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The time for unions is over; they have run their course and usefulness

Unions Are the Political Dinosaur in the Room


By —— Bio and Archives December 28, 2011

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imageA famous radio talk show host asked rhetorically why unions have supported and financed the Occupy Wall Street movement. The answer is quite simple. Occupiers are asking for communism. In communism, the entire labor force is unionized. It is in the best interest of unions to promote communism since union membership in this country is down to single digits and not likely to rebound.

Unions were necessary at the turn of the 20th century to protect workers from dangerous working conditions. Unions survive today as a political tool to influence elections and exert economic power.

Otto von Bismarck introduced the first welfare system in Prussia in 1883 which provided workers with sick days, workman’s compensation, and retirement benefits. He disliked trade unions and, in order to reduce their socialist influence, Bismarck introduced workplace compensation.

The Triangle Shirtwaist Factory Fire of 1911 in New York turned public opinion behind the union movement to improve working conditions, hours, and wages in sweatshops.

Pauline Newman, an organizer and executive of the newly formed International Ladies Garment Workers’ Union, worked in the Triangle Factory at the tender age of eight. “We didn’t have anything… There was no welfare, no pension, and no unemployment insurance. There was nothing…There was so much feeling against unions then. One hundred and forty-six people perished in the fire while the judge fined Blank and Harris seventy-five dollars.”


Unions started gaining track as more accidents were exposed and workers demanded protection. Union membership enrolled by 1930 slightly less than 7 percent of the U.S. labor force. In the 1950s, 26 percent of the labor force was unionized. Currently, less than 9 percent of all employees belong to a union.

The drop in union membership can be attributed to the switch from manufacturing, in which unions are predominant, to the service industry. Deregulation in airline industry and trucking forced fiercer competition. Firms downsized, closing plants, moving them overseas in response to unions demanding higher wages and more benefits. The decline in union membership in the U.S. is also a function of American rugged individualism, conservatism, and hostility towards unions. Factories have moved from northern states to the southern states where unions are not so popular.

Union membership levels in the U.S. are much lower than Germany’s (30 percent), Sweden’s (80 percent), Denmark’s and Finland’s (70 percent). Belgium’s and Norway’s (50 percent), Ireland’s (40 percent), Italy’s and Austria’s (30 percent), U.K’s, Netherlands’ and Switzerland’s (20 percent). (OECD data)

Government employment has large numbers of union members (37 percent). This begs the question why is it necessary for government workers to protect themselves against the general public. The private sector employees who earn much less than public employees must pay for the generous union salaries and benefits via confiscatory taxes. If they refuse, the public employees strike and create mayhem as we have seen in Wisconsin.

A union is a labor monopoly

A union is a labor monopoly.  As it struggles to survive, it must find new members among non-traditional sectors such as agriculture and white-collar office markets. Unions have organized teachers and government employees quite successfully.

U.S. unions are different from European or Japanese unions because they operate as adversaries to management. Japanese unions engage in labor-management cooperation. European labor unions tend to be socialist. SEIU in the U.S. openly promotes and supports socialism through groups like Occupy Wall Street and ACORN.

Countries like Germany with a rate of 30 percent unionization prefer cooperation to adversarial relationships between labor and management. According to Horst Mund, head of IG Metall, “workers in the auto industry have high wages and excellent working conditions for two reasons. Virtually all workers are unionized members of IG Metall, the German autoworkers’ union, yielding power to keep wages high. They have the right to strike but they do not because there is an elaborate system of conflict resolution. The German Constitution includes a second mechanism for keeping employees involved in the decisions of the firm for which they work.”

It is illegal to strike in some states when the private interest of an employee may harm the public interest such as striking by teachers, nurses, traffic controllers, or doctors. In 1981, Ronald Reagan fired all 13,000 striking traffic controllers who refused to return to work.

Some economists estimate that most union members’ wages are about 20 percent higher than salaries of non-members who have identical skills, education, and geographical location. The non-monetary benefits are often overlooked in remuneration calculations.

Public sector workers have “defined benefits” such as pensions which provide guaranteed income based on career length and peak salaries, generous retiree health insurance coverage, and job security.

A New York public school teacher earns $100,000 and can retire at 55 with a pension of $60,000. A private sector employee would need savings of $1.2 million to buy an annuity with the same yield, starting at the same young age. (Manhattan Institute’s Empire Center)

A city police officer collects $70,563 plus lavish health benefits and is able to retire in his forties. Few private employees have so much money saved that they can match public benefits. “According to the Federal Reserve, the average worker in his late fifties, has a balance of $85,600 in his retirement account, and a net worth of $222,300 overall.”  (Lawrence Mone)

“New York City pension’s costs have jumped from about 4 percent of city tax revenues to 20 percent over the past decade, crowding out other vital public investments.”  Taxpayers are worried about union compensation and unfunded pension liabilities. Lawrence Mone calls these public employees “municipal millionaires.” 

Voters in Ohio foolishly renewed this year the largesse towards the union salaries and benefits, agreeing to pay higher taxes in order to supply their fellow citizens with Cadillac health insurance plans and other benefits.

According to the Heritage Foundation, “Government employee unions are the largest special interest group in the country. Government unions spend more than any other outside group on U.S. elections.” Of the top five political spenders, three are unions:  American Federation of State, County, and Municipal Employees ($91 million), Service Employees International Union ($44 million), and National Education Association ($40 million).

Union members pay dues but they have little say in how their dues are spent even though the Supreme Court decision Communication Workers v. Beck (1988) stated that “workers cannot be forced to donate to political causes, and are entitled to demand a refund of the portion of their dues spent on politics.”

Unions engage in curious activities such as funding a credit union almost entirely by one local union chapter, with most loans going to four people. Nepotism created a bogus job ($119,000 per year) with the sole purpose to manage a scholarship fund that awarded $28,000 per year. A board member’s daughter earned $112,000 per year as a “confidential secretary” to listen to voice mail messages; she checked 109 messages in one year. United Auto Workers created trust funds to retrain laid-off workers and spent the money sponsoring NASCAR racers, a “Hollywood Showcase” at the 2000 Democrat Convention, and lavish conventions in Las Vegas. (Heritage Foundation)

Government unions control public policy through donations, serving their interests and not those of the general public

Government unions control public policy through donations, serving their interests and not those of the general public by putting pressure on policy makers. TSA and Homeland Security should not be allowed to engage in limited collective bargaining because their number one priority must be the interests of American citizens. 

Unions organized through secret ballots. Joining a union through “card-check” would harass and pressure workers to make public information they wish to keep private. The Employee Free Choice Act would prohibit the private ballot and the “check card” system would be used in favor of unions and in disfavor of the employer and the employees.

Unions discourage productivity; they are “anti-individualist movements and the epitome of socialism.” Marginal union employees receive tenure and cannot be fired without a lengthy and expensive termination process. The overall cost of doing business is higher and such costs are always passed on to the consumer. Employees are obligated by unions to pay dues, cannot opt out, and have no voice in how the money is spent. The Unions’ abundant financial resources have gone almost entirely into the electoral coffers of the Democrat Party.

Union employees no longer have the incentive to excel or compete as the union protection makes them complacent

Union employees no longer have the incentive to excel or compete as the union protection makes them complacent. Unions see illegal immigrants as a threat to their pay scale since immigrants are willing to work for lower pay.

Union workers in the U.S. complain that they can earn as much as workers in France, Germany, and Denmark but they have to work almost three months longer.

American workers bemoan the fact that they do not receive six weeks paid vacation in their first year of employment, paid maternity leave, higher and longer unemployment compensation, and universal health care like the Europeans. What they fail to mention, however, is that most of these governments are spending huge portions of their GDP on social programs, while the U.S. is providing them with free financial support through the IMF, military support, protection, and security for Europe. They also fail to mention the fact that European universal health care is a disaster, rationed, substandard to the U.S., and grossly negligent with little or no malpractice responsibility.

Unions can directly constrain the number of workers that can enter a specific trade or company and indirectly, by pressuring employers to increase wages. Unions thus have a negative impact on jobs for those outside of the union.

Unions represent their members legally but the rest of the workers do not have a legal voice. Management often prefers not to have anyone from the labor union team on their staff. Promotions are thus hindered by union membership.

When the Department of Labor was created in 1913, historical records stated that “it was the direct product of a half-century campaign by organized labor for a voice in the Cabinet.” This voice has become today an indirect advocate for socialism.

All federally-financed or assisted construction projects costs are more expensive because of the existence of the Davis-Bacon Act of 1931 which requires companies to pay “prevailing wages.” A prevailing wage is a union-level wage. The Davis-Bacon Act added almost $11 billion to federal construction costs in 2011. “Suspending the law would employ 155,000 additional workers in the process.” (Heritage Foundation)

“An executive order from President Obama strongly encourages federal agencies to use project labor agreements (PLAs) on federal construction projects. A PLA requires contractors to sign a collective bargaining agreement with construction unions before beginning work. This executive order discriminates against the 87 percent of construction workers who do not belong to unions.” Construction costs are 12-18 percent higher because of union labor only hires.

The National Labor Relations Board is reinterpreting labor laws under President Obama because the National Labor Relations Act was drafted carelessly. The act outlaws efforts to “interfere with, restrain, or coerce employees,” but Congress did not define these terms.

NLRB is suing Boeing through the International Association of Machinists (IAM). IAM goes on strike all the time, costing Boeing billions of dollars. Boeing built a new 787 airliner assembly line in South Carolina, a right-to-work state. NLRB claims it is an unfair labor practice and wants to force Boeing to relocate its nearly finished plant to Washington in order to give union members first preference for new jobs.

The Norris-La Guardia Act of 1932 changed labor laws in order to strengthen the power of labor unions. The National Labor Relations Act (Wagner Act) of 1935 determined the structure of private-sector unions in the U.S. and promoted equality of bargaining power between employers and employees. These acts served the interests of union labor rather than the interests of all labor. The national right-to-work law is necessary because no worker should be forced to join, or pay dues, to a labor union.

British policemen, French rail workers, Greek civil servants, and teachers’ unions are straining the budgets of the cash-strapped European Union. Private sector has experienced a severe union membership drop but the public sector is strong. Over half of workers in Britain are unionized. Most civil servants in continental Europe belong to unions. “Many center-left parties are union-backed. Britain’s Labor Party gets 80 percent of its funding from public sector unions. Spain’s sluggish state reform may be partly explained by its prime minister’s union membership.” (The Economist)

The National Education Association (NEA) had one tenth of the delegates who attended the Democrat National Convention. The British Medical Association’s vested interests are defended by “nice middle-class women.” According to the Economist, Singapore has the best civil service in the world and some of its workers are paid $2 million a year.

The European unionized worker’s pay is excellent but the benefits are absurd. Holidays, vacations, and pension are beyond generous. Many can retire in mid-fifties with full pay. It is insane to pay such retirements when governments are broke. Over 600 professions in Greece allow workers to retire at 55.

Public wages and pension payments absorb half of the Greek national budget

“Public wages and pension payments absorb half of the Greek national budget. The government does not know how many people are in the civil service, since that would require competence. It is now undertaking a census of civil servants. The guess is that it’s about one-in-three people. The constitution guarantees these jobs for life.” Public sector workers pay has doubled in the past ten years in Greece.  Workers get bonuses of two extra months’ pay annually regardless of performance. “(Real Clear Politics)

According to the Cato Institute, Greece’s debt is 875 percent of GDP when pension obligations are included. When Social Security and Medicare unfunded liabilities are considered, U.S. debt is 500 percent of GDP. And that does not factor in Obamacare.

Given the history of unions in the last 100 years, what would the impact be if all unions faded away?  Would all manufacturing stop, would workers be exploited, would the teachers not get paid fair wages? Would policemen and firemen not have pensions?  Would labor rights and advancements be lost? Would workers be mistreated? Would it affect the European or American debt crisis? I think not. The time for unions is over; they have run their course and usefulness. Unions are the political dinosaur in the room, the 8-track in the dust bin of history.



Dr. Ileana Johnson Paugh -- Bio and Archives | Comments

Listen to Dr. Paugh on Butler on Business,  every Wednesday to Thursday at 10:49 AM EST

Dr. Ileana Johnson Paugh, Romanian Conservative is a freelance writer, author, radio commentator, and speaker. Her books, “Echoes of Communism”, “Liberty on Life Support” and “U.N. Agenda 21: Environmental Piracy,” “Communism 2.0: 25 Years Later” are available at Amazon in paperback and Kindle.

Her commentaries reflect American Exceptionalism, the economy, immigration, and education.Visit her website, ileanajohnson.com

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