December 14, 2012

Labor Unions

December 14, 2012

Labor Unions

The recent right-to-work law passage in Michigan indicated the seriously changed nature of labor unions.

One can make a case that labor unions started in the U.S. as craftsman’s guilds going back to the time of the American Revolution. The most notable person in the history of the labor union movement is probably Samuel Gompers who started the American Federation of Labor in 1886. At that time in history, individuals had not yet adapted to the effects of “the Industrial Age” and workers labored under unsafe conditions for long hours and received low pay, little in the way of benefits, and little or no legal protection.

Upton Sinclair’s 1906 novel “The Jungle” wrought social change in as much as it precipitated government investigation of the meat-packing industry. It also heightened public awareness that some workers were treated very poorly.

Another, somewhat lesser know force from this period, was the photography of Lewis Hine see: Hine was a brilliant photographer whose work is collected as art rather than social commentary and his pictures of young children working in places such as mines are nearly incomprehensible to the contemporary mind.

In the 1920′s labor union membership had been eroded by a post World War I deflationary recession (this was before “The Great Depression”) which seriously cut both wages and union membership. This lasted from January 1920 to July 1921. The Bolshevik revolution in Russia and the perceptions of “radical unionism” in the form of the IWW (International Workers of the World) provided grist for antiunion sentiment.

In 1935 John L. Lewis created the CIO (Congress of Industrial Organizations). Whereas, the AFL organized people by skill, the CIO sought to vertically organize entire industries. Eventually, in 1955 the two groups merged into the AFL-CIO. The irony is that just as the two labor groups stopped fighting with one another their power started to diminish.

The Kennedys Hit the Small Screen

When I was a lad, my first awareness of the downside of labor unions resulted from watching something on TV called the Senate Labor Rackets Committee AKA the McClellan Committee. This was a Senate committee chaired by Senator John L. McClellan of Arkansas. These were riveting events. On one side were the Kennedy brothers (John and Robert.) On the other side were folks like Jimmy Hoffa , Sam Giancana, and an interesting dude named Johnny Dioguardi (AKA Johnny Dio) who seemed like a guy who wrote the textbook on labor racketeering.

The McClellan Committee showed that some unions had stolen union funds, made “sweetheart deals” with employers (in exchange for kickbacks) and, in general, acted against the best interests of the membership.

Jimmy Hoffa and the Teamsters Union came into the crosshairs of the federal government. The Teamsters were run out of the AFL-CIO and in 1988 the Justice Department filed a civil RICO lawsuit against the Teamsters in U.S. District Court in Manhattan. The lawsuit was filed by a U.S. Attorney for the Southern District of New York named Rudolph Giuliani.

The Justice Department had hammered the Teamsters Union into a series of plea bargains and a consent order that, in essence, circumvented a host of constitutional and civil rights issues. From the point-of-view of the Justice Department, it had imposed democracy on the Teamsters.

Victims of Success

In the past several decades unions have, in a sense, been victims of their own success. Having raised the wages of workers so successfully, much domestic union-made stuff is so expensive that manufacturing has been offshored.

Some interesting things have resulted: union membership is now being concentrated on non-exportable jobs – government workers are an excellent example. Nonunion companies are being equated with “low cost” and “low price.” The most glaring example is Wal-Mart.

Potential Drawbacks of Unions

Union bashers make a case that unions have some drawbacks: Unions have a kinship to civil service. The value of merit is diminished. Union members cannot advance based so much on their merit but must progress according to the union’s contract with the employer. Higher productivity does not merit higher pay. Employees might even be peer-pressured into not pushing the envelope.

I think that this is one of those inevitable consequences of both civil service and labor unions. They may take the edge off productivity but it would be hard to make a case that the extent to which this has occurred is fatal.

The Future of Unions

Unions have morphed in the sense that most union members are now government employees. About 37% of government workers are union members. About 7% of private workers are unionized. From my point of view the strength of union membership among public sector employees often works against the interest of the population. Instead of having a healthy bargaining dynamic where business and labor is each looking out for their side, all too often, politicians exchange good deals for public sector employees are their backing come election day. Here in California in January 2002 Governor Gray Davis signed off on a 34% pay increase for state correction officers. Weeks later that union contributed $251,000 to his campaign. On November 4, 2003 Davis lost a recall election. This was not entirely about the deal the corrections officers got but was also based on Davis’ clueless behavior during the fabricated energy crisis we had.

The fact that relatively blue states such as Wisconsin with its restrictions on public employee unions and Michigan with the recent adoption of a right to work law indicates that the value of unions remains unclear and their strength remains diminished.

The socially significant work done by unions was largely over by 1960. Apart from serving their members they have also become a significant political asset for Democrats.