Business & Labor Unions

The corporate base in this country has split in two. On the one side are the old line manufacturing industries which have evolved into a synergistic relationship with labor unions. Both sides have a common interest in seeing the company prosper. They have been joined recently by a rise in unionization in low paid service industries.  In some cases this unionization has forced smaller companies to join into negotiating units so that fairly uniform working conditions can be negotiated. This benefits the companies since they now have a well defined labor market with the costs that can be predicted and thus factored into their planning. It also makes the workers more mobile since they can be assured of similar working conditions even when they shift employers. Transparency in the labor market is thus insured.

The other part of the corporate base consists of those companies that have successfully avoided unionization. Typical cases are foreign manufacturers that set up plants in union unfriendly locales or in areas like retail have few employees at each site and can keep their workforce unorganized. These companies usually brag about their ability to keep labor costs low by using these techniques.
There is, however, another side to this. By fragmenting the labor market they distort the competitiveness of the unionized companies. This puts the old line and organized companies at a disadvantage. It's obvious that it is in the interests of the existing unions to want to organize these other companies. They get more members which improves their bargaining power. But it is also in the interests of the unionized companies. By cooperating with their unions on organizing drives they stand to benefit by leveling the playing field thus making them more competitive.

Another benefit is that many nonunion companies offer poorer fringe benefits such as medical and retirement plans. This puts a burden on the rest of society which must cover these shortfalls as an overall cost. If an employee doesn't have health insurance and ends up at a public emergency room then everyone else pays for the medical care in higher taxes. The nonunionized company gets a free ride.

Simple commonality of interest should indicate the next steps to be taken not only domestically but with foreign competitors as well.


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Copyright © 2004 Robert D Feinman
Feel free to use the ideas, but the words are mine.