Question About Labor Unions

The whole Hostess debacle brings up a question that’s been puzzling me. An assertion that you encounter with some regularity, say, in Paul Krugman’s columns or nearly anything produced for the Center for American Progress is that one of the reasons for stagnant wages among lower and middle income people is declining unionization. I think that’s a case of post hoc propter hoc reasoning, i.e. wages were rising in the 1950s and unions were strong in the 1950s therefore wages were rising because unions were strong. I think that, contrariwise, wages were rising and unions were strong because the demand for labor was high, something that hasn’t been the case for decades.

Here’s my question: how did that work out in the Hostess example? Follow-up: why wouldn’t increased unionization and more assertive unions result in fewer jobs?

Note that I have no particular animus against unions. I just don’t understand the argument that increased unionization and more assertive unions would result in increased wages for most Americans. Persuade me.

20 comments… add one

  • PD Shaw

    I think the argument would have to be based upon situations in which unions negotiate workplace rules that increase their own productivity. The union either possesses superior knowledge about activities on the floor (and for whatever reason management does not) or a heightened interest in their own safety and well-being. When the union bargains for concessions that increase labor productivity, it can justify or assist in higher wages or perhaps more labor.

    I think that argument might be persuasive in the 1950s, but subsequent laws like OSHA and MSHA have standardized health and safety expectations, so that unions don’t negotiate these and do not provide any productivity benefits from them. I would like to think management has improved enough so that they don’t discover that carrying widgets back and forth is a waste of time.

  • Here’s my question: how did that work out in the Hostess example? Follow-up: why wouldn’t increased unionization and more assertive unions result in fewer jobs?

    It doesn’t work in the Hostess example. Sure, they might make more than the Hostess offer via unemployment, but after that, they make nothing….so being in a union then means lower wages overall. This is evidence against the liberal position.

    As for the number of jobs and increased unionization, it should result in fewer jobs and also higher unemployment (all other things being constant).

  • Jimbino

    The idea of unions, and the principal effect of unions, is to keep marginal workers like the Irish, first, and later the Blacks, from competing by offering their labor cheaper. The consumer suffers.

    Whether or not unionization increases wages, it sure does result in a high priced product. Here in Texas, we live quite well without unions, which enables us to employ non-unionized electricians and plumbers for much less than we did in Chicago. Of course, here in Texas, we prefer to hire Mexicans and other Latins–the best are not only not unionized, they’re not even legal residents.

  • The idea of unions, and the principal effect of unions, is to keep marginal workers like the Irish, first, and later the Blacks, from competing by offering their labor cheaper. The consumer suffers.

    Not to mention the Irish or the blacks. The worker in general suffers since the higher wages induces entry into the labor market, but the labor unions work at keeping the number of jobs below the market clearing price. The effect here is to reduce the number of jobs and increase unemployment by increasing the number of people in the labor force.

    In other words, the higher wages are basically a transfer from those workers who can’t find jobs and firms.

    Power to the workers! Workers unite (and get f—ed)!!

  • PD Shaw

    I’m sure Dave can find non-union contractors for home repairs/remodeling in Chicago. Rahm certainly can find non-union contractors to help with the city budget.

  • Andy

    I think the biggest problem with unions is their success. On all the big issues they won so decidedly that the norms they advocated for pretty much became standard business practice or were enforced via government regulation. This normalization undercut their raison d’être and they’ve tried to stay relevant by focusing on pay, benefits and quality-of-life issues. Additionally, union culture hasn’t changed to reflect modern reality. As Dave notes, in the modern labor market, that is not a recipe for union growth except in the case of public employees.

  • PD Shaw

    OT: Dave, if you have your eye on any more Wordworth Mystery and Supernatural books, you may want to pull the trigger:

    http://vaultofevil.proboards.com/index.cgi?action=display&board=newsdusk&thread=5012&page=1

  • Drew

    As someone who worked in the heavily unionized steel industry, and whose current firm avoids unions almost religiosly, I will tell you its more the work rules than wages. The union leadership overplays its hand to increase jobs (read: dues and power) until the company falls under the weight.

    I posted over at OTB (a rare event these days) in Dougs essay that finding the operating profit number for Hostess has been a bit difficult in a simple media search. But it appears that debt to cash flow is hopelessly too high. Further, in the previous BK, when the company was healthier, the bid appears to have been variously reported as a couple hundred million to $500 million. Current debt is $700MM. Read: this is going to be a monstrous wipeout for owners, lenders and surviving ops. The proverbial shit storm.

    Whatever brands survive, my bet is that not more than 20% of the ops and employees make it to the end, and if people lose their heads, that could be optimistic. Clearly the head of the Bakers union is posturing for the balance of his membership, and the Hostess membership is currently swirling around the toilet on the way down.

  • jan

    I posted over at OTB (a rare event these days)

    Drew,

    I’ve given that site a rest, as it is just too adversarial to present a different POV.

  • Some time back when, Dave posted about his father exploring Communism in the ’30’s. My dad did, too.

    While he was sympathetic to some of the egalitarian premises, he never took up with the whole collective bargaining apparatus. Upton Sinclair had come and gone.

    Daddy was a carpenter, with seven children to rear. A day on strike might have have starved us all.

  • And that’s a note to robber barons of the 20’s , which we’ve had quite a few of last decade.

    I don’t mean to include you, Drew.

    And you need to go listen to The Shadows on Youtube.

  • They’ll be extraordinarily cool with the Porsche.

  • Hey, honeys, I like Porsche. I also liked that Lexus SC400.

    I actually drove the Infiniti GS 35. That was a cool car, once I learned how to park it.

  • Where y’all come from, Mamou? MY oldest brother has a spitfire ’68 Pontiac Firebird. Now he’s taking it to shows.

  • Where y’all?

  • Silly people.

    I was with two of my brothers and they think that Hyundai is doing a more than creditable job on their new luxury line. Do you have an opinion?

  • TastyBits

    @Janis Gore

    I like the Japanese cars. When I have the money, I intend to get a Lexus LX SUV for my wife. I need something that will last 10+ years and will be trouble-free.

    For out of town trips, I will rent a car, and I have driven many different models. I like the Accura and Camry best. They have good handling and a lot of top end acceleration. The electronic manual is not as a mechanical manual transmission, but it can take the handling to another level.

    I usually drive fast and aggressive. I find that most people with fast cars cannot drive them properly. My 12 year old Sentra cannot keep up with a Porsche on a straight away, but I have never been out driven by one.

  • Now then, my petite, pretty sister-in-law (my boy’s sister) used to drive an Infiniti. Then her husband got ticked because a cracked headlight rim cost $600 to replace. So he promptly went out and bought her a Lexus.

    I go, ‘ hunh?’

  • I recently had a full brake job on the ’97 Tahoe, and the mechanics apologized because it cost $605.

  • If you’re going down that road, spend $20,000 and get her a nice one . My blue one cost $12, 200.

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