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Union Head

The Real Poop

There have been the best of times; there have been the worst of times in this gig. You read The Grapes of Wrath when you were 12 and Ma and Pa Joad's struggles have never left you. You weren't trying to get rich, not for yourself. You just wanted your brothers and sisters to have a decent life—to not have to suffer abuses from The Man. You wanted a fair shake.

As union head, your job is to aggregate the working efforts of your constituents/partners/fellow union members to use "collective bargaining," a fancy word for "my side versus your side." That way, when The Man says your peeps have to make $9 an hour instead of the $15 an hour you feel they deserve, you have a way to fight back.

And the world has not been kind to the working man, at least it hasn't been for centuries—maybe even millenia.

The working man used to be a relatively uneducated but well-meaning and hard-working man (and yes, it was a man, not a woman for a vastly long time), who wanted to provide food and shelter and clothing and a few toys for his family. He wanted to protect them from the evil elements in the world and "give them a nice life."

But the individual man was dissed—by King, countrymen, and marauders who came to town every decade or three. The individual man had few rights and was really a projectile of the wealthy, the empowered.

Until the 20th century. At least in the United States. A bunch of things changed, the most important of which was the shift in global economies to manufacturing over farming; that is, the countries who dominated the world in the 20th century built stuff, rather than grew stuff. Namely, the car. (They tried growing cars for a while, but when they planted the fuzzy dice, surprisingly little would happen.)

The Model T was the first big manufactured product that had legs (not literally) and was globally exported from the United States. It was the standard in cars for a decade and made Henry Ford a billionaire. Henry tussled with unions—he wanted to pay the $9 an hour; his workers wanted $15 an hour (inflation adjusted, of course). Henry's push however, was that men were machines and he wanted to treat them as such, narrowing their duties and refining their physical movements until they were no more than automatons.

Then one day a group of men (at this point it was still pretty much only men who were agitatin') said, "There's gotta be a better way." And United Auto Workers (UAW) was formed.

Fast forward—go past strikes that assaulted corporate America in the middle part of the 20th century, and recall that in a strike, workers simply refused to work. They...just...sit. No violence. No shoving. Just a whole lotta nothing.

In the era of peach-picking Joads, The Man was easily able to find others who would pick peaches within a few hours so, the Joads were easily replaced and the famished labor supply was seemingly endless. But in a boom economy where everyone in France, Italy, Spain, England, and beyond all wanted American cars, things weren't so simple—a car was hard to make. Or at least harder to make than a picked peach.

So unions struck and set an example and, over time, a huge percentage of the American workforce was Union.

It was almost a game—one union looked over its shoulder at the work contract that the other union "won" in negotiations against the owners of the business and said, "Hey, gimme somma that."

So pay went up. And up. And up. Today, many unskilled laborers (those who didn't read Shmoop, didn't study at night, didn't graduate high school) earn $30 an hour or more—guaranteed. Not only did unions come to dominate the manufacturing sector of corporate America, they dominated—and still do—the public employee world. That is, the people at TSA (at the airport/the gal who checks you in), the people at the DMV, school teachers, the postal workers, and so on...they're all union. They all threatened strikes at one point or another and the government raised their pay and benefits.

They raised 'em high. So high, in fact, that in many cases the benefits and pay and pension obligations are now bankrupting the states that made those deals.

Couple that trend with the fact that the United States is no longer the "powerhouse" in making cars—Japan, Germany, and Korea are now major players. The U.S. isn't growing like it used to be. The world is competitive—and simply put, other countries pay their laborers a lot less, or at least differently, from how the U.S. pays its laborers.

So the era of "great unions" appears to be over. Union membership is shrinking—and it's not just the UAW. Unions were a very large part of the newspaper industry, for example. But the Internet came along, filled with bloggers who opine for free(ish), and almost the entire industry went from flush to nearly bankrupt in 25 years.

So you as Union Head now have a brutal vice inside of which you live. If you push hard for union contracts to be better, in many cases, you will bankrupt your employers and then everyone is out of a job. Or you'll piss them off Wal-Mart style (Wal-Mart famously hates unions; they won't deal with them and in a number of cases, they have simply closed their stores when the local workers tried to organize unions).

In corporate America, the reality for many sectors is that the world can't afford unions any more—that is, the U.S. is a high cost labor area and if you are a consumer, why would you pay $612 for a printer made in Chicago over the exact same printer made in China for $316?

In public sector America, the union challenges you've reviewed have been different; there, the "revenues" don't come from selling printer units—they come from taxes. And in many areas, taxes are so high that they are changing behavior. In theory, if the government taxed 100% of your earnings above $100,000, you'd work during the year to make that much; then just stop working in September if you'd hit your number. Why work more? The taxes would just take away everything you'd have worked for.

Well, in the proposals around the 2012 Obama campaign, the rich in California, New York, and other high tax states will be paying about 65% marginal tax, meaning that for every dollar they earn over $250,000, the proposals revolve around those people keeping only 35 cents on each dollar. So it's a fair question to ask: "Why bother working more?" And that's bad for the people that the rich would employ—their spending likely reduces and...bad things happen to the economy.

The taxes issue assaults public workers directly who work for states rather than the federal government. The press has been vociferous in covering the near-bankruptcy status of California. Bad deals cut with unions by the government are blamed for much of the states’ woes. And many wealthy people are simply moving out—it means that tax revenues go down a bunch and the state unions struggle further.

So...you're the union head. You have to figure out what to do. You’re just trying to get your fair share and do right by the people who have elected you to…optimize. Still happy you took this gig?