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The True Costs of Unionization

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In an attempt to be apolitical (which is truly difficult for me), I was reading a New York Times article about United mechanics entering into a training program after layoffs. The success rate of returning those mechanics was dismal if the measurment was to get them into a job with similar pay. The success factor was even quite low if the measurment was to get them into a job with a livable wage.

As I read the article, a couple of themes cropped up for me:

  • Many unionized employees are not engaged in the business mission
  • Many unionized employees are not engaged in their work
  • Union strategies no longer work in the global (outsourced) economy
  • Unions don’t cross polinate

The fact of the matter is that any time I hear that there was an uproar over the substitution of 10 hour days (3 day weekends) for a 8 hour day, and this was one of many factors causing a work slowdown, I think to myself that these employees are completely disengaged with the company’s mission. There’s another side to this though – United airlines clearly didn’t have an employer brand that was articulated to the workforce. The employer brand was (in the 90’s and early 2000’s) the union brand.

Many of us love our jobs – some of us don’t. Clearly, I have an interest in my work, my industry, and my company. You, as a reader of also have similar interests as displayed by the fact that you’re reading this instead of I believe my work is important, and that I have an effect on people and profits – as such I strive to always do great work. However, you always hear about unions in the airline industry, teachers, healthcare, etc. going out on strike. I’ve never understood how it could be that people working in education, health and safety could possibly walk off the job, or engage in a “slowdown.” The problem is not the people, but that union officials seem to be able to grasp the group mentality and create a sense of entitlement that isn’t in line with the laws of supply and demand.

Several years ago, dockworkers – the guys who load and unload cargo off cargo ships – walked off the job in California. The argument was that the docks wanted to implement technology ever time to increase efficiencies. This meant that dockworkers would need to be retrained to different skills, but also that some would be laid off. In effect, the unions basically blocked any hope at labor efficiencies in upcoming years so that their rather unskilled $80K/year laborers could all keep their jobs. Talk about lack of buy-in to their mission.

But back to the New York Times article. So after the United mechanics engage in a work slowdown – they eventually force United to look into outsourcing, and several years later United decides to shut down the plant. Outsourcing is a reality, and with good service level agreements and cost structures, unions can’t always compete. The outrage over outsourcing is real, and I’ve written on why I love the idea of global outsourcing – it gives emerging economies a better chance. On the other hand it leaves a huge talent problem elsewhere. In some industries, unions have inflated wages for workers whose jobs are heading towards being outsourced. Without other transferable skills, replacement jobs of similar compensation value are almost impossible to find.
Hey – I’m a fan of some unions. There truly are places where unions are necessary to protect the worker – the united farmworers, hotel employees, etc. where pay and benefits don’t make a living wage. In these types of cases, the worker deserves a voice. But in most others the workers are the ones getting the short end of the stick. The true cost of unions are the people. Easily disengaged from their work (or easily engaged in the herd mentality), aligned with the union vision more than the company vision, and not part of new talent strategies that are being developed, unemployed union workers are taking the brunt of the cost. Unions have been shortsighted by not being strategic partners with their organizations. Instead – they have been seen as oppositionary forces and now the workers will pay for it.

(I’d love to hear what you guys in Europe think about this…)

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