There is Power in a Union



When Billy Bragg wrote those words in 1986, the US and UK were standing at an economic crossroads. For years, unions had been an important economic force in both nations, protecting workers rights. They had been helpful in the creation of the middle class in both countries, however in the 1980s their power began to wane. Many blamed the conservative Reagan and Thatcher for their administrations, rather than accepting the economic reality. While in the past unions have been an extremely useful defender of their workers, right now they are part of the problem, not part of the solution.

The US manufacturing sector has been an unquestionable loser of globalization. In 1964, manufacturing accounted for 27% of GNP and 24% of the workforce, while in 2004, it accounted for 13.8% and 10.5% respectively. In order to offer competitive prices, many American companies have been forced to shift operations overseas in recent decades. Even though Americans manufacturing sector is the most efficient in the world, it is still unprofitable for most companies to maintain operations in America as a result of high labor costs.

Union factory workers in America are often paid far more than the average American. In 2007, unskilled United Auto Worker members for instance are paid an average hourly wage $27.81 an hour or about $58,000 a year, compared to a per capita income of $46,000. While factory workers in America were once making slave wages, the union members of today are doing OK, however their firms are not. The Big 3 automakers, Ford, General Motors and Chrysler are on the knees right now, posting record losses and holding enormous pension-related liabilities, partially as a result of mismanagement, but also a result of their employment costs. Yet, their unions are unwilling to renegotiate their pension liabilities. As a result an everyone loses situation is developing. The Big 3 will likely be forced into bankruptcy, closing plants, laying off workers and eliminating workers' pensions.

When I was working in Oklahoma, my work involved a project with a tire plant that was closing its doors. The company tried to renegotiate with the union, offering to keep the plant open if they could cut salaries by 30%, however union officials refused out of fear of setting a bad precedent.

Many in the media have been critical of Wall St. banks for sacrificing the greater good in the search of short term profit. I fail to see how the unions are any different. While the unions at one point served a great purpose, they need to accept the fact that their members are now firmly in the middle class, and their stuborness will only cause more manufacturing jobs to leave the country.