This editorial appeared on February 6, 2015 on Investors.com:
Unions: The entire port system on America’s West Coast could shut down within a week due to a labor impasse. The country should take this moment to give thanks that private-sector union membership is falling.
The 29 ports running north from San Diego to Bellingham, Wash., are the hub of America’s Asian and Pacific cargo traffic. Forty percent of the country’s trade depends on these dynamic harbors.
Already there’s a work slowdown that is “making life difficult,” says Kelly Kolb, vice president of government affairs for the Retail Industry Leaders Association. A complete shutdown — which could follow a weekend suspension of cargo loading — “could derail the economy,” she says.
Shippers have made two formal offers since last May to the International Longshore and Warehouse Union, but the labor bosses aren’t budging.
So what is the union fighting for?
The ILWU is demanding 3% annual raises over five years — which the shippers have agreed to — and some changes in the arbitration system.
Those might sound like reasonable demands for a minimum-wage worker. But the men who work the docks make far in excess of minimum wage.
In fact, according to the union’s own material, the average dockworker makes $147,000 in annual salary and pulls in $35,000 a year in employer-paid health care benefits. Pensions pay $80,000 a year.
That salary is well beyond the average American’s personal income — about $43,000 annually — and we doubt that the average dockworker is worth $147,000 a year to his employer. A few might be, and they deserve their generous earnings.
But many aren’t deserving, and they’re riding on the coattails of their more productive, harder-working associates.
This, of course, is one of the problems with unions: equal pay for unequal effort and production. It’s the sort of work environment that drives productivity down. Why work as hard as the next guy when there’s little or no difference in wages? Let him put out the extra effort, and you enjoy the fruits of his labor.
Eventually, though, the hard workers will cut back their productivity because why keep up the good work if the unindustrious guys get the same pay? It’s a race to the bottom.
The private-sector union membership rate in 2014 was 6.6%, with 7.4 million private workers belonging to organized labor. That’s a steep decline from the 35% rate of union dominance in the mid-1950s — and it’s a favorable trend. Today, unions are neither friends nor helpful partners with the American worker.
Those tempted to be sympathetic to the longshoremen’s demands need to consider who will pay for whatever package the union gets. It’s not the shipping companies, truckers, railroads or merchants who sell the products that pass through the ports.
No, the union will not be sticking it to “the man.” It will be sticking it to the consumers. That’s you. Pay up.
http://news.investors.com/ibd-editorials/020615-738418-dock-workers-union-demands-hurt-consumers.htm
What unions should be doing is transforming to producers’ ownership unions and embrace and fight for worker ownership participation, which does not cause added operations costs to production. They should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.
Unfortunately, at the present time the movement is built on one-factor economics––the labor worker. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices for the same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. Binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”
Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both…The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”
Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.
The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today––wages, hours, and working conditions––and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.
If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.
When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.
Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”
Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.
“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”
Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Subsequently, none of his successors or other union leader, ever followed through.
