Labour

Today I got an e mail from my company assuring me of my safety. I am sure you must be wondering what dangers lies before me. No I am not a stunt man. Nor do I work in a rough district. What dangers lurk around the corner?


There are union workers picketing around our facility. Perhaps that doesn't make me a fire man on a call, but I understand the need for the communication. My company has hired a contractor to completely gut one floor and refurbish it with a new cafe and meeting rooms etc. Well apparently this contractor had the nerve to hire non union dry wall installers. Imagine that! They didn't want to pay 2X the cost to dry wall the building! Whats this country coming to!



I used to think that unions had their purpose in America. That they helped us through a time when the greedy business owners were abusing their workers. Making them work 24/7 for a penny a week. The people organized through unions and fought the man!. Then I learned a little about union history. What they did to the Chinese. What they did to blacks. How they burned down businesses to the ground. Murder, destruction, theft, you name the crime, there is a good chance the unions have done it



More importantly, I learned from Milton Friedman how a free market really works. Most of us have the impression that in the turn of the 20th century that unions were the reason the average wage increased significantly in respect to business. Wages increased significantly. Working conditions improved tremendously. Hours were shorter. Vacations and benefits increased significantly. But the fact is that during that period less than 3 percent of Americans were union. are we then saying that 3% of the work force influenced the market with such force? Even today far less than 1 out of 4 Americans works in a union. Yet somehow we have managed to attribute all of our advances in the American (and other economic developed countries) standard of living to the mighty stride of the Union. Why is that?



Well, one thing we need to understand is through our healthy dose of media, we hear often of union bargaining disagreements. "GM workers threaten strike" or "Teachers may not be coming back to school in the town of east B.F.". While what you do not hear about in the news is each individual leaving his job for one with better pay or better benefits. I am not sure that "Jim Fisher leaves Gillette to get better medical insurance for his family" is really too interesting a headline for CNN news. What most people don't realize that these individual negotiations have massive effect. Sure, the fact that I did leave Gillette didn't make them shut down the mach 3 department, but when 30 others followed me out the door, don't think they didn't evaluate if their compensation package was sufficient. millions of people change their jobs each year. And its effects are the reason for our current standard of living today.

Despite what you may or may not believe about unions, their over all effect of our economy is very negative. But their reach for negativity is far more than just the economy. It decreases the number of doctors and the average standard of health care. It decreases the quality of education. It has added to the massive corruption in government. The list of negative effects goes on. Problem is that it does significantly improve the standard of living of the union member for today. Despite the fact that worker is destroying his company for his children (and his children's economy). Take a minute to evaluate how a union really gets their member wage increased. What is the intrinsic value of the union. They have the power to shut down their company, or at least seriously hinder its operation. Their power stretches beyond that. Companies know that if they do try and replace the union with non-union members, there are many consequences. Some legal and some not legal. Bad publicity, harassment of the new workers and very likely some form of criminal action against them.

So the union uses this power to artificially inflate their compensation. The reason I use the word "artificial", is because their wage or compensation is almost always far above the actual worth to the company. believe it or not, this is just as bad for the worker as it is for the company. Lets say you were a small business man that hired 4 plumbers. You organize all their work by advertising and buying supplies and trucks and everything that goes into it. After all is said and done and you have paid the insurance and the advertisers and the truck payments, etc... If the 4 guys do an honest days work they can make you $100 per day. Lets say the 8 hour day you charge $150 per man, but after all is said and done (bills are paid) you actually make $100 per man per day. You know what the plumbers out there are making and figure you could pay the 4 guys $60 each per day and then you can now keep $40 each. So you now make $160 per day profit. If one of the plumbers says he wont work for less than $80 (but the other 3 will), no big deal, you just tell him see you later and find one that will work for $60. Or perhaps this particular plumber wants the $80 because he kicks butt every day and actually makes you $150 instead of $100. In that case it makes sense to give him what he wants.
But lets say all 4 guys get together with every other plumber in your state and decide no one is getting out of bed for less than $85 a day. Now your left running a company for a total of $60 a day profit (you would be better off being a plumber than a small business owner). But the point is that the original $60 was a natural price that was decided by the market. If the price was less people coming of age would steer towards other industries. If the price was more, it would attract more people coming of age to become plumbers. The wage is a natural price that is decided by market forces. Such as how many people would become plumbers, or how much someone is willing to pay to repair their leaky pipe (charge too much and the person will either leave it leaking or figure out how to fix it himself). Regardless, that $60 is a natural wage that no 1 person or group of people got to decide. It is a natural figure decided by market forces. Now the union decides to inflate the natural wage or price. Do you just say screw it, I guess I will make $60 ($15 dollars from each guy X4) a day running my business. Of course not, you inflate your prices. But then what happens to the market? Does everyone just decide "OK I will pay more to fix the leaky pipe"? Or do people find alternate ways to accomplish what they need accomplished, eventually hurting the plumbing business overall? Perhaps they outsource their plumbing to India (just poking fun at the IT industry). Perhaps this leads someone to invent plumbing supplies that can be assembled without a torch (which did indeed happen) The most important thing someone can understand about a healthy economy is that every transaction should benefit both parties. If it does not, it is unhealthy for the overall economy and unhealthy for that particular industry.
We have many many examples of union destruction of their companies. GM is the one glaring example that not only effected GM, but because of our current leaders, it effected you and me to the tune of 57 billion dollars. Artificial inflation of wage eventually hurts the very position that is getting the wage. Although in the case of GM, it does not hurt them, instead the cost got shifted to the American tax payer. GM has indeed been affected as has America. Plants have moved to Canada and Mexico. Sales have suffered tremendously. To say that GM is unsuccessful would be a severe understatement. The correct thing would to have been to let it fail and then something else could have popped up in its place without a union. It is no coincidence that unions have migrated from the private sector to the public sector. They eventually destroy their companies or their companies figure out how to loose them. But in the public sector, their damage is absorbed by the tax payer. They hurt the very taxpayers that fund their artificially inflated wage. Take for example the teachers union. Do they help us provide a better education for our children? Do they improve any part of the education system whatsoever? I can remember a teacher when I was young celebrating the day he received tenure. In what industry does a person have the right to not be fired for his/her own mistakes. At what point does a person deserve to receive that right?
In summary, unions are very damaging to our economy. Danger is just one issue when talking about the mafia style tactics of the union. If your like most of us, you have to offer some value to your employer. Your in a constant state where both parties are receiving value from the transaction. Your making money and your company is making money off of you. Once you find yourself in a situation where there is more value somewhere else, you go to it. If your in a situation where you don't offer value to your company then they do what they must. People have this idea that we are supposed to spend our entire lives at one company, but the truth is that the economy being in a constant state of flux is what brought us the standard of living we now enjoy, not the unions. It is those millions of personal job negotiations that happen every day that brought us here. Why would we ever want to trade that for the socialist state where negotiation happens for the mass rather than the individual. It is indeed the free market that brought this standard of living to the American people. The unions have only served to remove jobs from America. GM has given us proof of this. do you think they will open new plants here in the U.S. where they must pay inflated prices for labor? All of Detroit was union at one time. Hows that working for ya Detroit? Yeah lets keep forcing unions into companies, cause I know if I were starting a new widget company, I would much rather have 1/3 my work force making full salary in retirement than have the Chinese make my widgets for 10 cents a day. Perhaps the one mistake the unions made in the 20th Century was they didnt kill all the Chinese, cause they sure are paying you back now! Or is it us that need to pay them back? Workers of the world unite huh?"