The Homa Files

Union supporters seem to have a hard time answering the question: which heavily unionized industries have prospered over time?

Steel? Autos? Telecommunications? Education?

Come on, name one.

Sure, members may prosper for awhile, but inevitably, their firms and industries move to non-unionized regions or off-shore.

So, the benefits are transient.

I guess public employee unions think they’re immunized since states can’t move and government services can’t be off-shored.

Or can they ?

Have you noticed how they’re referred to public serants or government employees … but, rarely as government workers.

* * * * *

Here are snippets from an article that stirred my thinking …

To members, unions exist to win higher wages and fringe benefits, and in this, they mainly succeeded.

In 2006, union wages in the private sector were about 19 percent higher than those in comparable nonunion firms.

The union wage premium can endure if higher productivity (aka, efficiency) justifies higher wages, or if companies can pass along costs to customers.

But, the productivity advantages of unionized firms are scant.

The formula worked, because many heavily unionized industries were dominated by a few large firms with similar labor costs that could be recovered in higher prices.

That changed in the 1970s and 1980s.

• Imports and “transplant” factories created new competition in steel and autos.
• Airlines, trucking and communications (telephones) were deregulated, allowing new low-cost rivals into the market.
• Digital technology and the Internet transformed communications and threatened many industries, including traditional phone companies and newspapers.

Both executives and union leaders underestimated the vulnerability of once impregnable market positions. The downfall of the “Big Three” automakers epitomized this disastrous cycle.

Public-sector unions now face a similar predicament.

RCP, Big Labor’s Dilemma, Robert Sameulson, February 28, 2011

This entry was posted on March 3, 2011 at 6:49 am and is filed under Unions - UAW. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.