The Ethics of Organized Labor

The fracas going on in Wisconsin this year reminded me of some discussions I had a while back about organized labor in general and the need for protection for workers in general. In the present-day case, the governor of Wisconsin is claiming that the unionized government workers need to contribute more to their retirement plans, and that the only way to ensure lasting change on these issues is to restrict the unions’ use of collective bargaining in the case of government positions. Regrettably, both of these positions are complete nonsense. The union employees are already contributing 100% of the input to their retirement funds – just like any other employees who deposit some amount of their income into a retirement plan. That income does come from public sources (the people in question are public employees; that’s where all of their salary comes from), but the idea that the union is somehow draining extra money from the state budget is fatuous. Similarly, collective bargaining agreements will always be the heart of any organized labor contract, since that is the only way individual workers can gain influence in their dealings with any large organization. You might as well just say that the union workers are bad because they cost more than we want to pay them…

Unfortunately, what is getting lost in all of this political bellowing is the essential conflict between employers and workers. In the early years of the Industrial Revolution, working hours and working conditions that would never be tolerated in today’s world were not only common, they were legal and supported by most political leaders. The research that proves that working your employees to exhaustion for low pay and no benefits under unsafe conditions is actually bad for business came much later – and generally after modern labor laws were already on the books. But as I’ve noted in several other blogs, most people don’t really understand how economics works – and don’t really care, as long as their personal demands are met. As a result, there are a lot of employers (private and public) who would still ignore both labor law and a century of empirical research and require 15-hour working days without overtime or benefits, and union officials who would rather seen an entire industry die out (or move off-shore), putting all of their members out of work and destroying entire communities, than accept any reduction in employment numbers, let alone pay cuts…

This condition is even worse in the public sector, where most people have no idea what government employees do in the first place, and don’t value that labor even when they do understand it. There is a persistent popular image of bureaucratic drones getting paid huge salaries to do nothing; police officers spending all day eating donuts and sleeping on the job; postal workers getting full pay for performing less than 10 hours of actual work each week; and utterly incompetent teachers who can’t be trusted to teach a class (or, in some cases, even be near minors without supervision) who still can never be fired. There is also a popular image of senior managers who receive salaries that are thousands of times higher than those of any employee, do nothing to earn a penny of it, and will cheerfully demand that their employees work thousands of hours of unpaid overtime just so their employers can collect higher bonuses on work they already don’t do. The problem is that both of these beliefs are, occasionally, quite correct…

Historically, the truth is that workers who are treated well by their employers do not form unions, and if forced to do so by circumstances will still work in collaboration with their management and ownership groups for mutual benefit. And it’s also true that top management teams are hired by the stockholders (through their agents on the board of directors) to run the company for the long-term benefit of ALL parties involved – not because stockholders are saints, but because they recognize that antagonizing local residents, environmental groups, government regulators, vendors, suppliers, customers, potential investors or your employees is bad for business. If both of these things are not being done, then you’re doing it wrong – and your organization is ultimately doomed….

So what should be done in this particular case? Should the governor abandon the reforms he is trying to implement and allow the state to slowly go broke, eventually descending into Federal receivership? Or should the union membership give up the primary benefits of organized labor and accept working conditions that could eventually descend into nineteenth-century standards so that the governor can gain political power and stay in office and the taxpayers can continue receiving all the services they want without paying any more in taxes? Or can all parties involved become aware of the disaster that is looming and try to work together while they still can?

It’s worth thinking about…