortest amount of time possible. I used this system in my own (tiny) family business and it worked like a charm. Everybody was happy. Employees policed each other for loafing, and all I had to keep an eye on was cutting corners on quality. We all made about 40 percent more than we were, or than our counterparts in other companies competing with us were. Very low labor turn-over to boot, and no worker-comp scams either!