UNIONS; THE HIDDEN COSTS

This is being prompted by the recent demise of an industry giant. A company with a glorious past, one of innovation and a history of ignoring those who say '…it can't be done'. I am referring to the Labor Day closing of Consolidated Freightways (CF). It was an industry leader for the vast majority of its existence. Early in its history the company decided that the available tractors for pulling its trailers were not acceptable. For those of you unfamiliar with the industry, the unit that pulls the trailer or trailers down the road is not a truck, it is a tractor; a unit that is not complete without a trailer. They then started a new company, to manufacture tractors for them. This company was also hugely successful and changed the industry. This is but one of the innovations CF brought to the trucking and related industries. CF's demise was brought on by chronic labor disputes.

This is the first of the hidden costs of Unions, lack of job security. In any industry with intense competition, where some companies are union shops, and others are not; the union shops are the most likely to go under. I have had personal experience with that under a much smaller union trucking company. I could name several union trucking companies that have gone under in the last decade, yet I can't think of a non-union company that has done so. I'm sure there have been some, but they were all small players and didn't get much if any coverage; 20 to 30 jobs are not considered very newsworthy. However, the big ones that went belly-up were all union companies.

But why are Union Shops more likely to close the doors? And why is it always so messy when they do? Now we get to the second hidden cost; attitude.

Unions tend to create a wall of distrust between management and labor; this often is not in the best interests of the workers that the union claims to represent. However, it must be understood that in the trucking industry the union gets their cut via dues even when a company goes out of business. Some might be lost to non-union companies, but much of the freight will be picked up by other union companies. The freight still has to move sometime. The freight sitting on CF's docks, under armed guard, has traveled most of it's way via CF, whenever the CF drivers get paid (or get a settlement; which may take years), the union will get its share. And also keep in mind; even though thousands of truck drivers are now on the streets looking for work, not one employee of the Teamsters was laid off! Unions tend to act like leaches; they suck off the host until dead, and then move on. Unions get a percentage of each employee's pay (dues). They have every incentive to boost the hourly pay as high as they can, regardless of market conditions. Their jobs are safe, and there is always another host around the corner.

This leads the union leadership to have disregard for stable employment for its "employers"; the union members. The union leadership has no reason to worry about any companies' market share; since they have their fingers in so many different, competing companies. They have a virtual monopoly. If you are a union truck driver, you are a teamster. If you are a union steel worker, you are in another union. If you are a union meat cutter, that's another union. So, if you are a union member, and your union overplays their hand; it is no big deal to the union since they have a lock on that industry.

This leads me to a defining moment in my view on unions, the UPS strike a few years ago. Now keep in mind that these guys were making over $20/hr. There was one picket sign I just can't get over:

At over $20/hr, these people were telling this to their customers; proclaiming it loud and long! How many customers went to Fed Ex as a result of this sign? Did the union care? Nope; Fed Ex is under their thumb also. The money is just taking a different route to them; that's all. They still get their cut; or most of it anyway. Since Fed Ex couldn't handle all the volume most of UPS shippers tried to ship via regular LTL (less than load) trucking companies, like us or CF. It really messed up our system and we had to refuse new customers.

More distressing though, what does this sort of rhetoric do to the management/labor relationship? If I was management; I'd have it out for the employees that struck. These people who I am paying very high wages to, are telling everyone that I am 'using them severely'? Yep; I'm going to be ticked off for a long time! This makes management suspicious of labor and creates a vicious circle.

I work as a driver for a non-union trucking company (one of the late CF's competitors). Sure we gripe about upper management when they come up with stupid decisions, and sure we have our idiots in middle management (we have plenty of idiot drivers too). However; generally we work as a team. We view the market as a positive sum game; if we want more pie, we grow the business to make the pie bigger. Union shops tend to view the pie as static, it can't grow or shrink; the object is to take more of it from management. No thought is ever given to the fact that the whole pie might be dropped on the floor in the fight over a bigger piece!

CF was loosing money every day it stayed in business. We'll never know for sure if the Teamsters were willing to take the offered 12% pay cut to keep the company in business or not, but I'd have been surprised if they did. Unions tend to not allow pay to even stay the same; either a yearly raise is locked in or it is being "negotiated". In 2001 we didn't get a raise (neither did our CEO), a lot of drivers grumbled about it; but most of us felt it was more important to keep the company profitable. This year? Well the economy picked up and we got our raises. Not only that but it looks like our profit sharing will be really good, perhaps as high as $3000 for those of us at top rate. Was the lack of a raise worth keeping our good paying jobs? Sure was! However, CF was locked into a contract raise last year and had to give raises even though the economy wasn't good and the company was loosing money. Had negotiations been in progress in the summer of 2001, the union would have insisted on raises; regardless of the profit picture.

Despite what I have just written, I am not anti-union. I have just looked at the costs of working for a union company. Yet, there are benefits for everyone in having unions. Although I am non-union (by choice) I make top union scale; yes, I am making over $20/hr. I don't have union dues. None of my pay goes to fund liberal candidates who wish to increase my tax burden (another cost of unions since they often donate dues money to the DNC). Yet, would I be making the money I am without unions? Nope! Would my benefit package be as good as it is without unions? Nope! Would we even have a middle class, much less an upper middle class without unions? Nope!

Unions were formed in the early part of the Industrial Revolution. Workers were treated not much better than slaves then. In some ways worse than slaves, since the employer had no vested interest in keeping the worker alive; he could hire another one at no extra cost. The slave owner, if he lost a slave, had to actually buy another. There was no recourse if a worker was fired. There was no unemployment check he could collect. The boss said "jump"; the worker asked "how high?" He didn't have a choice; he had a family to feed.

Unions evened the playing field. Not only that, they created a middle class that could afford to buy the products that were produced. The union movement even benefited the manufacturing industry in the long run; even though they had to be dragged kicking and screaming into the new phase!

Now, workers are treated with respect (in most cases), be they union or non-union. Pay for a skilled worker is fair. Most companies offer good benefit packages including health care and retirement. If a worker is fired without cause, he or she has options that can be pursued to correct the problem.

There are some industries that it would be silly to work in without a union. A great example is the construction industry. Jobs are fleeting there; often lasting only a few months. There is a lot of turn-over after each job. Having a Union Hall to go to for the next job, and having the pension administered by the union helps construction workers maintain some sort of stability in a very unstable industry.

However, unions need to understand that in order for them to continue, they need companies to stay in business. If a company cannot make a profit, where it its incentive to continue? Unions need to start working with, rather than against management. It would be to the benefit of their employers (the workers).

I stated earlier that even if a company goes out of business, the union still gets its cut. That isn't quite true though, except in the view of the union bosses. Private sector union membership has been dropping rapidly. The only area where union membership is growing is in the public sector; government. This is because the government has a true monopoly, and won't go out of business. Their costs can be passed on to the "consumer" via higher taxes and the "consumer" can do little about it. Taxes are enforced with the threat of jail time (just try to boycot the IRS!). Yet, union shops in the private sector continue to go out of business and much of that business goes to non-union shops. If private sector unions don't wake up to this fact, they may soon see some of their jobs going away, rather than those of their members.

Unions could be positive instruments, if they had no coercive privileges and merely provided collective-bargaining conveniences to anyone -- labor or management -- who wanted to engage them. But the legal indulgences shown to unions make them implements of economic, social and political destruction.

Among the worst offenses against the rule of law in the past hundred years are the various special privileges granted to unions. The Norris-Laguardia and Wagner-Taft-Hartley Acts put unions in a position to impose their will on companies by force, to "close" a shop to all but union labor, and worst of all, to engage in violence for economic gain. No conceivable rationale could be offered for these things that would square with fundamental principles of justice. The Right-To-Work movements of the past couple of decades have done considerable good in reversing the pernicious effects of coercive, violent unionism, but much remains to be done.

There's no mystery why unionized industries have been losing jobs, while non-unionized ones have been gaining. Except for the government sector, this is uniformly true; even the heaviest manufacturing industries are learning to do with fewer and fewer human hands -- because it's the path of survival.

There is a great irony in the unflagging support of the Left for coercive unionism. Given the current state of American labor law, a union is a private army backed by political mechanisms. What other description would apply to an organization that has the privilege of compelling you to join or leave your employer, and enforcing its will by violence, for which it and its members are immunized from prosecution? Yet substitute the word "militia" for "union," and the Left would be, pardon the phrase, up in arms in righteous condemnation. But in our society, unions are single-stop shopping centers for large masses of votes and monetary support to political campaigns -- and the Left cannot wean itself from them.

Violence for economic gain. Forced collectivization. A status above the law. Josef Stalin would approve.

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit the Palace Of Reason: http://palaceofreason.com

I'll take some exceptions here:

...the unit that pulls the trailer or trailers down the road is not a truck, it is a tractor; a unit that is not complete without a trailer. [CF] then started a new company, to manufacture tractors for them.

Methinks it was the trailers, not the tractors, that CF started building. I could be wrong, but I don't think so.

Unions tend to create a wall of distrust between management and labor;

Management does this also. This sword cuts both ways.

IMO, if labor and management work in opposition to each other, then everybody loses. Sooner or later.

Management does this (i.e., create a wall of distrust between labor and management) also.

Good management doesn't. Good managers know they exist to help and serve the people who work with/for them. Good managers understand that their success is inexorably linked to that of their workers. IMHO, good managers are also those who can and will also do the work their subordinates do. This is to say, "If you can't do it, you probably shouldn't be managing it.

This sword cuts both ways

Yes it does.

You need to research your comments more thoroughly. CF started the company "FREIGHTLINER" - a TRACTOR-producing manufacturer.

I know there was a company named White-Freightliner for a time. I think that it was always more "White" than "Freightliner", but I suppose they must have teamed up on it. Not sure if that's the same company.

I don't think any tractor was ever produced by CF. It is more logical that they would have built trailers.

What a simplistic and wrong view of the unions and their effects.

This leads me to a defining moment in my view on unions, the UPS strike a few years ago. Now keep in mind that these guys were making over $20/hr. At over $20/hr, these people were telling this to their customers; proclaiming it loud and long!

As as customer of FedEx and UPS I couldn't care less what they pay their employess, it is what they charge me that matters. Since FedEx ground service quality sucks, I would be happy to use UPS and their higher paid drivers - since they are able to offer rates better than FedEx anyhow. I am sure there are different factors for other companies, the one that makes no difference is what hourly rate they pay their employees.

Those who join labor unions are simply trading one oppressor for another. At least one has some leverage dealing directly with management. After all, management has a vested interest in keeping their employees somewhat happy and productive. The union bosses couldn't care less about your working conditions or how happy you are at your job so long as the union dues keep rolling in. In fact, they WANT you to be discontent with your employer and your working conditions so that they can justify themselves.

If you read it carefully he said the distrust goes both ways.

To my eyes, the clear emphasis of the original post was anti-union. I was just trying to goose it up a bit the other way.

Don't get me wrong. I am not saying that unions are always a good thing. I just think that opposition between management and labor has usually turned out to be a bad thing.

From what I can see, that is the direction things are going again these days. For example, all the fancy management compensation packages. I think those are wrong for both labor and for the shareholders.

I think we need to contact our representatives and push for a law making it illegal for any government union to strike!

The employeees in the copy room of the city where I used to live used to be paid $15 an hour. They also had excellent benefit plans, including "domestic partner" benefits.

They would go out on strike anyway.

Service Employees International Union. SEIU

It was not real clear who 'they' was referring too, sorry.

I understood it.

Having seen drivers literally run in with packages at Christmas time -- as I have seen UPS drivers do many times -- I believe employee pay and satisfaction do make a difference in the quality of the service that is ultimately provided to the customer.

If UPS is paying $15 and XYZ is paying $12, who's drivers do you think are going to run?

In my area, FedEx drivers own their route and get paid per delivery. When I started at my current company, I watched in our shipping department as the FedEx guy would make our deliveries and then he would (a couple times a week) leave a package that wasn't for us, saying he would get it the next day. He would scan it delivered, but not actully deliver it until later. You would have to be an idiot not the realize that this is probably happening with my outbound packages as well. When I went back to UPS they beat the FedEx prices and the quality of employees and resulting service is no comparison.

(Do I keep a FedEx account in case UPS stikes? You bet. Will I care who is union and who is not? Not unless it actually affects the service provided to me. I have no problem with the UPS union. I know my driver works his ass off, 12-14 hour days - but my product gets out every day, he waits a couple minutes if needed.)

**I realize I am generalizing about two companies based on the interactions with just 2 employees.

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