This is a tough one. Like a Gordian Knot, one string is overlapping another. Pull one, and an unexpected result pops out. This problem is one that will depend upon specifics, such as what is the business, what is the competition, how many people does it affect….. Not a quick answer mind you…
Michigan went to right to work, as you all by now know. That is a blow to unionized labor in that state. It does not mean unions are immediately dissolved. It means that over time they can be weakened….
Indiana also went. Ohio, Wisconsin, Illinois, are all trying to follow suit. Anywhere there were cars made, there is a large enough voter backlash to make it tough to keep unions in business. Why? The economies of these heavily industrialize auto manufacturers are slumped. Detroit in particular is a ghost town, compared to its heyday in the seventies. However, automobile manufacturing units put in by foreign car makers, BMW, Nissan, Honda, and Toyota in Southern right to work states, are thriving….
There are many factors. During the 80′s and 90′s baby boomers simply preferred foreign models. Despite campaigns to buy American, buyers persisted in preferring foreign models whose quality showed through when the time came to trade them in. So some of the slump can be contributed to poor design and planning. But, today when every new car is carrying a price tag of $1500 to pay for labor and future pensions guaranteed to the union of automobile workers, it is very hard not to succumb to the philosophy that perhaps, unions did chase the jobs away and cause the rust belt.
Companies who are non union have more money to re-invest into their business than companies who are closed shop… If you have more money to reinvest, you can build better cars than your competitor who cannot match you there… because he diverts more money to labor.
To understand how unions work you need to understand cartels. Cartels as in Arab Oil Cartels, withhold the amount of product (labor) forcing its price to climb…. The labor unions says: if you want to make cars, this is our price. The automobile manufacturer has to meet that price. If all cars have the same labor price, then this system is static. But when some labor is high priced, and some is low priced, then those with low price do well, and those with high price do not…. Over time, the proper tendency would be to become free of union intervention….
Granted, a union is savvy enough not to kill it’s host, and with global competition, may unions have made concessions to keep their plant open and working. But there have been many plants that closed. Like Janesville. It closed because it wasn’t needed; not because of labor. However the argument against labor unions, is that they make cars less competitive by inflating its cost, and if cars don’t sell, they get discontinued, and that forces the plant shut down…
It is no lie…. that union salaries positively impact a communities economy far more than do non union wages….A union is able to bargain for a higher wage, and a non union worker gets the lowest amount a company can pay and still keep and employee… Those that vote for making states a right to work one, fall back on the adage that it is better to have a job that pays little, than a job that goes away…. Ask yourself. If you were laid off from a union job, and off work unemployed for two years, then applying for a job making one third your previous amount, would you take it? If so, then right to work wins over closed shop labor. Because you would work at low wages.
Now. There is no one that I’ve seen who has not given credit to the unionization of American workers as being the reason our nation used to have a prosperous middle class. That middle class did most of the buying and selling in this nation. When they have money to spend, all is well. When they don’t and are pinching pennies themselves, the economy sputters and dies. This is commonly accepted by all people.
The Unions are what built America.
As Unions have gotten weaker, corporate income has gotten higher, and wages have gotten lower….
Where this is good for investors, it is not good for the economy. More money thrown to wages and less to profits and dividends, is the key to getting our economy thriving. More money thrown to wages increased our nations demand for goods. Increased demand is what investors are waiting for to toss in all the money they have waiting on the side, hoping for the perfect moment to lay it down……
So I think we are beginning to see the dilemma and the possible resolution required.
Labor unions are not a business tool. If treated as such they will evolve outward and disappear. They are a social tool. Having labor unions is bad for business and is a burden to any business that has to deal with them. Labor Unions are NOT business friendly. However as a tool for society, they serve the most basic function of forcing more money to back down to the first through fourth economic quintiles, and sucking it out of the stratosphere of the top 1%….
Instead of money being bet on the price of eggs in China, it is being used to buy more eggs in ShopRite which stimulates the economy…
We know from history how dark life is for those without any protection from their employer. The standard reply from a boss, is “if you don’ like it you can just……… leave.” But what if you can’t leave? What if you have so little that your children starve if you are off work one day? Two days. Three days….
Without unions, you have no choice. You have to work at whatever wage they tell you…. All America becomes a sweatshop….
Socially, philosophically, and patriotically we need a rejuvenation of Union Strength. Toss out all business arguments. That usually is how all anti- union arguments are framed, and it is smart they do so, because as I said above, Labor Unions are bad for business.
But they are good for America….
There are $2 trillion dollars today on the sidelines waiting for Congress to decided on its tax plan. Some of that needs to be invested in todays workers. The argument for unions would be weaker if business on its own, chose to reward its workers with some of its riches just because they were are part of the success too. But they do the opposite, and therefore, society needs some balance.
Labor Unions are a social issue… an economic issue…. not a business issue. The US rust belt needs investment. It also needs those wages to be high enough to spurt the local economies…. Only unions can provide that higher rate…. Though in negotiation for their own welfare, when successful, all of America benefits…..