by 
Unions are a relic of the past and hinder the ability of the American manufacturing sector in its race to keep pace with the rest of the world. At one point in time Unions might have been necessary to guarantee workers some basic benefits, but today, the benefits that they secured are bankrupting businesses and governments and yet they still feel they have a right to them.
Don’t get me wrong. I’m not saying that if you made a contract with an employer that they should not honor their part of the bargain. On the contrary, I believe that the terms that you and your employer come to should be firm and both parties should keep up their end of the deal.
What I am saying is that I’m not sure why any more of these deals are being made.
A Great Deal, if You Can Get It
Part of what is sinking the automotive industry right now is the fact that for every car sale they make, a big percentage of that sale goes towards paying pensions and health care to people that have long since worked for the company.
Life expectancy is longer than it was, and that means that what might have been a short-term obligation in the past is now a long term obligation, made longer by buyouts and early retirement. It’s the same problem that is plaguing Social Security—the longer people live, the more that they’ll need.
So when a business in the U.S. tries to compete with a foreign company, they have no ability to compete because of the price they have to charge—unless they manufacture the goods outside of the country.
Consumerism vs. Manufacturing
Part of the reason that we’re in the recession that we’re in is that we’ve traded being a country that produces to being a country that consumes. Easy credit meant that we purchased things that we couldn’t afford, and the more we needed the more we found in other countries for cheaper rates.
If we want to get back out of this hole, we’re going to have to become producers again—get people to buy things from us. We can produce better product than most of the world, but we have our hands tied by the fact that we made deals that are proving to not be wise.
How Do We Solve It?
Obviously, people that made contracts should have those contracts honored. However, I would like to see some kind of plan where people could get some kind of portion of those contract’s value (which they could opt into) in some kind of retirement fund. If someone were to see that they could get a huge chunk of change to sock away, in their younger years, I bet they’d be satisfied—especially if the potential returns were higher than what they’d need to retire.
I’d also like to see something where union employees were disbanded in favor of good benefits and a good retirement savings plan. I don’t think we should force unions out of existence, just provide them with something better than helps our balance sheets now and in the future.
Many people that are in unions don’t realize the money that they are not making, and they see the union as having their best interest at heart, whereas any organization that has power will want more. If you’re in a union, just ask yourself
- Who pays your union head that’s not working in the same place as you are?
- Where does the money come from for the advertisements on buses, radio and television?
- If that money were not going to them, how could that affect you? Would you see more in your paycheck?
Good work will usually be rewarded. Bad work should be corrected. No one should work under slave labor conditions and without benefits, but we could do this without a union.
The US automakers have been drowned by their so-called legacy costs – pension and health benefits for their retired workers and their families. That’s not a problem with unionization, the problem is that our government has not kept pace with other major industrialized nations and provided health care to all and worked to guarantee pensions for retired workers. Because of these failures of government, workers had to band together and demand private health and pension plans from their employers.
Why should all the benefits and profits of a business go to those individuals and groups that happen to be the current owners of shares of stock in a company? No company can produce goods or services without labor and those who labor have a greater claim on the fruits of their labor than shareholders, but our system gives them no voice in the operation of their company, no job security, and no right to reap the benefit of their labor beyond whatever meager wage the employer deigns to pay them. In today’s globalized economy, an employer can be rewarded for firing his American workers and having his products made in China by slave labor. The worker has no rights at all.
Unions have attempted to correct that problem, but in the US they have failed because they chose to see the issue as restricted to a single company or a single industry rather than attack it as a systemic problem. Rather than attack unions as the culprit, we need to realize the problem is our corporate system itself and work to insure that every American enjoys the right to good health care without regard to their ability to pay, and a good pension when they retire, and protection from employers who want to outsource their jobs.
I would argue that the reason that the U.S. automakers are drowning in legacy costs is directly related to unions, who demanded those deals. Regardless of whether you believe the government should be a part of health care or not, it’s the unions that pushed for this, they got it, and they refuse to get anything less in a time when everyone else in the private sector has to do with less.
And traditional American society is about freedom, rather than tyranny. Comparisons between us and other countries must also compare the growth of this country compared to other ones.
Obviously we disagree about whether the government has the responsibility or the individual has a responsibility in taking care of people.
“it’s the unions that pushed for this, they got it, and they refuse to get anything less in a time when everyone else in the private sector has to do with less.”
Wow, Min, as usual, very far off-base! The auto unions made huge concessions recently in order for their companies to receive bailout funds. Every major news agency reported that in depth.
Also, the unions may have demanded it, but the companies also gave it, many times with very little resistance. During the good days of the auto industry, paying out those legacy costs wasn’t an issue. The union workers were receiving their fair share of the profits. Once the American companies started making sub-standard cars, with ugly designs that weren’t able to compete in the world market, the trouble began. If the companies didn’t right in a rainy day clause of some sort, the contract should stand. Solely blaming the unions for the current mess is ludicrous.
I would suppose that you’re also an advocate of executive pay restrictions then, as well. After all, since the country is doing badly right now, they shouldn’t continue to collect their million dollar bonuses, right??
There are a bunch of factors to the American Auto industry’s decline. What the unions negotiated is part of them. I believe you can add what you mentioned (the looks of the cars) as well as the fact that the American auto industry has failed to innovate and anticipate demand. But price is definitely the overriding factor in my book. “Detriot” was all into building things for maximum profit (SUVs, Trucks, etc.) whereas the other companies made their margin with compact cars, etc.
But this isn’t just Auto-makers. Many cash strapped states have found that they are having a hard time figuring out how to balance their books, and part of it is because public employees and their unions have negotiated a deal that did not take into account possible future deficits.
I believe that every contract should be honored. I believe an agreement made between a person and his employer– no matter if that causes the company good or bad times– should be honored. If, however, that causes the company to not be competitive or go under, then that company should go under or renegotiate for better terms.
I’m not solely blaming the unions for the problems we’re in. Indeed, that’s only part of the problem. The big problem is that we, as a country, continue to live in a fantasy world that believes that everything will constantly get better, and we legislate that way, when history proves that it’s wrong.
We get ourselves into massive amounts of debt, expecting to one day pay it off– but when will that day come?
We promise people things in the future claiming it won’t cost us much, but it turns out that it costs us a great deal– and we borrow more.
We have this tendency to expect things to be the same or better, and that’s proven to be false, but from the single person to the federal government, we have trained people not to save and buy quality, but to spend like drunken sailors on anything and everything. We’ve created a dependent society– and some of that rests on unions, and the idea that I deserve something simply because I got a job somewhere.
I’m not saying that there shouldn’t be good working conditions, or that we should have slave labor. What I am saying is that some of the promises and deals that were made were unwise and not done with enough forethought. And I’m also saying that perhaps what the Unions needed to do to secure a good workplace has accomplished its task. Maybe they were needed, but I’m not sure they are any longer.
As for executive pay– for those companies that now work for the federal government I believe that their pay packages should be dictated by the majority stock holders, just as any other company. If other companies want to pay their chief executives massive amounts of money, it’s their right. I just hope that they learn from this debacle.
There would not be good working conditions or decent pay or weekends if there had not been labor unions. Most of the benefits we enjoy today are a result of the hard-won fights of workers for their rights.
Unions took a wrong turn long ago when they decided that the enemy was the individual corporation or a single industry. They focused on the workplace instead of becoming a national political force like their European counterparts. As a result, we suffer today because of the idiocy of conservatism that got its foothold because labor was too focused on the workplace rather than the larger society and economy.
I did not say that Unions never did anything good. I did say that I think Unions have gotten out of control and may have lived passed their usefulness.
I do not agree that unions should be abolished. Some unions engage in behavior that harms their members. Those unions should be changed and eliminated by their members. Some companies engage in practices that allow the executives to loot the treasuries at the expense of the other stakeholders (owners, employees…). That doesn’t mean executives should be abolished.
I do believe many unions have mistaken protecting the worst employees from the consequences of their behavior (and forcing the other employees to do the work they should have done – or lose there job as the company goes bankrupt). But unions are not innately bad. Then can be very good. And given the poor state of management of many companies I can see why many feel the need to protect themselves with unions.
I do think poor union management contributed to the decline of American car makers. But company management has to be more responsible – they ran the companies after all.
.-= John @ Curious Cat Investing and Economics Blog´s last blog ..Consumer Debt Down Over $100 Billion So Far in 2009 =-.
Unions had a place when people were working in the coal mines and everyday someone was dying because of a poor work environment. Just as that was unacceptable on the part of employers….it is equally unacceptable what is happening with unions now. An employer should not be held hostage by its employee’s. A company should not be forced into bankruptcy because of employee’s. This is complete idiocy. If you kill the golden goose that lays the eggs….guess what? No more eggs. Has anyone noticed that all of our manufacturing is now done in China? Guess what made this country what it is? Manufacturing. Guess what country is rapidly expanding 5x faster than we did? China. Guess why we have a 10% + unemployment rate.
This next part will probably really [anger] a lot of people but that’s ok. I am sorry but if you work on an assembly line and you are responsible for putting on a dohicky and it doesn’t require any real talent, or skill, or training….perhaps $20, $30, $40 dollars an hour is a bit much to expect for pay. That is when you go to school so you can get a better job, or use your own talents to start your own business. We live in a country of entitlement. Give me, give me, give me. This is getting even worse. People that don’t work…get a place to live, health care, food, a little extra cash. People think they are entitled to certain jobs with certain pay even though they may not be qualified…or deserve them. Unions bring this mindset to a whole new level in modern day. My boyfriend owns a construction company and he refuses to use union workers to the point he turns down union projects. He refuses to use a former union worker because of their attitude. The get paid the most, the complain the most, they work the least, if it is “not their job” they refuse to do it all together. It is almost impossible to fire a union worker even though they are not preforming. Unions and the lazy overpaid workers that work in them are literally destroying this country. China thanks you though.