Steven G. Percifield--author

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Steven G. Percifield  Author and consultant
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The conflict inherent in the unionization
of government employees

Note: I wrote this a couple of years ago as a blog in www.goodreads.com, then forgot about it. During a convivial discussion with one of my neighbors, I took the stand that monopolies, in and of themselves, were detrimental to personal and economic freedom. Further, I felt that labor monopolies were as detrimental to a free market as business monopolies. Hence, the resurrection of this old blog.

 

There were very good reasons for the creation of labor unions back in the day.

The best example I can think of is the IBEW (International Brotherhood of Electrical Workers). Ill-trained, underpaid, under-equipped and ignorant of the dangers of the product with which they worked, linemen--before the IBEW--were at the mercy of the companies whose goal was electrifying America.

Electrocuting Americans (several hundred workers a year at the peak) did not seem to pose a problem for the companies--it was simply a part of doing business. Labor was, after all, cheap and plentiful...and very replaceable.

With the combined clout of union organization, government regulation and a changing culture, the travesties which characterized the trade were largely put behind; well equipped, well trained and well compensated careers became the norm, with death and serious injury on the job becoming increasingly rare.

The situation evolved, likewise, for industrial workers--auto workers are a prime example. Originally, safety and working conditions were the stated goals (as well as pay and benefits). Getting stuck in the "gears of commerce" was more than just a metaphor.

Even though Ford Motor Company paid higher industrial wages than virtually any company in the country early on, it still became unionized. It can be argued that the UAW having already organized GM and then Chrysler back in the 30s, recognized that it could not continue to exist if Ford had a labor advantage over its organized competitors. A Ford advantage would put GM and Chrysler (and the UAW) out of business whether Ford's workers were in need of representation or not. After a bloody organization drive in which Union goons and Company thugs fought genuine battles, our government stepped in to quell the violence and American auto industry unionization was complete.

Long after the wheels of commerce ceased running over auto workers on a regular basis (minimizing job safety as a negotiating priority) the UAW continued its efforts to get more and more for its members (and the union management) in terms of wages and benefits. It succeeded. American auto workers' wages and benefits were the envy of laborers everywhere.

The Big 3, who all shared the same extremely generous labor contracts, had only one another to compete against in their mandates to return profit to their shareholders. They did so by raising prices until they met with consumer resistance. Deprived of that avenue, they turned to reductions in the costs of their products. This cheapening (as well as shoddy workmanship) largely resulted in the abysmal product quality offered by the Big 3 in the 70s and 80s.

Ironically, the greed of the UAW opened the door to the most conservative of American economic principals--free market competition. Even more ironically, that competition came from non-American sources. It can be argued that the veritable plethora of foreign manufacturers available today in the US auto market is a direct result of the union's ability to hold the US auto manufacturers hostage in the name of securing more and more wages and benefits for its members.

However, market forces (eventually) are inescapable. They can be delayed or end-run but eventually they will overtake and overwhelm.

I saw a study the other day which concluded that in terms of the value of total compensation--pay and benefits (retirement, paid vacation days, sick leave, healthcare, etc., etc., etc.)--government workers make on average 50% more than persons doing comparable skill-level work in private industry. In addition, they have far, far greater job security as governments don't go out of business and are EXTREMELY unlikely to fire anyone.

An analogy I heard recently: For a quick comparison of the ethics of private industry versus government walk into an auto dealership--sales people will likely fall all over one another in their efforts to get to you. Now walk in to a Bureau of Motor Vehicles or Secretary of State office to get a license for that car...did you see a difference?

The fact that government employees are primarily union members is a testament to the benefits afforded by collective bargaining and professional negotiating when contract time comes a-knockin'.

The inherent conflict though is this: governments do no go out of business. In the private sector, a union can only provide as much benefit as it's members' employers can afford to pay. If they surpass this limit--without some kind of outside help--the employer goes out of business and the employees (and ultimately the union) find themselves "out on the street."

In the public sector, on the other hand, if unions demand so much that the government can't afford it, the government doesn't go out of business: it just raises taxes taking more of our money to pay its employees...or it settles for a state of anarchy like we currently see in Greece.

Hello Illinois--are you listening?