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Unfortunately, what people need to judge this is information about where the negotiations are really at, and what the issues are, and what the differences are -
by InTheArena 7y ago
Unfortunately, what people need to judge this is information about where the negotiations are really at, and what the issues are, and what the differences are - not just PR releases from GM and UAW. Both institutions have proven corrupt over and over during the last fifty years, and it's hard to take either at face value.
There is also a consistent pattern. Companies do great, leading to expansive contracts with workers, then are mismanaged, or not sustainable during down-cycles. Then a down-cycle happens, and the company declares bankruptcy (which more often then not involves a government, a hard core negotiation or a bank bailing them out), and moving to a starvation contract, which they keep in place to far to long, then they get a expansive contract, and the whole thing continues.
Alternatively, Unions don't agree to the starvation contract, which then destroys the company - see Eastern Airlines, Pan Am, and all the carriers that didn't survive deregulation in the 1980s.
- seibelj 7y agoWouldn't it be easier if the company could choose to pay more during the good years (bonuses / raises) and cut more during the lean years (no bonuses / layoffs)? Then the employees could choose to leave the company if they determined the broader market conditions were such that they could get more money at a different employer! This union thing seems really inefficient.
- vertex-four 7y agoThe actual result there is that companies never "choose" to pay more.
- rtkwe 7y agoYep, they'll largely only do so when forced by market conditions. Unfortunately there's a lot of other effects that will insulate them from small to medium wage differences: moving is tough, expensive, and affects the whole family not just the worker, in a reasonable commute radius there's often only a handful of potential employers for plant workers, and manufacturing by design has relatively little reliance on individual employees and their skills, tasks are rote and repetitive, and to top it all off getting healthcare outside of an employer in the US is insanely expensive. All of this adds up to a huge barrier to employee power to push for higher wages.
- AnthonyMouse 7y agoThose are exactly the things that push wages up, because new or growing companies have to set salaries that overcome them in order to attract a workforce. Then workers at existing companies can go to those companies, get a job offer under those terms and bring it to their existing employer and credibly threaten to leave if they don't get a raise. The existing employer would have to match it anyway in order to replace them (because the replacement employee would have those same costs), so it allows the employee to negotiate a raise -- or take the better paying job at the other company, which had to do better than after-cost breakeven to attract them to begin with.
- rtkwe 7y agoIn a vacuum perhaps but that depends on the credibility of them actually leaving and for there to be new jobs coming into a sector. Manufacturing in particular isn't great because any new company is already going to be looking for lower wages just to compete against imported products manufactured overseas. A small difference in wages won't attract people from far away to move to a new location because of all the thing I originally stated and ultimately while there are some good benefits to manufacturing in the US it's hard to beat Mexico or China because the costs are so much lower there for labor. On top of that because it's a relatively low skill field the potential hiring pool is very large so there's little need to pull in veteran higher wage (and higher healthcare cost) employees from other companies.
- AnthonyMouse 7y agoBut now you're talking about a completely different issue -- competition from foreign labor pushing wages down. But that's also the same reason why the unions can't really get more money from them. They can't pay US workers more when competitors are able to (and do) pay foreign workers less. You're also now looking at the company's perspective rather than the employee's. The fact that there are other industries is a benefit to the employee -- if you can go to college and get paid twice as much as a software engineer then some people will take that option (benefiting them), which reduces the labor supply in the original industry (benefiting the remaining people).
- mfer 7y agoHistorically, companies - specifically their leadership - has tried to get the most they can out of people for the lowest cost. It has often gotten into ways that would be considered abusive today. Are people just a thing in a financial transaction where each side tries to get the most out of the other at the least cost? If someone thinks that then it's kind of a sad view on humanity.
- seibelj 7y agoCompanies must optimize the cost of all inputs. No matter how much unions want to be paid, the market sets the price for cars, and if labor demands an absurd amount of money that prices GM's cars above the market price, the cars won't sell. This isn't "abuse", it's a free market system.
- mfer 7y agoAre companies all optimizing for cost? Isn't there a temptation to optimize for executive compensation? What it manufacturing was sent to the place in the world with the lowest overall expense. The extra money made could be put into bonuses and raises for execs. This is an honest temptation. It's not just about the company health. It prioritizes some employees over other employees. It's more than optimizing expenses.
- seibelj 7y agoEvery company takes inputs (labor and physical goods) and produces outputs (products and services). GM is not the only producer of cars, this is a very competitive industry. If they sell a car for $25,000 they can't simply raise the price without consequence - there are competitors' cars for sale. So how will they cover the extra expense demanded by labor? It sounds like you believe executives are paid too much, so the extra money to pay labor should come out of executive compensation. However, the vast majority of executive compensation is in the form of equity, and labor's demand for more cash will punish the stock price. Plus there really isn't that many executives and you can't squeeze them enough to cover the extra spend on labor.
- rtkwe 7y agoEasier for the companies maybe but not the employees. Companies are almost always in a better position relative to employees when it comes to negotiation: they have more information, deeper pockets, and on an individual negotiation level have little need for a specific employee (especially in manufacturing jobs where the skill level is low). The employee on the other hand often has few options and if they do push for better wages can just be canned losing their healthcare and possibly pension (in the few places those still exist) because in manufacturing (and to be honest many other jobs) individuals are by design replaceable and largely interchangeable. In some areas there's only 1 or 2 employers for that type of job and moving for a better opportunity requires uprooting the lives of the rest of the family (children go to new schools and spouses have to find new jobs as well) with a lot of uncertainty about the new job. To counteract this and get the employees a fairer share of the value they add to a company unions exist so that the power imbalance gets evened out between workers and management.
- benj111 7y agoI don't know why you're getting down votes. Not so much bonuses, but a certain amount of unpaid time off is common in the contracts of European car workers. I still don't think you could/should get rid of the unions though.
- pytester 7y agoConflict is inherently inefficient. That doesn't mean surrender to the opposing party is the best option.
- bjourne 7y agoIsn't the whole point of market capitalism that unfit companies should cease to exist? The airlines you enumerate weren't competitive thus their bankruptcy was both expected and welcome. The airline industry itself survived and (unfortunately for the planet) more people than ever fly. I find it very hard to believe that any union has ever destroyed any company. But if it has, then it probably was for the best and the company deserved to be destroyed.
- gridlockd 7y agoMarket capitalism doesn't care about individual's workers livelihood though. It makes the assumption that their labor can be allocated more efficiently. That is the reason why companies going out of business can be healthy. In practice, that isn't necessarily true, at least in the short run. If an airline goes out of business, that doesn't mean all these workers will just be absorbed into other airlines, especially not at the prices they just failed to bargain for. They may need to switch industries and start from close to zero. Unions are supposed to prevent that from happening, but when they overplay their hand, both sides lose. Talking about GM, the labor cost for building cars in the US is so high, it barely makes sense. Either foreign labor needs to get more expensive (perhaps through tariffs), or domestic labor needs to get cheaper. Otherwise, these jobs will disappear and the unions will become obsolete. It's not a good bargaining position.
- benj111 7y agoThe idea is, It was an insulated market, barriers to entry were high, prices were high and wages were high. Deregulation happens, new players come in paying lower wages, and undercutting the established players. They need to cut wages, but it's whether the union lets them. If they don't, the airline goes bust, and the staff have to take lower paying jobs at the upstart airlines anyway. Ofcourse the unions point of view could be that stock holder/corporate compensation is too high, and that should be trimmed instead of/ in addition to cutting staff wages. From the unions perspective, a bankruptcy isnt welcome, nevertheless it could easily bring one about.
- JumpCrisscross 7y agoProfit sharing and equity grants align employees and shareholders in cyclical industries. I never understood why base pay + shareholder-aligned compensation never shows in these negotiations. Yes, the lavish packages and guarantees are better in the short run, but they will need to be re-negotiated in the next downturn.
- specialist 7y agoFurther, I'm keen to learn more about the German practice of having labor represented on corporate boards. They seem to have many fewer of these food fights. Why? What helps? Expanding stakeholder participation, generous profit sharing, limiting CEO compensation, larger social safety net...?
- knightofmars 7y agoIf the labor board members don't act in the best interest of labor or are generally ineffective they can be removed by labor. Also, it's unlikely you'll have a labor dispute when half the boards is made up of labor elected officials. https://en.wikipedia.org/wiki/Codetermination_in_Germany https://en.wikipedia.org/wiki/Codetermination_in_Germany
- froindt 7y agoI agree they align incentives, but there's a large degree of cynicism/skepticism and lack of understanding of how profit sharing is calculated among the workforce. I've worked places where the message that makes it to the represented employees is a far cry from what was presented in the union negotiations. E.g. The end employee thinks they're losing their pension when in reality, they're not, new employees wouldn't be getting a pension. I talked with a guy who worked 42 years for the same company and was on the bargaining committee when a work stoppage occurred. He said they always thought the company kept two sets of books - the ones they showed the union and the actual books. Nevermind that he worked for a F500 company which was publicly traded at least half the time he worked there, and he worked for the largest facility in the company, driving much of the revenue for the company. You also hear things about "the company going after tax write-off so they don't have to pay workers as much" when that write-off they're mad about is a standard cost of doing business deduction in the same way payroll is...the company is making a donation to a community organization or buying supplies, but they'd reduce their tax bill by just as much if they paid the money out to employees in the form of profit sharing, bonuses, or higher wages.
- specialist 7y agoFocus on the markets, economics. Ignore the food fight. GM and others are making fewer cars in the USA. Why?
- vkou 7y agoBecause as long as imports aren't tariffed, you can make cars cheaper in a place where $5/hr is a good wage, and you don't have to pay for your employee's health insurance. Welcome to globalism. You know, that thing that leftists were protesting in the 90s and 00s? Hint: the solution is not to drop US wages to $5/hr. I also see much handwringing about the crazy health insurance costs GM has to pay. That's unfortunately the cost of doing business in a country with an utterly broken healthcare model. There is no sane reason for why 'good' healthcare coverage should cost $13,000/capital/year... Yet, here we are.
- gridlockd 7y agoNote that you're basically saying that we should all pay more for cars just so that those workers can keep their jobs. Fair enough, but why stop there? What about all the other productive jobs lost due to cheaper foreign labor? It would be unfair to give special treatment just to auto workers. Either everyone should have a right to forever keep the profession of their choice, or no one should. Soon enough you find yourself in the situation where everything is more expensive and everyone's standard of living is lower, because all comparative advantage has been lost. This has been known for well over a hundred years, but people still have trouble accepting it.
- vkou 7y agoNo, we should pay more for cars so that executives can keep their multi-million dollar pay, and so that the average surgeon can afford three summer homes, and so that my 401k can keep growing at an average of 7%/year, from now till the day I die, without me having to lift a finger. Duh. Why is optimizing labour costs the only option that such false dichotomies put on the table? Why are all other expenses sacred, but wages the first on the cutting block? It's not a 'if we don't cut pay, we will live in a dysopia where nothing is affordable' situation. It's a 'if we don't reign in the capital owners, the healthcare cartel, and management compensation, we are going to continue to live in a dystopia, where the vast majority of normal people continue to get squeezed to enrich those three groups.' (I'd also throw in loan servicing in there, but sadly, the existence of the bloated retail banking sector is a consequence of those three problems, not the cause.) Most of a typical family's expenses are housing and healthcare. No amount of blue collar wage cutting is going to make either of those two line items affordable. But it sure as shit will make said blue collar family not be able to afford them. Wringing your hands over the cost of consumer goods, while ignoring those two elephants is bad policy. We'd all be better off if we lived in a world where cars and widgets and clothes cost twice as much, but healthcare half as much. Well, most of us would, at least. You can find such a model on the other side of the pond.
- AlexTWithBeard 7y agoIt's close to impossible to make a justified, informed decision when both sides are hiding behind pompous phrases and heavily standardized press releases. But in absence of other information my uneducated sympathy would tilt a bit towards the company and away from the union for one simple reason: many unions are essentially monopolies. Yes, we all know a good union is a good thing and it can be beneficial for both the corporation and the workers. But what if a union happens to be "bad" it seems like the corporation has very little leverage. We do have all sorts of laws and regulations preventing formation of large monopolies in corporate world. Do we have anything to prevent a de facto monopolization of workforce by a union?
- jschwartzi 7y ago> We do have all sorts of laws and regulations preventing formation of large monopolies in corporate world. Do we have anything to prevent a de facto monopolization of workforce by a union? It's called "right-to-work" law. Some states have it and some states don't. But it prevents a union from requiring you to join as a condition of working for a company.
- charwalker 7y agoAnd in some cases translates to the ability to fire you same day with no reason given. Perk is you can do the same, quit with no reason or notice. The imbalance seems clear.
- TremendousJudge 7y agoOh wow, yeah, won't anybody think of the poor corporations
- EpicEng 7y agoWithout those evil coprorations your union members are out of a job, so yes, we should probably at least consider that there are two sides to this.
- WrtCdEvrydy 7y ago
- markstos 7y agoWhy do we need to judge it?
- criddell 7y agoYou don't. But if you are going to express an opinion, it helps if it is an informed opinion.