Unions

One of the things I have been thinking about recently is unions. By nature, my gut reaction is anti-union. I realize, though, that I ought to moderate my view because the basic idea of a union - particularly that of defending the rights of those who are less able to speak for themselves - is not a bad thing. Instead of giving in to a "Unions BAD" reaction, I need to consider whether in each situation a union is doing what is best for its workers or not.

Consider the UAW. I am not a fan of this union, because the unionized benefits that it has won for its workers render the companies that pay the workers hopelessly uncompetitive. Consider this blurb from a New York Times article about the concessions that the UAW has expressed a willingness to consider:

"Currently, the average U.A.W. member costs G.M. about $74 an hour in a combination of wages, health care and the value of future benefits, like pensions."

Assuming a full-time work schedule (2,080 paid hours per year), this is an average per-employee annual cost to GM of almost $154,000. That should scream "Unsustainable!" But the power to command this level of benefits is the power of this union. [Sidebar: read with a very large grain of salt any argument that says "Productivity has soared this decade, but wages are stagnant." Be wary, because a large part of this is not greedy executives stealing bread from the mouths of the workers, but because of the cost of non-wage employee compensation. When employer-paid health care costs are added to such macro considerations, employee compensation has stayed roughly in line with productivity growth.]

It is a good thing that the UAW is willing to make concessions, because it will eliminate the companies where it has its power if it doesn't. Workers at non-union companies don't have as sweet a deal as the UAW workers, but $25 an hour at Toyota is not what I'd call exploitation.

I think the truth is that bankruptcy would hurt the unions more than it would hurt the companies. Factories don't instantly vanish in bankruptcy, nor does everything immediately close - as the airlines who had to declare bankruptcy for restructuring discovered. But the power of a judge to alter the union's contracts means that there is a strong incentive for the UAW to do everything it can to keep the Big Three out of that court.

But in the end - I don't think that there are enough changes that can be made in time to prevent it. They are burning through a LOT of cash, and there were only 236,000 domestic light car sales in the US last month. The auto market is getting beat up, and even companies that weren't on the brink are hurting. For a company like GM...