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Wednesday, March 22, 2006

No Logic In His Reasoning

Harold Meyerson has an interesting editorial today, "Will Your Job Survive", which sounds the alarm that between 42 and 56 million (more) American jobs are offshorable.

In his article, he lays the claim that:

Every other advanced economy -- certainly, those of the Europeans and the Japanese -- has a conscious strategy to keep its most highly skilled jobs at home.

Yet America is proof that they are failing at that. We have BMW making cars in South Carolina, Mitsubishi in Illinois, and many more European and Japanese countries "on shoring" jobs to the US.

In fact, the countries with the most strict rules about keeping jobs at home, France, Germany, Italy, and Spain, are seeing a migration of them to the old Soviet Bloc countries. They also have double (or more) the US unemployment rate because of many of their policies that they try to protect jobs with.

His solution is of course protectionism. Find ways to lock jobs from leaving the US, which has never worked.

This particular suggestion vexes me:

We need to unionize and upgrade the skills of the nearly 50 million private-sector workers in health care, transportation, construction, retail, restaurants and the like whose jobs can't be shipped abroad.
If he removes the word unionize, it makes perfect sense. But adding a union adds no value to the equation. In fact, I'd say that by adding a union to those jobs which can't leave the US, it might just hasten the retreat of others.

As I mentioned the other day in my article "Micro Thinking in a Macro World " we sometimes take an overly simplistic, one way view of things. The suggestion of unionization to me means that what Myerson is looking for is the higher wages generally associated with unions.

What he ignores is that while those jobs can't leave, they can drive others away based on the higher costs associated with doing business. For instance, no one disagrees that our health care costs are already too high. So, if we drive them up a few more percentage points with a union movement what does that do to companies costs that provide that coverage now? Does that become the straw that breaks their back and causes them to remove their jobs from the market here?

Unionization also generally leads to work force inflexibility, a drag on the companies they are associated with. What's the normal company response? Either eliminate enough workforce to pay for the unionization of the rest, or pare it down to a bare bone, and hire temps, or union "day laborer" from the hall when they need extra bodies. Either way, you end up with a chunk of their workforce out of full time employment.

I once worked with an construction company that required union workers for certain government jobs. They had two permanently on staff, and when they got a government contract called the hall, got enough to do the job, and afterwards laid off all but the two.

The other half of their company was non-union, and paid about $1.50 an hour less than scale, but hadn't had a layoff in over 25 years. They also had a medical plan that was on par with the union, a company matched 401(k) and profit sharing.

At the end of the year the non-union workers had made on average 30% more than their union counter parts, had put more money into their retirement, and had a job for the 50 weeks a year they wanted to work, and 2 weeks vacation.

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7Comments:

Blogger NEO, SOC said...

Great post! It's sad because when I think unionization, I think of sanctioned slothful work. Not all unions are bad, but I have seen too many where the workers met quotas instead of busted humps and put in an honest 40 hours. Also, the idea of people getting triple time for working on the holiday? As an IT person putting in more overtime and not getting paid or barely making time and a half; I was shocked to see people getting triple time. Plus, many would actually delay work for the purpose of creating the need to come in at higher pay. Plus, I believe that many (including those in the ULSR) enjoy this cushion, and that's all they're looking for.

7:08 AM  
Blogger ablur said...

There was a time when a union was a good thing. That time has passed. The union no longer represents its members it has become an entity unto itself. Its drive for self preservation no longer serves the needs. The members have lost control of these colossal enterprises and suffer at their yoke.

8:29 AM  
Blogger Mark the Pundit said...

But he wants to unionize the jobs that will not go overseas to begin with. How does THAT prevent outsourcing?

10:09 AM  
Blogger shoprat said...

All too often protectionism is nothing more than unionization in disguise. I belong to the UAW and would rather not - its impact where I work is minimal, and as my coleagues have found out (to considerable economic cost) it is never there when you really do need them.

2:46 PM  
Blogger Crazy Politico said...

Neo, My biggest gripe with them when I was on active duty was the number who had the "vested" attitude. After 5 years they were generally safe from layoff, and were vested in the Union. At that point performance became secondary to time. With many (not all) you could tell what week they got that letter.

Ablur, I agree with you on that. When unionization started they were very necessary to push work reforms that we needed. Anymore the sole purpose of many unions seems to be self perpetuation, not actually doing much for the workers.

Mark, I was wondering the same thing. I think part of it is they know trying to unionize what can be outsourced will hasten that avenue for corporations.

Shoprat, I think my turning point with them was when my Mom was a steward. Two of her coworkers were caught "with their pants down", literally. The union demanded she defend them, when what they were doing was a clear violation of workplace rules. When she refused to defend the conduct, she was of course replaced by a "team player".

Management isn't always wrong, and if Unions wouldn't try and flex when they clearly are, maybe I'd have a better opinion of them.

5:31 PM  
Blogger The Conservative UAW Guy said...

There are pros and cons to unions.
I work for GM, which would gladly steamroll me in a heartbeat w/out the union. Conversely, they do indeed protect those who are undeserving.
As far as wages go, unions do raise the bar for the non-union places.
I've seen it happen.

I think the big unions would fare a lot better if they got away from rabid liberalism and socialism too.

They lost me there a long time ago....

7:11 PM  
Blogger Crazy Politico said...

CUG, I agree with you on the wages, they definitely do help drag them up in their sector. Sometimes that's good, other's bad.

As for "out in a heartbeat", I have a slightly different take. In the late 70's, when the US auto industry was hemmoraging jobs quicker than they are now, many folks who were vested were collecting up to 80% wages for 5 years after the layoff.

So, for every 5 the companies laid off, they saved the wages of 1. Had the UAW, seeing that because of import competition, etc, relaxed their rules, how many of those tens of thousands wouldn't have had to be axed?

I read a thesis a few years ago on the subject. A guy getting a masters in economics had calculated that the UAW contracts of the 1970's and 80's cost more workers their jobs than the actual problems the industry was having.

The steel industry is another great example. They have 1/8th the workforce they did in the US 30 years ago. Most of our steel industry sold out or shuttered due to labor costs. Everytime the union told the workers "we'll call their bluff, they won't shut down", they were wrong.

7:57 PM  

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