Unions

Every year or so I ask you this question, but I don't remember ever getting a definitive answer: What is the "value" that's in keeping with what pay, Harold? What does it mean to be working for your "real worth"? What's the dollar value? How do you calculate it?

Is there some natural process that determines how much pay you should get for a certain kind of work, or is it something else?

Gunner Asch wrote in news: snipped-for-privacy@4ax.com:

Don't do that, it might not be his job to get peeded on, better talk to his Steward... You might be taking away a hardworking union man's money....

Bill

My adopta-dad worked for the Chrysler Kokomo, IN casting plant. He took a job that paid 7 cents less an hour but he could do in 4 hrs. It gave him time to sober up so he could do that job. He racked out in the locker room for the first 4 hours.

He wasn't embarased about his drinking but he was a bit about 8 hrs pay for

4 hrs work.

Wes

I do believe that you are at least partially correct. However, even without unions, how would US automakers be able to compete with countries that pay their workers forty dollars a week or forty dollars a month?

As a country's wealth increases, its ability to compete with poor countries decreases. The unions didn't cause the situation, they only accelerated it.

Isn't it what unions are actually worry about? Let's have simple math here:

80 workers then == 80 profits, 16 workers now == 240 profits

Where the rest of workers came to? To expand the manufacturing? It has to be expanded 20-fold with this level of performance increase. Does not happen. Or do they came to some other areas (thru re-education and so on)? So those areas has to expand

5-fold at least. Does not happen. So where?

It's not like I advocate the unions or against or anything. Just want to understand - where those people are going to?

C.

Tom is doing what he has to do to make his business succeed. He will most definitely keep the best employees and let go of the marginal ones. That's the difference between the US and Europe. The marginal ones will go on unemployment (which Tom will help subsidize) then they will find something else, but at that point it's not Tom's concern.

Look at it this way... What is better, Tom keeping the plant open, paying taxes, and paying good employees well, or going out of business and not paying any employees or taxes?

Times change. There's much gnashing of teeth in Rochester, NY, where thousands of Kodak employees thought they had jobs for life. Kodak couldn't keep them all on if it wanted to. What to do? People need to move, people need to be retrained or be smart and general enough to work anywhere.

On Wed, 7 Nov 2007 15:31:35 -0600, with neither quill nor qualm, "Adam Corolla" quickly quoth:

Consider the billions they spent to build brand-new factories offshore. That cost a lot more than a year's difference in wages.

While both statements may be true, your minimalization of the damages that unions do is also noted.

----------------------------------------------------------------- When I die, I'm leaving my body to science fiction. --Steven Wright ----------------------------

An example of unionism mentality:

I worked I&D of conventions. That was installation and dismantling of exhibits up to 20,000 square feet. I was good at it.

I couldn't figure out why I was not getting as many hours as others who worked at half the pace I did.

Then I figured it out. The company would rather send TWO men for a day than one man who knew what he was doing, and could do it in 8 man hours. The union would rather have half wits doing the 8 hour shuffle than those who did the job in a reasonable amount of time. Double the dues for the union.

Duh.

So, I went back to driving a fork lift until retirement. There, it's performance based, and I was at the top of the heap.

Steve

I do believe that you have now triggered Godwin's Law.

Yes. Emphasis on "past" and "century". Welcome to this one. Be useful or get out.

I'll probably get rid of a lot of it when I retire. There won't be any room in the cave I'll be living in.

Some day I come over and raid your wife's library!

snip-----

Maybe you should join a union, Ed! :-)

Harold

snip---

Yes, Ed, I realize that I have never provided an answer, in part because I surely am not qualified to provide one-----but one thing is sure------there are workers that can lose their jobs to just about anyone off the street----and they're making wages far beyond those of people with years of experience in pursuing a skilled trade. I'm smart enough to know there's something wrong with that scene. How do you suppose that came about?

For sake of conversation---I'll use a UPS driver. I'm sure they screen humanity for the "cream of the crop", and have decent people in their employ. I've talked with the local delivery people on occasion and have found each of them to be very polite, friendly, and you could probably add hard working to the list. They have no real skills-----and can be replaced by just about anyone. I dare say I could learn their job in a week, tops.

Having said that, do you really think a truck driver, one that can be replaced by almost anyone that is capable of driving, is worth more pay than someone that has dedicated years to mastering a trade? Do you feel that a guy off the street can take the place of an experienced tool maker? Is it possible that one of these people has greater "resale value" than the other?

It's not for me to assign values, but I'm sure as hell able to see when the price of some things is beyond worth. Minimum wage will top $8/hr in Washington first of next year. Do you really feel a kid filling drinks at a fast food restaurant is worth that kind of pay? As the wages keep getting driven ever higher by the bleeding heart democrats in this state, what they're managing to accomplish is to eliminate a certain portion of society from buying the products. How does industry, or society in general, benefit by that? Worst of all, it's helping questionable people think they can make a living without preparing themselves for the real world.

Harold

Yeah, we know you've maintained that. The interesting questions in economics start showing up when you assume that this and other obvious answers are wrong. Just assume it to begin with. And then ask what would happen if...

Of course, what you get from that exercise is mostly hypotheses. But sometimes you also get a fresh angle, complete with a new window into actual experience. When it comes to trade and competition, and the consequences of changing one factor or another (like an individual company's wage scale), the conventional wisdom starts falling apart. If I had life enough for another career it would be labor and trade economics.

For example, take Whirlpool's move to Mexico that was just being discussed. Here's an obvious fact that seldom is questioned: Whirlpool could have moved their plant 40 years ago, and the relative labor costs would have been of the same order as they are now. Why didn't they move then? The quick and obvious answer is that they didn't have the kind of foreign competition 40 years ago that would have forced the move. So what caused the "value" of high-priced American labor to fall below what was being paid, and to knock the profit out of the business for Whirlpool? Nothing much happened, actually, except for...foreign competition itself. It makes you wonder what the proper "value" of labor is, and how it is set. In this case, it was low-wage foreign competition. In that sense, Tonelson is right. Whirlpool moved because they got caught in a race to the bottom.

But it's also curious that most of the moves to Mexico by US companies happened all of a sudden, just after NAFTA was passed. What was the big deal about NAFTA? We could have accomplished the same thing just by knocking off our tariffs. Some of them really weren't that high to begin with. But NAFTA was about much more than tariffs. And here's the sleeper issue, which you come to realize after spending years of reading about trade in the era of globalization: the big deal that's discussed in the economics literature, and which gets only passing mention in the popular press, is not direct-labor rates. It's capital flow. That, and having a clean and easy way to take your profits out. NAFTA gives them that, too.

Labor doesn't care directly about capital flow but capital itself cares a great deal. Free flow of capital across borders is what makes it possible for Whirlpool to take its manufacturing plant to Mexico for a reasonable price. It's what made it possible for GM to crate up an engine plant and move it to Shanghai, where they make engines that get shipped back here and stuffed into Chevies.

Free movement of capital across borders is what has given US companies a huge coercive threat and lever against labor in the US. Not that the companies really care about battling with labor, per se. They care about total production costs and their real savings come not from cutting costs of direct labor (it's only 7% in the car assembly business, anyway; labor + load is only around 14%). It's from gaining all of the supply- and operating-cost advantages that come from low *embedded* labor costs of plant, equipment, and material; and from the lower overhead that comes from operating in a country where you can dump all of your pollution into the air and water. That's called "externalizing" some of your operating costs to the host country at large. Etcetera.

So, would cutting wage rates have kept those plants from moving to Mexico? I doubt it, at least, not without cutting *everybody's* rates, in practically all manufacturing businesses, because they all add up to embedded costs. And then we'd have to start externalizing other costs to the whole society -- in other words, dumping toxic crap back into the air and water. Sometimes it looks like we can compete directly with third-world countries only by becoming a third-world country ourselves. Another race to the bottom. And so on.

If I were writing about it for publication I'd find a way to get my hands on some balance sheets for those companies, and pick them apart. I think the important facts there would not be what they seem to be, to those of us who look at it through a labor/cost telescope.

Compared to what? The "value" of a dollar is based on what it will buy. The dollar has fallen (thank God, says US manufacturing) relative to most other currencies. That makes imports more expensive. But it doesn't make US-manufactured goods any more expensive, at least directly.

Now you're introducing a non-economic element into an economic analysis. What you're adding is your sense of fairness. Fairness is an issue that's involved in most of these discussions, but there's a big problem with it: we don't remember to draw the line between fairness and economics itself, and to treat them separately.

Here's the big fairness issue in the US economy: If your sense of fairness isn't offended by CEOs making 300 times the wages of a skilled worker, then you've either cauterized your nerve endings or you've been so beaten up by laissez-faire ideology that you're as numb as a fence post.

That's the trouble with ideology itself, but I won't go there for now. d8-) We're caught in a dilemma between our sense of right and wrong, and what works economically. The unhappy fact is that CEOs earning 300 times the wages of workers seems to work just fine, economically. It's happened in parallel with the growth of our GDP, in fact.

There's your sense of fairness again. Thought-teaser for the day: What would happen if we raised the wage for filling drinks at a fast-food restaurant to $12/hour? Would the economy suffer? We added 150,000 jobs last month. Did high wages hurt? And what would the consequences be if we stopped buying as much fast food, cooked more at home, and the kids got jobs in some other part of the service sector, where they can really support $12/hour? Maybe they could be bicycle couriers for hedge-fund managers. They could afford $100/hour and never feel a pinch.

That's what makes economics fun. d8-)

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I will always stand up when I am attacked.

"SKILLED ON PRINCIPLE ----- UNION BY CHOICE"

Union Millwright Ron

If a company has 20,000 employees being paid $50,000 a year, that's a billion a year in salaries, which of course doesn't include benefits. You aren't really saying anything. Exactly how much does it cost to build a new factory overseas vs. modernizing a factory here? How much will the company save in wages?

Actually, I'm not trying to minimalize the damage that unions do. I'm only saying that recession is an inevitable part of growth, especially in a world in which most countries are still third-world at best. I see it as simply supply and demand. A wealthy nation can't compete with a poor one in labor costs.

Unions are as I said a (probably) necessary evil to keep corporations from screwing the workers; however with unionization the situation then becomes whether management can screw workers more or whether the workers (unions) can screw the company more. It's a lose/lose situation either way--unions all too often lack the ability to see anything from the corporation's perspective. Wringing every last cent out of the corporation and giving it to the workers as you know results in the company either going out of business or fleeing the country. On the other hand, corporations who are led by greedy, inept managers who try to screw the workers out of a livable wage eventually damage the economy so much, they don't have anyone left who can afford their products--but that takes a lot longer and a lot more widespread abuse because the harm is extremely diluted across the market base.

The solution is for both sides to sincerely try to understand the other. Workers have to understand they can't get higher wages and better benefits every year if the company's profits aren't going up, or the company will run out of money and die; and the corporate management needs to understand that production is better when employees are motivated to increase the company's bottom line. Unfortunately, that's not how the free market works, so there will probably always be a need for unions--which are a remedy which ultimately be as harmful as the problem.

Competition works for a while but the end result is inevitably bad. Unfortunately, the most efficient system--cooperation--(what communism is

*supposed* to be based on) fails much more quickly because people don't seem to be motivated by the lofty ideal of working toward a better world for all; but tend to get very motivated by avarice and the spirit of battle.

I seem to see ways in which things could be improved, but sometimes I wonder if maybe everything is not only as it should be but as it must be.

As far as I'm concerned, the problem is with people. All people. The union is but one of the evils that people use to lever themselves up without applying effort. Obtaining that "free lunch", if you will.

Most everyone I've ever known thinks that they can get ahead by demanding unearned pay-----failing to come to terms with the idea that when their pay goes up, but their productivity does not------the pay they receive will come from the widgets they produce selling for higher prices. Everyone gets the privilege of paying more for their purchases, causing them to whine, proclaiming they're losing ground, demanding more, again, all the while producing less. Only when these morons are reduced to rubble will they begin to see the big picture. If then.

Harold

On Thu, 8 Nov 2007 17:24:59 -0600, with neither quill nor qualm, "Adam Corolla" quickly quoth:

None. They'll divvy it out to top management.

OK.

Unified voices/actions os the employees can work as well as unions do.

Huh? Inept managers paying low wages ruin the economy? How? I see these folks running the corporation out of business, not ruining the economy. Or is that your point?

I disagree about needing unions. Hell, the press does a better job at at getting wages up or eliminating sweat shops than they do.

Precisely. Everything we're discussing is moot. Karma resolves all!

----------------------------------------------------------------- When I die, I'm leaving my body to science fiction. --Steven Wright ----------------------------