4 ms·

Ok, so then how does a unionized company stay competitive if it isn't allowed to cut costs by reducing employee compensation? You are suggesting only unions kno

by umvi 6y ago

Ok, so then how does a unionized company stay competitive if it isn't allowed to cut costs by reducing employee compensation? You are suggesting only unions know the effective secret methods of cutting costs that business-textbook-writers are unaware of?

sudosysgen 6y ago
It's quite simple. They either cut profits, or offer employees equity in compensation for lower wages. That goes against what the owners want, but it helps the workers and maintains the usefulness of the enterprise.
- fiter 6y ago
  I believe in the competitive scenario, there are no profits to cut. It's not clear to me if equity is worth anything if there are no profits to distribute and the company is not growing. I think the point is that whether it is a "nice employer" or a union, the company will be less competitive. This strikes me as a tragedy of the commons which would have to be resolved by legislation to force all market participants to offer the same benefits. (Of course, the difficulty then are participants putside of your legal system, but taroffs could hopefully capture this detail.)
  - sudosysgen 6y ago
    Equity is always worth something, because companies own capital, and capital is inherently valuable. In this scenario, there is no loss in competitiveness. The union bargains for pay when there is profit, and when there is no profit it bargains for capital. At the limit, when the workers own the company entirely, then their own self-interest will be to reduce their salary in order to protect their equity. In this sense, their salaries will fall in line with what they would earn in another company, or slightly higher, but they will have massively more assets and equity than if they didn't have a union. Of course, in reality, if there was no growth there would be bigger problems, but you get the gist. I really fail to see how unions in this scenario make the company less competitive, or create worse conditions for the workers than without the union.

by umvi 6y ago

sudosysgen 6y ago

It's quite simple. They either cut profits, or offer employees equity in compensation for lower wages. That goes against what the owners want, but it helps the workers and maintains the usefulness of the enterprise.

fiter 6y ago
I believe in the competitive scenario, there are no profits to cut. It's not clear to me if equity is worth anything if there are no profits to distribute and the company is not growing. I think the point is that whether it is a "nice employer" or a union, the company will be less competitive. This strikes me as a tragedy of the commons which would have to be resolved by legislation to force all market participants to offer the same benefits. (Of course, the difficulty then are participants putside of your legal system, but taroffs could hopefully capture this detail.)
- sudosysgen 6y ago
  Equity is always worth something, because companies own capital, and capital is inherently valuable. In this scenario, there is no loss in competitiveness. The union bargains for pay when there is profit, and when there is no profit it bargains for capital. At the limit, when the workers own the company entirely, then their own self-interest will be to reduce their salary in order to protect their equity. In this sense, their salaries will fall in line with what they would earn in another company, or slightly higher, but they will have massively more assets and equity than if they didn't have a union. Of course, in reality, if there was no growth there would be bigger problems, but you get the gist. I really fail to see how unions in this scenario make the company less competitive, or create worse conditions for the workers than without the union.