Kenneth Rogoff: Resurgent Unions and the Global Economy

Kenneth Rogoff says that if unions gain more power in rich countries like the U.S., as they appear to be doing, they are likely to be "a major destabilising force in trade and growth":

Resurgent unions and the global economy, by Kenneth Rogoff, Project Syndicate: Will the political resurgence of labour unions throw a wrench into the wheels of globalisation? Or will their growing strength serve to make globalisation more sustainable by fostering greater equality and fairness? One way or the other, unions stand as a major wild card for the evolution of our economic system...

Unions’ rising influence is evident in many recent events: German Chancellor Angela Merkel’s controversial deal to raise minimum wages for postal employees; several US presidential candidates’ open misgivings about trade and immigration; and the Chinese leadership’s nascent concerns about labour standards.

Along with their political clout, unions’ intellectual respectability is also experiencing a renaissance. After decades of vilification by economists for raising unemployment and strangling growth, the union movement is now receiving backing from thought leaders such as Paul Krugman, who argues stronger unions are needed to counter globalisation’s worst excesses. ...

Today, US political leaders such as Congressman Barney Frank want to bring back unions. But there is good reason to be sceptical. For a relatively poor country such as China, real unions could help balance employers’ power, bringing quality-of-life benefits that outweigh the growth costs.

But, for the US and rich countries in Europe, the argument that stronger unions would bring more benefits than costs is far more dubious.

Nowadays, most workers already have legal and statutory rights that cover the basic protections that unions originally fought for a century ago. Instead, union influence today all too often serves to promulgate inflexible work practices and flat salary structures that do not adequately reward work effort and skill.

Some of the issues that unions are promoting, such as human rights and environmental quality, are unassailable. When they try to connect these issues with trade, however, their motives become questionable.

A case in point is union lobbying against the US-Colombia free-trade agreement, ratification of which would greatly advance US-Latin American relations. ...[A]nti-pact activists have complained that Colombia is anti-union because it does not protect union members from rebel violence. Yet the Colombian government notes that all Colombians suffer from rebel violence — union members actually experience less of it than the rest of the population.

Unfortunately, this play is being re-enacted across a host of trade issues, including many involving China.

For rich countries, income redistribution is much better handled through taxes and benefits system, rather than by government edicts to strengthen unions. The rich today pay so little in taxes in many countries that it would be a big improvement simply to move to a flat tax, with a very high exemption level so that lower-income families pay nothing.

For middle-income countries, it is a tougher call. But here, too, increasing workers’ legal and statutory rights, while allowing most unions to fade away, seems like the right approach.

Unfortunately, we are far more likely to see unions’ growing political influence become a major destabilising force in trade and growth, with highly uncertain consequences. When we see political leaders in many rich countries pander to unions by bashing each other on free trade and immigration, there is every reason to worry about trouble ahead. ...

From the archives:

The union question is a hard one for me. I don't believe that the degree of market power workers and firms bring to the bargaining table is in balance. "Superstars" at the upper end of the income distribution have too much market power, and firms have too much market power at the lower end of the income distribution, where the lower end starts at fairly high levels of income.

Unions are one potential answer for workers at the lower end of the income distribution, but is a return to unions the best solution to the market power imbalance? Should we return to the past, or should we try to use the changing political landscape as an opportunity to build better institutions for both workers and firms, institutions that offer workers the same degree of bargaining power that unions provide, and the the same degree of income, health, and retirement security, but do so more efficiently? We already know how unions work, pretty much, but can we do better?

A proposal to implement novel policy has no chance of surviving the political process even if it is well-grounded in economic fundamentals, and even if it looks to be a clear improvement over unionization for everyone involved. There is legislation to change union membership rules under debate in Congress, but the current political battle is about getting people on record for the next presidential election rather than a serious hope of changing the rules on union membership drives. If the next presidential election goes according to plan, then there might be a chance for change, but even then unions may be (and probably will be) the only viable solution within the political process.

Comments

[hari]

I suppose Rogoff is off to something more than bashing the labour unions - he wants a better format to go forward in the era of globalization - and Mark is questioning the strategy and tactics of what's the real framework of policy in this area of social/political reforms.

I was yesterday navigating the EU blog to see exactly how all this falls into place in the New Year with Reform Treaty and its Bill of Rights now a matter of ratification by all EU-27.

The reason why I requested Anne to look into it is because she perhaps knows better than anyone else here what's relevant for our discussion in this blog - under the new biil of rights there're specific articles dealing with the issues Rogoff and Mark are raising in context of OECD developed countries.

My personal reading of the EU blog confirms my opinion that Rogoff is perhaps not only begging the issue but also trying to deflect the political/economic arguments raised by exacerbating impact of globalization felt by the lower level working class in US and other OECD countries ( eg. Italy and Spain).

Free market thinking is NOT going to provide us with serious framework of resolving this social/political issue, as coming state elections in Germany might also have to tackle this same problem now.

Rogoff suggests tax policy to provide redistribution and adjustment from top down. OK!

But will GOP support such a tax policy of income adjustment? I don't think so, not in our life time!

Demos have to find ways and means of protecting their social class(es), if they want to provide the leadership at the Centre. Fiscal measures are surely the most difficult medicine to sell, but there's no other alternative when redistribution is NOT working or when inequality is simply getting worse in almost all OECD countries - rich are getting richer while the middleclass is strugling to survive!

Tax policy is difficult to implement without support of the working class - and that calls for Unions to work closely with political parties to find realistic solutions. In Germany they're able to discuss/debate this type of serious social/political problems without spotting in each other's eyes!

Without the Unions and their central authority, I don't think you can go forward in todays's globalized world. This is fundamentally the arnea of political economy, and countries such as Sweden have with lots of difficulties found resonable solutions - which are now working and being supported by all political persuasions.

[ringemann]

rogoff:
"Unions’ rising influence is evident in many recent events: German Chancellor Angela Merkel’s controversial deal to raise minimum wages for postal employees..."

But this had nothing to do with unions and it was not a raise - the government introduced a minium wage for the recently privatized post sector.
In fact unions in Germany are not very keen towards minium wages, they normally prefer to negotiate about wages with employers without getting the government involved. It is called "Tarifautonomie".

I do not know whether the two following points rogoff is mentioning have anything to do with unions, but at least in Germany unions are not getting more powerful. they barely manage to hold their position and are not very succesful in stopping the decline of labour standards.
So i guess bashing unions is an easy way to attack any improvement for labour at all.

[anne]

This is among the most stupid and perverse and mean-spirited essays ever, but there we have Kenneth Rogoff. The problem we have is unions, good grief, everywhere I go another union goony is threatening to deny me tomatos, or if not tomatos then radishes and I would be a lesser woman were I unable to buy radishes. I lie awake night and days thinking will those there u nions deny me radishes, and in preparation I already hidden 7,000 pounds.

What deceiving hateful rubbish.

[anne]

Democracy is always fine, as long as there is no democracy. I always associated suppression of unions as a characteristic of fascist states, but what do I know. Must find a public school teacher to beat up today. Down with the goonies.

[BJ Feng]

I have no problem with unions in the private sector, but public sector unions should be banned. They have unequal power in that politicians have little incentive to negotiate a fair wage, or endure a strike. And thanks to political donations, politicians end up in the pockets of big labor, which is a conflict of interest as politicians are also the ones who approve wage increases. In California, this has gotten way out of hand, especially in Los Angeles where Dept. of Power and Water workers routinely make over $100,000; now other city workers want the same sweet deal. I could handle the salary, it's the lifetime pensions and benefits that, when added along with the wage, amounts to grand larceny. So what is the political response? Raise taxes of course. That despite record revenues. There's never enough money for the greedy unions. And lest we forget, power is very concentrated in unions, with union bosses running the whole show. Incredible that there was opposition to keeping the secret ballot in union elections, but it shows you what the bosses, and the politicians who are controlled by the bosses, really want--uncontrolled and absolute power over the rank and file. Stalin, mentioned in another post, would be proud.

[anne]

"In California, this has gotten way out of hand, especially in Los Angeles where Dept. of Power and Water workers routinely make over $100,000; now other city workers want the same sweet deal."

Document this; not that it makes any difference to the gross charges, but document this.

[anne]

"And thanks to political donations, politicians end up in the pockets of big labor, which is a conflict of interest as politicians are also the ones who approve wage increases."

Where is the evidence? I want to have specific evidence on this charge. I am waiting for the evidence, and guessing there is none.

[anne]

"Incredible that there was opposition to keeping the secret ballot in union elections, but it shows you what the bosses, and the politicians who are controlled by the bosses, really want--uncontrolled and absolute power over the rank and file."

Document this; I know of no opposition to keeping votes by union memebers in union elections and on union policy secret. Show me the opposition. I am waiting.

[save_the_rustbelt]

This could be a classic case of shutting the barn door after the horses have run away.

Unions representing cooks and nurse aides will never have the leverage of unions representing manufacturing workers (show me the money).

Whatever one thinks of public employee unions, they do not have the wider economic impacts of industrial and trade unions.

So now we want to create unions that aren't really unions but new special institutions that are sorta kinda like unions? Hmmmmm.

Workers are going to get screwed for at least another generation and there is probably little we can do about it now. Once an avalanche starts no one can stop it.

[DLL]

Posted by Anne: "In California, this has gotten way out of hand, especially in Los Angeles where Dept. of Power and Water workers routinely make over $100,000; now other city workers want the same sweet deal."

Document this; not that it makes any difference to the gross charges, but document this."

I think this is what BJFeng is referring to:

More than 13% of DWP workers are paid $100,000 and up
http://www.dailynews.com/ci_7040820

With an across the board raise of 16-28% being implemented that number should climb steadily.

[Callahan]

Save the belt says it all.

Screwed, jewed, and tatooed. We, and I mean all workers all over the wonderful world, are screwed. If we make more money, we may travel more, thereby wasting precious oil. Decent wages are no more. Those of us who have two wage earners in the family are insulated from such troubles for now, but it ain't gonna be long until the bottom falls out.

It's a conspiracy man.

We are becoming Mexico.

[anne]

Ringemann:

"Unions’ rising influence is evident in many recent events: German Chancellor Angela Merkel’s controversial deal to raise minimum wages for postal employees..."

But this had nothing to do with unions and it was not a raise - the government introduced a minium wage for the recently privatized post sector....

[Please explain this further, since I can find no ready seemingly balanced explanation.]

[anne]

Using a hateful, ignorant, shocking ethnic slur is intolerable. Shame!

[Callahan]

anne, are u talkin ta me, are u talkin ta me, are u talking ta me?

Well sorry for the old timey phrase, how about this one instead? Gouged (or otherwise ripped off), screwed, and tatooed.

[anne]

Never have I heard or read such a hateful shameful ethnic slur.

[Callahan]

Anne,

I may be ignorant, but not so hateful, and if you've never heard that one, then you ain't been around much have you?

[ken melvin]

So it's evolution we be dealing with. Can we call this the biology of capitalism? And, is minimum wage a weed or virus. The unions in the US; a matter of proper husbanding of the soil? Doing the lords work see3ms more like creationism. Now, the redistribution from the top be far more the natural order.

[anne]

Even given this highly prejudiced article, I find nothing to be upset about. There should be a reasonably balanced article available from the Los angeles Times:

http://www.dailynews.com/ci_7040820

November 2, 2007

More Than 13% of DWP Workers are Paid $100,000 and Up - L.A.'s best jobs: Average utility employee earns $76,949 per year
BY BETH BARRETT

As the Los Angeles Department of Water and Power seeks a hefty taxpayer rate hike, a Daily News review of salary data shows the average utility worker makes $76,949 a year - or nearly 20 percent more than the average civilian city worker.

More than 1,140 of the utility's employees - or about 13 percent - take home more than $100,000 a year. And General Manager Ron Deaton, who is on medical leave, rakes in $344,624 a year - making him the city's highest- paid worker.

DWP salaries are on average higher than city and far higher than private-sector workers' even as the utility has come under fire for recent power outages and another round of rate hikes: A 9percent, three-year electric-rate hike and a 6 percent, two-year water-rate hike.

The salary disparities have emerged in recent days as a crucial issue in intense negotiations with six unions representing nearly 22,000 city workers - about half the work force - whose contracts expire today.

"To the average person, they're going to go, `Wow, that's a great salary and they're charging me more,"' said City Councilwoman Jan Perry, who is among council members who have asked the utility to justify its rate-hike request.

"People who are regular folks will say, `Gosh darn it, where is all the money being spent? I lost power for five days, and I had to throw out my groceries."' ...

[anne]

Ethnic slurs are hateful. The slur used was shockingly hateful, and would be treated as such in any setting, hopefully to be instantly apologized for and never to be used again. Shame.

[Callahan]

Geesh, sorry, I'll never use it again.

It is better to forgive, than to be forgiven.

[anne]

I do understand using an expression with no thought, becoming aware the expression is hurtful and simply not using the expression again. I understand.

[Callahan]

Anne, thanks, I'll go away now, with my tail between my legs, and my hillbilly head hung low.

[anne]

Thank you so much for understanding, and forgiving me for being angry and writing so. I am pleased, and did understand the expression was accidental but thought to complain.

[anne]

No; you are lovely, and Ozark mountain folks are lovely, and I learn a lot from your comments and understand the reason for the satirical comment. I like satire, which is difficult to do well.

[Lafayette]

Article: Or will their growing strength serve to make globalisation more sustainable by fostering greater equality and fairness?

Tell me where I am wrong!

Maybe the unions are resurgent in the US, and let's hope so, but in Europe they have never gone into remission. Particularly, in France.

Management would not get away with half the shenanigans that they do stateside, especially in sectors where unions are particularly strong such as Transportation.

As I argued earlier, for the present, unions are part of the problem. The solution to any business is its need to make profits, which it then shares (fairly or unfairly) with its stock-holders. Unions are not part of that solution.

They are part of the problem for as long as they negotiate only on Comp & Ben, which are costs. In fact, if they do so too successfully, they are capable of bringing a company to its knees. The surcharge on every car made by Detroit is a classic example of pricing an industry out of its market and allowing foreign competition to enter.

The knee-jerk reaction, which I see/hear both in the US and Europe, is "Well, we just put up our tariffs, or we fine companies that dislocate jobs". This sort of reaction would be laughable if the situation were not so drastic.

I suggest that unions put their Comp & Ben on the back burner by negotiating increases in their take of the profits. Now, for this to happen successfully, they need access to bedrock corporate information -- not just what it declares as profits but what it makes as profits.

For that to happen, they need representation at the highest levels of a company. And, if they had that, believe me, there would be far less dislocation of large-scale manufacturing. This latter solution is the easy-way-out, which is why companies take it.

By dislocating, management protects its profit-generating revenue base, meaning profits -- which it merrily shares with its equity-holders, with a comfortable portion going to management. That is neither fair nor ethically acceptable. It is morally unfair to unhook oneself from the market in which one makes the major part of one's profits. Meaning, the jobs that support demand come from companies that remain located in the US.

This means further that we shift jobs abroad but maintain demand for those products at home. This imbalances the traditional Supply & Demand mechanism, by which labor supplied generated consumer demand. It moves more of a nation's GNP out of Consumption and into Imports in the national accounts, and - if exports cannot equal imports, then it diminishes GNP. Why?

Consumption is reduced (because people get fired) and Imports increased because the products that national-labor no longer produces now enter from manufacturing located elsewhere).

There are two solutions to the challenge, and both are worth implementing. The first is to allow those who are fired to "re-skill" themselves into better paying jobs - rather than go from the GM assembly line to the Macdonald's service counter.

The second is to find a way to lower/maintain Comp & Ben and therefore labor factor costs, that must be recuperated in a company's product/service pricing. And there we are back to Health Care insurance (one of the highest in the world) which is a major component of labor factor costs. To lower HC costs, guess what must be done? (If not, then you don't deserve to be a presidential candidate.)

Yep, lower them across the board -- not announce magical ways of getting everybody covered at the medical/medicinal cost structures that exist today. That election pledge will get well-deserved coverage for the poor who cannot afford it -- but it also incarcerates the poor in unemployment. You don't get something for nothing?

Am I wrong? Am I wrong? Hey, tell me where I am wrong!

[anne]

Callahan:

"It is better to forgive, than to be forgiven."

Which may be why I have a difficult time at Confession, needing too often to be forgiven.

[Alex Tolley]

should we try to use the changing political landscape as an opportunity to build better institutions for both workers and firms, institutions that offer workers the same degree of bargaining power that unions provide, and the the same degree of income, health, and retirement security, but do so more efficiently? We already know how unions work, pretty much, but can we do better?

Any ideas what those institutions might be? It seems to me that there has been a pretty steady erosion of workers rights in the US as [large] employers have found ways to evade/avoid labor laws. Divide and conquer is the modus operandi. Workers really need some help it getting some redress for their relatively little power in the workplace and so far, the impersonal justice system isn't providing it.

I am well aware of the abuses that unions can generate, but at this point, US corporations seem to be getting pretty much of a free pass on the abuses they indulge in.

[Callahan]

For Alex Toley - History Repeats.

For Anne - I am humbled by your generous comments, and will strive to never do what I did earlier, again.

Thanks

[save_the_rustbelt]

"Never have I heard or read such a hateful shameful ethnic slur."

Anne has never spent much time with the Teamsters. Or listened to hip-hop. Can we get back to the point?

[save_the_rustbelt]

"Any ideas what those institutions might be?"

Well, if it isn't unions it would just about have to be bigger government. Economists seem to think an enhanced EITC and single payer health insurance would make up for replacing a good job with a Wal-Mart job.

[David in NY]

I focused on the same passage Alex Tolley did. It raises the question, "If not unions, then what?" And I don't know what the answer would be, and I don't know what Mark is suggesting it might be.

[Cynthia]

Hari: you write,

"Rogoff suggests tax policy to provide redistribution and adjustment from top down. OK! But will GOP support such a tax policy of income adjustment? I don't think so, nor in our life time!"

I'm under the impression that Rogoff believes redistribution of wealth is evil whether it's done through taxes or unions. But if he were forced to make a choice, he'd choose redistribution of wealth via taxes over unions!

And let me close by commenting that Rogoff comes across as an empty shell engaging in scare tactics to prevent non-upper echelon employees from sharing in the benefits of American corporate capitalism!

[Bruce Wilder]

anne: "What deceiving hateful rubbish."

Exactly my thought.

I especially loved this part:A case in point is union lobbying against the US-Colombia free-trade agreement, ratification of which would greatly advance US-Latin American relations.

Legitimate questions about how the Colombian government conducted its epic civil war with drug-financed rebels do not trump broader issues. So anti-pact activists have complained that Colombia is anti-union because it does not protect union members from rebel violence. Yet the Colombian government notes that all Colombians suffer from rebel violence — union members actually experience less of it than the rest of the population.
In Rogoff's fetid mind, the concerns of workers, as expressed by unions, never counterbalance the unquestionable goodness of his "broader concerns", never have legitimacy. It is pure Toryism, when it is not pure Lie.

". . . Colombia is anti-union because it does not protect union members from rebel violence." No, Kenny-boy, Columbia's government is anti-union because it allows right-wing goon squads to kill union leaders with impunity.

[Barry]

"If not unions, what?"

Wh*reson says: "For rich countries, income redistribution is much better handled through taxes and benefits system, rather than by government edicts to strengthen unions."

For those who didn't know, the trend (in the USA, at least) has been for the rich to get tax cuts, and the middle, working and lower classes to get screwed.

We've tried the economists' policy of quid pro quo; they reneged on the deal. When somebody has spent decades reneging on a deal, only a fool trusts that they'll have a change of heart.

Rusty: "Economists seem to think an enhanced EITC and single payer health insurance would make up for replacing a good job with a Wal-Mart job."

That's because economics professors (in general) have no clue about the real world, and the 'think tank' economists are paid to lie.

[ken melvin]

Employee owned.

[LesserFlea]

What short memories. Does no one remember that at
the time CA politicians of both parties were saying:
if we enact this law (written in Houston) to deregulate
electricity in California it will save consumers all
kinds of money. Only LA held out, because LADWP had always
been a pretty good provider. They took lots of abuse
for this. But comes the crisis-- only LA has an adequate
supply. They made some money selling surplus onto the grid
and could have made more by selling at a higher price
except for politically dictated restraint. (So that I,
in SB with SC Edison, benefited a little as well.
But not nearly as much as I lost, and am still losing,
from Enron's depredations.)

The kvetchers should check out comparison rates and
salaries with private utilities before arguing that LAPW is anything but a jewel.

[hari]

It seems there's hardly any trust/confidence left between labour and capital in US from above discussion of Rogoff's piece and Marks comments.

Whereas here, in EU, a Bill Of Rights is now included in the Reform Treaty which I suppose will further cement the unique role of organized labour vis-a-vis the economic community of 27 nations.

How do we reconcile with this growing dichotomy across the Atlantic in social/economic equality and good governance? Don't misunderstand me, the EU has also a lot of internal problems which will occupy its attention for next generation, I suppose.

However, it seems something critical has happened to organized labour in America compared to its counterparts in Northern Europe, in particular.

Cynthia - I do agree with your argument on Rogoff...

[hari]

It seems there's hardly any trust/confidence left between labour and capital in US from above discussion of Rogoff's piece and Marks comments.

Whereas here, in EU, a Bill Of Rights is now included in the Reform Treaty which I suppose will further cement the unique role of organized labour vis-a-vis the economic community of 27 nations.

How do we reconcile with this growing dichotomy across the Atlantic in social/economic equality and good governance? Don't misunderstand me, the EU has also a lot of internal problems which will occupy its attention for next generation, I suppose.

However, it seems something critical has happened to organized labour in America compared to its counterparts in Northern Europe, in particular.

Cynthia - I do agree with your argument on Rogoff...

[Cynthia]

Wow, I must say that Rogoff is extraordinarily inventive when it comes to conspiracy theories!

First he invents a conspiracy about how unions in the States are out to undermine the sanctity of capitalism...

Then he goes on to invent a conspiracy about how unions from abroad have ties to the Colombian drug cartel!

[anne]

What the situation is now in Colombia I do not know, but I have had the sense of past intense anti-union hostility such as may be found in almost no other country.

http://query.nytimes.com/gst/fullpage.html?res=9C00EEDC1E39F93AA15757C0A9679C8B63

April 29, 2001

Union Workers in Colombia Are Easy Prey for Gunmen
By JUAN FORERO

Ricardo Orozco, vice president of the hospital workers' union, had pleaded with the government to provide him with bodyguards. For weeks, he had been certain that his name was on a list of potential targets for right-wing gunmen. But the government had determined that the chances of assassination were slim, and no bodyguards were assigned.

So on a recent morning, Mr. Orozco was unprotected as a gunman attacked from behind and fired five bullets at him in Barranquilla in northern Colombia. Mr. Orozco, 36, married and the father of a baby girl, was left dead on the street.

That attack and dozens of others are part of a terror campaign, mostly carried out by an illegal paramilitary group, that has debilitated the union movement and undermined the efforts of labor leaders involved in peace talks with leftist rebels. Labor officials say that at least 120 union workers were slain last year and 69 in 1999. Thirty-five have died so far this year....

[anne]

http://www.nytimes.com/2004/09/08/international/americas/08colombia.html?hp

September 8, 2004

Bogotá Says Army Killed Union Chiefs
By JUAN FORERO

BOGOTÁ, Colombia - The attorney general's office said late Monday that Colombian soldiers assassinated three union leaders last month, an account that contrasts sharply with the army's earlier contention that the three men were Marxist rebels killed in a firefight.

The attorney general's human rights unit on Monday ordered the arrest of an army officer, two soldiers and a civilian who took part in the killings of Jorge Eduardo Prieto, Leonel Goyeneche and Héctor Alirio Martínez on Aug. 5 in Saravena, a town long besieged by leftist rebels. Since 2002, American military trainers have been instructing Colombian soldiers there in counterguerrilla techniques, though it is unclear if the Americans trained the unit accused of killing the union leaders.

"The evidence shows that a homicide was committed," Luis Alberto Santana, the deputy attorney general, said at a news conference on Monday. "We have ruled out that there was combat."

The attorney general's announcement vindicated union leaders in Colombia and Europe who said the army had killed three defenseless union activists and then tried to cover the matter up.

"It's clear that we were never wrong, saying that they were assassinated by members of the Colombian Army," said Domingo Tovar, who coordinates human rights activities for the Central Workers Union, largest Colombian labor confederation.

The attorney general's announcement came days after Secretary of State Colin L. Powell warned the Colombian government that it must curtail rights abuses or risk losing aid....

says...

Where are you, paine? Wake up! this discussion needs you>

[anne]

http://query.nytimes.com/gst/fullpage.html?res=9906E1DD173DF935A15754C0A9679C8B63

July 26, 2001

Sixty-seven union members have been killed this year, mostly from unions that represent government workers like teachers and utilities workers, said the National Union School, a research and educational center in Medellín. Last year, at least 130 were slain, the center said....

[Bruce Wilder]

You make me laugh
Cause your eyes they light the night
They look right through me
You bashful boy
Youre hiding something sweet
Please give it to me yeah, to me

Talk to me some more
You dont have to go
Youre the poetry man
You make things all rhyme

[Callahan]

This just in from the AP:

WASHINGTON - Federal Reserve Chairman Ben Bernanke pledged Thursday to slash interest rates yet again to prevent housing and credit problems from plunging the country into a recession.

The Fed chief made clear the central bank was prepared to act aggressively to rescue a weakening economy. “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,” he said.

[anne]

Possibly there have been remarkable gains for union workers in Colombia since September 2004, and I do favor trade liberalizing with protections for workers and the environment, but Kenneth Rogoff would appear to be bizarrely ignorant or deceiving about reasons for workers fearing trade liberalizing with Colombia.

[btg]

The problems I see with unions and increasing unionisation has to do with the split between the public and private sectors - the UAW is having to make concessions, and outsourcing/globalisation means that few unions in the private sector have much power.

Canada has a higher rate of unionisation than the US - what I have never seen is a breakdown/comparison showing what percentages in each country are private sector vs. public sector.

For example, here in Toronto, police, firemen and other government employees have very powerful unions, and they have high wages with good benefits and pensions - same applies to teachers and many health care workers who work in hospitals. ages ago, "public servants" were underpaid - this is no longer true, and the trend seems to be that aside from any privatisation of public services, we are developing an economy whereby government workers form a well paid elite in the workforce, while those of us who support them through our taxes do not get the same standard of living, unless you are part of the corporate elite or have some skill/education that is particularly well rewarded. sort of like feudalism, and quitte the opposite of the "guardian" mentality Jane Jacobs describes in her book "systems of survival".

the only private sector unions that can command the same kind of power are in services that are strictly local - mainly construction, where the only competition comes from other unionised jurisdictions, or from companies that can use non-unionised labour (including illegal immigrants, which are more of a factor in the uS than in Canada) - in some places, like here in Toronto, companies doing government work have to be unionised, or pay union scale, in order to win tenders.

for me, i hate this dicototomy of a few powerful unions with large numbers of workers who have little protection and few benefits - for me, a better situation would be more widespread unionisation, but with less powerful unions. in terms of public sector union, politicians/governments don't face market constraints, and contracts can be overly generous becuase of the monoloply power of governments. regulated monopolies often face constraints - sometimes the cost of a rich contract can be passed on to consumers, other times they can't. what is needed is some sort of limit on public sector contracts - like judicial review that would ensure that governments cannot agree topay pulbic sector workers anything higher than what might be negotiated by a large private sector company facing a reasonable level of competition.

[anne]

http://query.nytimes.com/gst/fullpage.html?res=9906E1DD173DF935A15754C0A9679C8B63

July 26, 2001

Sixty-seven union members have been killed this year

[Article filed from Bogata, Colombia.]

[robertdfeinman]

Union bashing is just one example of several themes used by conservatives. Other favorites have to do with "free" trade and (domestically) "excessive" regulation and runaway trial lawyers.

What all these have in common is that the areas being attacked are on the margins. In the US, unions are at most 12% of the work force. The degree that things will change if the remaining trade is opened up is slight compared to the existing volume that is already unregulated.

Similarly damage awards (especially for medical malpractice) are an insignificant amount of the total costs of health care.

So what's going on here? The weakest issues continue to be attacked as if they were serious threats. There seem to be several possible explanations:
1. The conservatives are stuck with a fixed list of bogeymen and can't adapt.
2. The conservatives are desperate because they see their influence waning and are trying to revive the fear themes of the past in a hope that they will regain some of their supporters.
3. There are no new lights in the movement and the vast majority of flacks have no new scripts to work off. I can't think of a single, young, conservative social philosopher who has any presence in the intellectual sphere. The movement seems to be suffering from hardening of the intellectual arteries.

I'm open to other interpretations.

[hari]

But Robert...you're painting a dismal picture of America and its political paralysis! Of course, enemies of American capitalism will rejoice if the damn thing implodes with advent of globalization and whatnot.

But I don't think it reflects well on American democracy and what we understand by export of "good governance" by this WH.

I suppose Mark was hiding his gloomy outlook (also) and not being forthright about the demise of organized labour and its future.

Invariably there's a wide gulf in social philosophy and may be even basic intelligence about the reason why organized labour is an important part of the EU pyramid - especially when it comes to consultation on social issues (before they're approved by EU Parliament).

[hari]

But Robert...you're painting a dismal picture of America and its political paralysis! Of course, enemies of American capitalism will rejoice if the damn thing implodes with advent of globalization and whatnot.

But I don't think it reflects well on American democracy and what we understand by export of "good governance" by this WH.

I suppose Mark was hiding his gloomy outlook (also) and not being forthright about the demise of organized labour and its future.

Invariably there's a wide gulf in social philosophy and may be even basic intelligence about the reason why organized labour is an important part of the EU pyramid - especially when it comes to consultation on social issues (before they're approved by EU Parliament).

[reason]

Me, I don't like excessive market power wherever it is. Anti-trust is one arm of fighting for workers rights. And I really think political representation (and particularly legal rights for employees in labour contracts) acchieves more of lasting value for the great bulk of the workforce than unions have. I think the right to have some form of collective representation (like a Betriebsrat in Germany) is probably more important than widespread trade union membership.

To put it more pragmatically - getting John Edwards into the Whitehouse is probably more important than expanding unions.

[anne]

http://www.nytimes.com/2008/01/04/business/worldbusiness/04wages.html

January 4, 2008

Germany Posts Month 21 of Declining Jobless Rate
By MARK LANDLER

FRANKFURT — Of all the measures of Germany's economic revival over the last two years, none may be more telling than this: there are 711,000 fewer people out of work in this country than in 2006, and 1.5 million fewer than in 2005, when unemployment reached a peak of more than 5 million....

Germany's banishment of double-digit unemployment has been a political coup for Chancellor Angela Merkel. But some analysts worry that all the positive economic news is starting to influence political debate in a way that could undo the hard-won gains in the job market.

The Social Democratic Party, which governs Germany in coalition with Mrs. Merkel's conservative Christian Democrats, is calling for the adoption of a national minimum wage. The country is one of just a few in Europe that do not have a national minimum.

The Social Democrats have made the issue the centerpiece of their campaign in a state election this month in Hesse. Mrs. Merkel opposes a minimum wage on the ground that it could hurt job growth, but a majority of Germans support it, according to polls.

Mrs. Merkel's vice chancellor, Frank-Walter Steinmeier, a leading Social Democrat, said Germany should consider a minimum wage in the range of 7.20 euros ($10.62) to 7.50 euros ($11.06) an hour. By comparison, the minimum wage in France has been set at 8.27 euros ($12.19) since mid-2006; in Britain, it is £5.52 ($10.89) an hour for workers 22 and older.

Employer groups in Germany uniformly oppose a set minimum, and some economists agree that it could discourage hiring. Germany, they say, has recaptured its competitiveness, in part by resisting pressure for big pay increases.

"The German labor market is working better because the unions have lost power," said Holger Schmieding, head of European economics at Bank of America in London. "This is an attempt to correct that by having the government set wages in sectors where the unions are not strong enough to do it." ...

[anne]

Over and over, the tone of economic reporting on Germany is slanted to attribute past sluggishness or higher unemployment to the strength of unions. Any evident decline in union strength is then welcome or any encouraging economic news from Germany taken to be a result of a decline in uion strength. What we want is for Angela Merkel to be Margaret Thatcher. (Well, not we because I do not want that.)

I however find no evidence ever presented that union strength has been harmful for Germany. I find union strength responsible for what may be the most remarkable anti-poverty program ever in bettering the well-being of East Germans while protecting West Germans.

[anne]

Kenneth Rogoff worries about a minimum wage for postal workers, without bothering to give a hint as to why such a minimum wage is threatening or to whom. How low should the wages of postal workers be to satisfy such an economist? What Rogoff is after is simply destroying a union balance to employers who in Germany are in the midst of a striking earning increase, broad and deep.

Has Rogoff looked at German or French or (gasp) Swedish stocks these past years?

[hari]

Anne -

It's not question of weather labour market is working better without minimum wage scales, in Germany, but a macroeconomic redistribution problem.

The Public Sector Unions have just gone on record demanding adjustment of their members wages - held back for last few years due to economic crisis - by roughly 8%!

This is surely a hard medicine for CDU to take, including the SPD Min of Finance in the grand coalition.

The German Railways (state owned still!) have finally given into locomotive drivers union for a separate wage deal...and a strike may now be avoided. It's still not a done deal, as far as I can tell from here.

You see, in spite of what you read in the media, the organized labour in Germany (DGB) is part of the power structure when basic economic decisions have to settled.

Of course, politics is surely part of the ideological problem in age of globalization when govs must struggle to preserve their relative comparative advantage via-a-vis their (real) trade competitors.

However, without formal institutions, procedures to ameliorate job dislocations and whatnots during this stage of rapid structural dislocation within national economies, govs can't handle the adjustment process without the political cooperation of the organized labour in EU.

[anne]

So the wholesale historical murder of unionists in Colombia is of no evident concern to Rogoff, while postal union support in a wildly prosperous Germany is in a bizarre linking reason to worry. Sixty-seven unionists murdered by July? *

* "Yet the Colombian government notes that all Colombians suffer from rebel violence — union members actually experience less of it than the rest of the population." **

** Not counting the violence unionists are subject to from the Colombian government.

[anne]

Thank you so much, Hari.

"It's not question of whether the labour market is working better without minimum wage scales in Germany, but a macroeconomic redistribution problem."

Interesting.

[hari]

The German Postal Union minimum wage was imposed, I suggest, to avoid takeover by FDI or even a by a local private group!

You've to pardon Rogoff for his ignorance about the facts of the case, I suppose, and because he used it as an example.

[Cynthia]

Bruce Wilder,

There's no doubt that your prose is utterly brilliant, but Paine still outshines you in the poetry department.;~)

[dilbert dogbert]

I think that any gains negotiated by unions would be taken away be the Fed.
To the Fed all wage increases are inflationary. Gas, food, medical care, college tuition. Nah!

[calmo]

UK Ken sees the Texas janitors maybe with this:One way or the other, unions stand as a major wild card for the evolution of our economic system... and not those stingy Senators who had serious reservations about the consequences of increasing the federal minimum wage...unlike their own self-dealt wild benefit package.
Maybe union membership is on the rise now that the Texas janitors have set the example...but I see this wild card as damn near extinct, you know?
Mark opinesI don't believe that the degree of market power workers and firms bring to the bargaining table is in balance. [calmo sees herd of elephants on one end of beam "negotiating" the placement of fulcrum to "balance" against that "threat" of unwashed (socialist!) workers on the other.] Domestic workers, even those among the country's most entrenched unions (auto workers) can accept pay decreases and reduced benefits in return for the joy of continuing employment until the next round of "bargaining". If you're lucky enough to belong to a union.
Now you may believe that GM is a special case...and itiz: the exemplary case demonstrating that firms, esp global firms have power and unions, not so much.

Twas Rusty, sometime ago that put the boot to this: if wages were sufficiently remunerative, subprime activity (not just the lending, nor the borrowing, nor the investing, but the disregard for fair and honest (lookit those "illegal aliens" produce!) would not have been necessary to generate the current morass?

[mik]

Anne sez:

"Never have I heard or read such a hateful shameful ethnic slur."

Gosh, woman. You should get out a bit more.

Shalom.

[evagrius]

Just a note-those LA utility workers earning over $100k a year are probably pulling 50-60 hours overtime a month.
Another detail is that the "average" pay is probably for a worker that has been there at least 10+ years.

[anne]

Hari:

"The German Postal Union minimum wage was imposed, I suggest, to avoid takeover by FDI (foreign direct investment) or even a by a local private group!"

The clever suggestion here is that the reason for setting a minimum wage in the course of privatizing the German Postal Union was to avoid private investors buying the private company and being aboe to add enough to the profitability of the company by pressuring workers to make the purchase quickly attractive. The grumbles from the investment community on the imposing of the minimum wage, suggest strongly this was the government's reason.

[anne]

Forty percent of the employees at the Los Angeles Department of Water and Power are within a few years of retirement. Salaries simply seem competitive with private utilities in California, but more is needed to draw any conclusions. What overtime may amount to is not discussed. While complaints are being made by selected elected officers, so what play of politics there may be is surely not clear.

[save_the_rustbelt]

If memory serves me correctly, some of the best paid union members in the US are California longshoremen, who are busy unloading cargo containers from China, you know, that contain all of the merchandise that used to be manufactured in the US.

There have been some blue collar winners from expanded trade, just not very many.

[Gene O'Grady]

I've worked with utility workers (high voltage electricians and HVAC leads, for instance) and I've worked with MBA's in Marketing. I can name some of the utility workers that are worth the $100,000/year, but none of the MBA's.

A couple of other points: Public/private is not really a relevant distinction in California Utilities. The public Palo Alto utilities, let alone the gigantic LA Water and Power, are competing with PG&E for the same skills and the same working conditions.

The overtime is not featherbedding or exploitation; utilities are a crisis ridden business (power outages, even more importantly not frying two billion dollars worth of stuff when the power comes back, floods, fires, death.) I once saw a (capable and dedicated) high voltage electrician post a 23.5 hour day after a major power outage, and supervisors and management assumed (correctly) that it was what he was due.

The decision has been widely made (largely for cost reasons, especially benefits) to keep staff levels lean. That means that there is no way to manage the crises that inevitably come along except with this kind of overtime, and the time-and a half, double-time, and differentials that ensue are entirely appropriate.

I can point to a variety of blue collar positions that are overpaid and underworked (by the way, I was in a non-Union environment), but the higher end electricians, HVAC journeymen and leads, and (perhaps surprisingly) plumbers are worth every dime. The assumption that they aren't is just uninformed snobbery.

[kthomas]

"jewed"? That is racist, to the core. And I do get out, and I have heard that one before. Has no place on these boards.

Sorry for straying off point, but somebody needs thier head slapped and maybe thier mouth washe with soap.

Prof Thoma says: "Unions are one potential answer for workers at the lower end of the income distribution, but is a return to unions the best solution to the market power imbalance?"
I can't see any alternative, unless the uber-wealthy suddenly find thier conscience. When I look at history, the unions have a very imporant part to play. My family benfited for many generations on Union pay, and it made a huge differnce. Thier decline has been obvious, but then so have real wages...delclined.

I'm not saying we need another Jimmy Hoffa, or a resurgence in Teamsters, however. Something's gotta give....

[Dickeylee]

Gene beat me to the point, Journeymen electricians and linesmen are worth every penny they make. If they are pulling in $100k, it is with a lot of O/T, which is probably mandated by the Utility to keep staffing at a minimum.

[paine]

mr r is a right wing
multi nat corporate stooge
hack
and hatchet man

small side issue example

"...[A]nti-pact activists have complained that Colombia is anti-union because it does not protect union members from rebel violence. Yet the Colombian government notes that all Colombians suffer from rebel violence — union members actually experience less of it than the rest of the population"
its not "rebel" violence
killing union leaders
its right wing death squads

this whole reasonable sounding surface
needs its harvard cover blown
here's the scam
a callfor unions where unions can't survive
and no unions where they are sure to succeed
proof
in the would help
but can't survive environments like columbia
the absence of unions should not be
grounds for no trade deal

so what is his point

obviously its simple straight forward and obvious

make the world safer for trans nats

[anne]

Well done, Gene O'Grady.

"The overtime is not featherbedding or exploitation; utilities are a crisis ridden business (power outages, even more importantly not frying two billion dollars worth of stuff when the power comes back, floods, fires, death.) I once saw a (capable and dedicated) high voltage electrician post a 23.5 hour day after a major power outage, and supervisors and management assumed (correctly) that it was what he was due."

How, by the way, is the training of master technicians handled, by apprenticeship? What might a typical role for an electircal engineer be?

[BJ Feng]

"More than 1,140 of the utility's employees - or about 13 percent - take home more than $100,000 a year. And General Manager Ron Deaton, who is on medical leave, rakes in $344,624 a year - making him the city's highest- paid worker.

DWP salaries are on average higher than city and far higher than private-sector workers' even as the utility has come under fire for recent power outages and another round of rate hikes: A 9percent, three-year electric-rate hike and a 6 percent, two-year water-rate hike."

I seriously doubt that all 1,140 workers who make over $100,000 are the hardworking people you describe. But this is precisely the kind of public sector union power I've been talking about and many of you have noted.

It is rare to find a politician willing to stand up to these public sector unions. France is lucky to have Sarkozy, we can only hope the French are smart enough to continue to back him to the end instead of giving in to the unreasonable demands of the unions. And yes, those demands, that they be treated differently from the rest of the workers in France because they happen to work for the government, are absolutely unreasonable and divisive.

Private sector unions are in trouble because they use outdated, combative tactics that wind up hurting the companies, and ultimately the workers who labor in those companies. Just look at the ridiculous programs in the auto sector demanded by the unions. The job bank where thousands of workers sit for 8 hours a day doing nothing. Strict union laws prevent those workers from being shifted to another area or job so the company has to suffer. Is it any wonder that the industry is dying?

Instead of this combative, unproductive strategy, the union should work with the company to insure that the company remains productive and as profitable as possible. The unions should fight to get as much of those profits for its members as possible. A simple way would be to demand stock and options for the rank and file. That way, ordinary workers would profit when the company rakes in windfall profits, and even fired, or laidoff workers would continue to benefit from a leaner, more profitable company for the rest of their lives, as they would still have the stock (and we know stocks usually move up after announcements of layoffs). And for those people who want labor to be represented on the board, well here's the perfect way. Workers, who would own a good chunk of the company by my method, could elect their own board members. And because the workers would also be the owners, they would have an incentive to look out for the best interests of the company and demand that the company be as profitable as possible. That would be offset by the want of higher wages, in theory a good balance could be achieved.

Unions are irrelevant to most workers because the union big wigs refuse to adopt a sensible strategy and persist in the failed Marxist tactic of combative struggle with companies. That leads them to demand unproductive programs designed to prevent change, but companies must change and adapt, or be left behind. In the end, only a profitable company can continue to pay its workers, and the more profitable a company is, the more money there is to pay out. Unions need to realize this and get their workers a slice of the profits without implementing dumbass rules which entrench outdated techniques and jobs. But to do this, they have to embrace capitalism, not fight it.

[kthomas]

Cool, BJ is back.

"In the end, only a profitable company can continue to pay its workers, and the more profitable a company is, the more money there is to pay out."

That sounds like BJ - very optimistic. Do you've an example? I do believe in alturistic capitalism.

[Bruce Wilder]

Cynthia: "Paine still outshines you in the poetry department."

I would hope that people recognized my poetic tribute to Paine as the original work of the incomparable Phoebe Snow. If not, get thee to your "neighborhood" iTunes store, and enjoy. I would never even attempt to compete with the Paine, but I think Phoebe Snow shines pretty bright -- of course, I "hear" her orchestration -- maybe Paine needs an accompanying soundtrack?

[billyblog]

Rogoff says:

"After decades of vilification by economists for raising unemployment and strangling growth, the union movement is now receiving backing from thought leaders such as Paul Krugman, who argues stronger unions are needed to counter globalisation’s worst excesses."

Nice of Rogoff to put a face on at least one of those economists who is NOT vilifying unions these days. And, by the way, showing pretty convincingly that unions have been the single most effective instrument for equitable income distribution in the post-WWII period.

Would Rogoff care to name names among those – other than himself – who have vilified unions? And give us principled reasons for this vilification with a bit more substance than the "I declare myself the winner of the argument" logic of statements such as:

"Nowadays, most workers already have legal and statutory rights that cover the basic protections that unions originally fought for a century ago. Instead, union influence today all too often serves to promulgate inflexible work practices and flat salary structures that do not adequately reward work effort and skill."

Has Rogoff ever sat in on the deliberations that go on at the highest management levels of our Fortune 500 companies? If he had, he would never make the sorts of fatuous and self-serving statements we hear from these apologists for trickle down capitalism who actually do appear to believe that their 8 and 9 figure compensation packages are equitably deserved because, shucks, they are just being rewarded for their work effort and skill – not to mention their soi-disant wealth creating "efficiency."

What gag-me-with-a-spoon tripe masquerading as "economic analysis."

I am sure, for example, Rogoff is aware of that little tidbit which appeared in The New York Times back in April 2007, you know, the one that pointed out how the Masters of the Universe in the hedge fund business have been adding so much value to the global economy – well, of course, only after that "not to worry it's only a one off aberration" near melt down of the world's financial system in 1998 brought on by the hard working and skillful rocket scientists at LTCM – that we needn't even pause when we hear about such market efficiencies as:

"Combined, the top 25 hedge fund managers last year [2006] earned $14 billion — enough to pay New York City’s 80,000 [presumably most of them in the "inefficient" UFT] public school teachers for nearly three years."

Here's the link:

http://www.nytimes.com/2007/04/24/business/24hedge.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1200008292-30VK7yRvJwTG6e6pDfuPCA

And when he says:

"But here [in the U.S.], too, increasing workers’ legal and statutory rights, while allowing most unions to fade away, seems like the right approach."

This gives new meaning to the term "disingenuous." Or perhaps Rogoff has not stayed in touch with recent labor unfriendly NLRB and EEOC decisions, and decisions by an ideologically conservative Supreme Court which has been giving just about as much protection for workers "legal and statuatory [sic]" rights as the Bush administration has given to the constitutional rights to habeas corpus and privacy.

Strong letter to follow, but I doubt that it will do any good with someone so obviously blinded by his ideology about the relative "inefficiencies" of unions.

[Bruce Wilder]

or http://www.guitarhero.com/

[commenter's note: part of a lame joke about Paine needing a soundtrack -- feel free to disallow -- bw]

[anne]

http://www.nupge.ca/news_2006/n27jn06b.htm

June 27, 2006

Colombia Remains Deadliest Country for Trade Union leaders: AFL-CIO Solidarity Center reports more than 4,000 trade unions murdered since the mid-1980s.

Washington - Colombia remains the deadliest place on earth for trade unionists, says a new report by the AFL-CIO Solidarity Center.

Entitled Justice for All-The Struggle for Workers Rights in Colombia, the report provides extensive background and updated information but sums up the situation in a single chilling passage:

"Since the mid-1980s, approximately 4,000 trade unionists have been murdered in Colombia, more than 2,000 of them since 1991," the report says.

"More trade unionists are killed each year in Colombia than in the rest of the world combined. In October 2005, the ICFTU * reported that Colombia was once again the 'deadliest country for trade unionists.'"

According to ENS (Escuela Nacional Sindical), 70 trade unionists were killed in 2005 while 260 received death threats, 56 were arbitrarily detained, seven survived attacks in which explosives or firearms were used, six were kidnapped, and three disappeared....

* International Confederation of Free Trade Unions

[Barry]

evagrius says...

"Just a note-those LA utility workers earning over $100k a year are probably pulling 50-60 hours overtime a month.
Another detail is that the "average" pay is probably for a worker that has been there at least 10+ years."

Combined with the comment about high levels of seniority:

Take a guy with 25 years on the job, base salary of (say) $30/hr. That's ~$60k/year, but throw in 500 hours of overtime/evening/night premium, weekend/holiday premium, and things go up quickly.

Of course, what this means is that the $100K is earned by somebody who might pull 50 hours/week *to start*, with frequent night work and weekend work.

Nothing like 24 hours of overtime one a weekend to boost one's paycheck.

[Bruce Wilder]

People, who think legal protections for workers are an adequate substitute or even complement to, unionization should contemplate the meat processing industy's long battle to avoid paying workers during the time the workers are "donning and doffing" or cleaning the protective clothing they are required to wear.

That there is even a dispute is a demonstration of just how out-of-control management is, in these cases. Common-sense would dictate that an employer paying by the hour, has to pay for the time spent, at the workplace, getting into or out of this gear. (This is not like a restaurant worker wearing a simple uniform, and the time spent is not trivial, nor is the amount of money trivial, since it is typically at overtime rates that this marginal activity occurs.)

Yet, there's been extensive and varied litigation aimed at establishing the "principle" that the employer does not have to pay, for time spent fulfilling the employer's work requirement. Employers have fought this every step of the way, and they've even won, occasionally, just to muddy up the precedents.

[save_the_rustbelt]

A friend is a senior seniority pipe fitter who certainly makes 100K plus a year.

He is one of the few guys who gets to fix the high pressure steam lines on refineries (10,000 psi) or the gizmos that cool nuke plants.

He is worth more than most of the snotty young MBAs I've met, most of them couldn't pour water out of their boots if the instructions were written on the heel.

Anne: the high skill trades generally replenish themselves through apprenticeship and journeymen programs. Bad news, lots of nepotism, more than a little racism and the occasional bribe determines the apprenticeship class.

[jefff]

I have read that some of that rather excessive (from the point of view of the company, anyhow) overtime among utility workers is due to a shortage of skilled workers in those trades (not enough employees == more overtime).

One cause of that shortage is the decimation of the union based apprenticeship system which used to train such workers.

[kthomas]

For the record, paine is a peudo-poet.

[kthomas]

Blast, I meant psuedo. Word! to paine.

[anne]

STR has before mentioned difficulties about fairness or openness or possibly recruitment for apprentice systems. Please add to such discussion when possible, for it is an important historical source of secure employment about which I have never read. Nor do I understand how well developed a system of vocational education we have, say as compared to the French or Germans or Japanese.

The comments on utility employment open an interesting subject as such.

[Icarus]

So, I take it that a public union employee deserves a 6 figure salary because they work some overtime?

Every attorney with a 6 digit salary, or physician, or consultant...all of them...are expected to work over 40 hours a week. How come no sympathy for them?

That poor vascular surgeon, making $300k/year. Does she deserve your sympathy? Long nights, operations which last hours and hours, and the level of importance.
How about the attorney or investment banker? Talk to one in NYC or SF. Ask him/her if they work 40 hours/week.

As usual, logic dissapears, and an uncritical sympathy arises.

Also, that "racial" slur should be kept in context. Anyone supportive of the Israeli state is inherently compassionless and violent in terms of the plight of the Palestinian population. Yet, pro-Israel remarks go unchecked. Where is our disgust? Zionism is Racism, pure and simple.

[Icarus]

There are also a shortage of skilled workers for Investment Banks and top Law/Consulting firms. That's why those workers get their salaries. If there was an endless supply of 170 lsats, things would change.

[wogie]

As Mark says there is a market imbalance today resulting in the income distribution problem. I think his musing and Rogoff's about finding a different approach than strengthing unions to the point they held in the past deserves a lot of attention.

In the past glory days of unions they wielded too much power -- to the detriment of the economy and society. I recall when the Steelworkers union negotiated a 3 month sabbatical (with full pay) every 5 years for their members. I remember when the Teamsters union had an iron grip on commerce -- abetted BTW by a then regulated trucking industry that made it easier for the carriers, who were capturing economic rent, to pass through pay demands than to oppose them.

So, either we approach righting the market imbalance in a different way, or put constraints on union power.

Power corrupts regardless of who has it.

Also, Bush's steel tariff early in his first term hurt the steel fabricating folks and imposed a cost on the economy

A story regarding Germany. Shortly before the Dotcom boom burst my nephew was dispatched to Europe to open operations there. He found he could neither hire or fire employees without the agreement of the other employees and their union. The power in Germany is tilted to workers -- not a balance. (He wasn't there long, the bubble burst, he returned home to find he had no job, and there no longer was a company.)

[lonesome moderate]

There are a number of instances in California of public employee unions that have figured out how to use the symptom to buy themselves unjustifiable salaries (or, at least, I consider them to be unjustifiable). The most notorious example that I know of are the prison guards, who are reported to make a base salary of something over $70,000 a year and can retire at 50 with 90% of base pay.

http://www.law.stanford.edu/program/centers/scjc/workingpapers/DHolwerda_06.pdf
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/07/15/MNGK4R0TOF1.DTL&type=printable
http://www.contracostatimes.com/ci_7737282?source=rss&nclick_check=1

[robertdfeinman]

I suppose we shouldn't be surprised by those who resent unionized workers getting a decent salary. There they are in some miserable job with no protection and a meager salary and all they can think of is trying to drag others down to their level. Sour grapes.

Then there is the fellow who worked at Walmart who got fired before Christmas because he refused to put on a Santa suit when the guy hired for the job didn't show up. He said that being a non-believer he didn't feel it was appropriate to ask this of him.

For those who say that unions had too much power in the "good old days", how do you explain that this excessive power didn't prevent the unionized companies from making a good profit?

The current squeeze on employees can be seen as the result of poor management, global forces, a change in the types of industry needed or the buying of congress by big business. Whatever the problems are, they are not due to too much union strength.

If the unions are eliminated, or rendered totally ineffective, they will have to be reinvented. Their return (in whatever form) won't be any prettier than the last time. The lack of study of labor history in the US makes it easy for business to gloss over the reasons that workers banded together in the first place.

Isn't it strange that some of the highest paid workers in the country think that belonging to a union is a "good thing"? Why else is there a writer's strike? Why do sports figures and actors belong to unions? How about college professors?

What do they know that that grunts in the cubicles don't?

[Fred]

I think a lot of these comments above indicate a point I made in a previous comment on this topic, which disappeared for some reason. Namely, the public has been taught to really, really hate unions, to the point where trying to redress the imbalance between the rich and poor in this country through pro-union legislation is simply politically unrealistic. The realistic strategy is as follows. First, mandate high real interest rates by the Fed (3% real, at least and perhaps 4%). Second, eliminate taxes on the poor, by eliminating the payroll tax on the first $15K of income and also replacing state sales taxes with federal to state revenue sharing (states that won't repeal their sales taxes get no revenue sharing). Third, go on a spending spree for programs that have long been needed, such as national healthcare and cradle through age 20 state daycare/education (vocataional education at the upper end for those who dont'go to university) administered by the states and paid for with federal revenue sharing. Steps 2 and 3 are expanisionary because of the deficits they will cause, but are balanced by the contractionary effect of monetary tightening (which has the secondary advantage of reducing the wealth of the rich tremendously by causing a decline in the stock market).

Eventually, it will be necessary to put the fiscal house in order. There are 3 ways to do this. (A) cut the programs listed above. (b) Make the economy more efficient with all sorts of good-government initiatives. Everything from reform of the crazy health-care system to reform of the patent system to getting rid of the home mortgage interest deduction. (c) raise taxes on the upper middle class and wealthy. It shouldn't be too hard to block option A. People don't like to give up programs once they are in place. So that means the special interests and the upper middle class and wealthy will have to duke it out over options B and C.

This is a realistic strategy for major reform. Pro-union legislation is not going to accomplish anything significant, other than give the public more reasons to hate unions and mistrust Democrats.

[Oliver Woods]

It is ridiculous to say that greater union power means greater economic destabilisation.

It is an argument against free market economics, for one. Unions are merely organisations/collectives of workers, just in the same way that employer associations function in the same ways. Why can't workers be allowed to organise in teh same way that their employers do?

And this totally ignores productivity related arguments. Having strong unions and high levels of union membership encourage more moderate unions, and if there is adequate legislation, democratic accountability to unions. It is clear that this would result in lower strike rates, greater desire for constructive engagement with employers and concurrent greater desire for unions to appear moderate in the eyes of the media.

Some of the countries with the most stable economies internationally have influential unions incorporated into government decision-making along with other peak associations: Singapore, Germany, Austria and New Zealand. In Singapore's case in particular, unions are given extensive power in return for not striking. This is somewhat unsavoury, but there is no doubt that the NTUC (National Trade Union Congress).

[Mark Thoma]

Not sure where the comment went - I didn't remove it. Sorry about that.

[calmo]

You are so reasonable Oliver...it can only mean 1 thing: no MBA. I wonder if Ken would let you have this one uncontested:It is an argument against free market economics, for one.Unions demanding inputs on the working conditions might constitute an invasion of that freedom that management has in organizing and optimizing the factors of production.
I appreciate the international perspective you bring to the discussion and Ken's, not so much.

[david]

"In the past glory days of unions they wielded too much power -- to the detriment of the economy and society. I recall when the Steelworkers union negotiated a 3 month sabbatical (with full pay) every 5 years for their members. I remember when the Teamsters union had an iron grip on commerce -- abetted BTW by a then regulated trucking industry that made it easier for the carriers, who were capturing economic rent, to pass through pay demands than to oppose them."

If only the economy could have grown when Unions had power. What a shame, the postwar years crushed under the weight of the almighty Union economy crushing machine. Thank goodness for the mighty unionless aughts, and the workers' paradise they have brought forth.

[BJ Feng]

Well the economic boom of the 1980s and 1990s started with Reagan's crushing of the evil air traffic controllers' union. Jim Cramer remarked that, in the 1970's, there was insurance for losses due to strikes, so common were they. It was well known that unions would take turns striking and demanding ever larger wage increases. One union would strike, get a higher wage, then it would be another union's turn, then another, and then the original union would strike again.

If unions have been tainted in the publics' eyes, it's because of the tactics they have chosen and the unreasonable demands made by public sector unions. Taxpayers are asked to fund ever greater demands for wage increases upon already generous wages and lifetime benefits. Let me state again that I have no problem with the existence of private sector unions, even if they want to continuously strike to preserve foolish programs like the jobs bank at GM. But public sector unions that hold the taxpayer hostage are intolerable. It's not often that taxpayers are able to recruit a white knight like Reagan or Sarkozy, with the courage to fight on their behalf.

[gordon]

A thoughtful and informed discussion of unions and attitudes towards them in Australia is here. Note that it was written before the recent election, so references to John Howard as Prime Minister are out of date.

[Cynthia]

Bruce Wilder,

So if employees at a processing plant are no longer paid for "donning and doffing" prior to entering the assembly line, then this means (using the same logic) that surgery techs should no longer be paid either for "donning and doffing" prior to entering the OR... Something tells me that this cost-cutting measure would face sizable opposition in hospitals across the country!

[mik]

Here is county of Santa Clara Gross Earnings Of Employees
for the Fiscal Year 2007:

www.bayareanewsgroup.com/multimedia/mn/news/scc_salaries_090507.pdf.

You may want to search for "nurse" and find that there were 4 nurses that made more than $250K that year and 9 that earned more than $200K.

Under new contracts nurses in SF Bay Area hospitals make around $75/hour base and get double for overtime and 2.5 * $75 for holidays.

It is a hard work for most nurses in hospitals, especially in public ones where most patients are illegal immigrants and homeless with god only knows what illnesses they have.

But with little overtime a beginner nurse with 2 year community college degree can make $170K/year.

Not too bad.

And you thought you are smart by getting BSEE or MSCS from MIT. Very few of you will make more money than an average nurse.

[mik]

In 2002 West Coast Longshormen went on strike and shutdown imports from China for a few weeks.
Eventually port operators surrendered and, if memory serves, new contract pays some port clerks $125K/year as a base salary.

West Cost port operators decided to do something about
those uppity working folks.

When you hear something like superhighway from mexico to canada, NAFT superhighway or some such, don't automatically dismiss that as righ-wing nuttery.

A shiny brand new port in Mexico is being built as we speak. China crap will be offloaded there.
Then Mexican truckers will carry it via superhighway all the way to the "port" of Kansas and on to Canada.