Thursday, November 10, 2011

The Union Fix - Part 2

In part one of “The Union Fix” I introduced the immediate step towards dismantling the strangle hold unions have on U.S. manufacturing.  In part two, I discuss the longer-term solution to finally break the cycle of anti-competitiveness and bring manufacturing back to our nation.

In Washington State, the IAM waged a strike on the Boeing Company in 2008 resulting in months of delays and lost production.  After reaching a contract agreement, Boeing sought assurances from the IAM that it would not strike again.  When the IAW failed to meet this demand Boeing made the decision to build a second 787 assembly line in North Carolina, a right-to-work state.  Although now embroiled in a highly publicized lawsuit against Boeing over the decision, the IAM provides a perfect example of how unions price themselves out of the manufacturing labor market and drive companies to alternative markets. 

The Boeing case also illustrates part of my proposed solution.  Twenty-two of our nation’s States are right-to-work states.  However, the liberal foothold in the remaining 28 States is unlikely to relent sufficiently to permit the adoption of right-to-work laws.  Therefore, we need a compelling compromise. 

Large corporations are forbade from controlling too much of a given market per existing anti-trust laws.  The word monopoly in the halls of the Federal Trade Commission is a springboard to action and eventual divestiture of assets from the offending firm.  However, these same principles have not been applied to unions.  Unions that represent all employees to a particular firm or industry have a monopoly on that labor market.  Therefore, we should extend anti-trust laws to unions via legal precedent or legislation.  In so doing, no single union would be able to have a monopoly on labor.

The outcome of this step would be a dismantling of the AFL-CIO, SEIU, and Change to Win Federation.  In addition, no one union could represent all the employees in a particular trade at a single company.  Therefore, more than one union would be required; in cases where no additional union is ratified, at least a portion of the employees would not be unionized.  In all cases, the unions would be forced to compete with one another for members.  Competition would tend to put downward pressure on dues and inherently limit the amount of money available for political manipulation.

This solution is effectively a compromise in that it still allows a closed shop for unions, it preserves worker’s rights to unionize, and it gives workers greater choice in representation.  Finally, from the perspective of the firms, there would be competition in the labor market giving the companies greater flexibility over the compensation packages.  In turn, this helps prevent ludicrous pension benefits, exorbitant wages for menial labor, and ultimately makes the U.S. manufacturing industry more competitive against a world of low priced alternatives. 

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