Tuesday, September 20, 2011
Unite without unions?
When I was in college, the teachers at my high school went on strike. They needed people to help the students, so I volunteered. My dad, at the time, didn't say much, as I was an adult. But I think it was pretty scandalous, me being a scab. Frankly, I needed some money, and I felt bad for the kids, so I decided to help. I didn't have to physically cross any picket line, however.
In the years that followed, I started to feel bad about doing that. That is about the time I read a lot of Noam Chomsky, and thought "the man" was screwing everyone over. I worked at a lumber mill one summer, and I remember a poster in the shop: "Your boss needs you, you don't need your boss." I've come to realize that capitalism is a heartless economic system, but it better and freer than any other system out there.
Collective bargaining is entrenched in law in Canada, while in other places it is voluntary. Here is why I think mandatory collective bargaining is not necessary.
Say I go into Walmart and I want to buy a $10 soccer ball. I say to the manager, "I want 10% off this ball." He says no, and I leave the store. Both of us are free to bargain and then agree to terms.
Now lets say I go into Walmart and I represent a soccer league (a collective). I say to the manager, "I'm going to buy 100 soccer balls and I want 10% off." There is now incentive for the manager to deal with me. He can sell a lot of balls at once and since he's just dealing with me, there are savings (rather than selling 100 balls to 100 people). He counters with 5%, and we are both free to accept or decline the terms.
Imagine that I want my 10% but he is unwilling to give me that, so I barricade his doors and shut down his store. This is essentially what Canada's collective bargaining laws are like. There is already incentives for management to deal with a group of people, rather than just each person separately. There is no need to make it law. But when it becomes law, it distorts the normal functioning of the market.
If employees bargain as a group, they gain some leverage over a company. But there needs to be balance, or else it is just legalized extortion. If a collective's demands outweigh the cost to fire all of them and retrain new employees, then the company must have that option. Of course, smart companies know that this is a last resort and would only be done if the employee collective was being totally unreasonable. But company management understands the broader picture. Public companies have stockholders who must be paid. They know the market climate. Employees are just one piece of the puzzle.
Because employers are not allowed to fire unionize employees, we end up with a system that constantly needs government interference and legislation. If collective bargaining were voluntary, like all contracts, the market would function much better.
It is tough to talk about this because I know many people with government pensions. I think talking about pensions (specifically) and unions (in general) usually gets bogged down in the historical function of unions, which was to protect workers from oppressive and unsafe working conditions. I don't really think these are an issue anymore because they are now covered by Canadian law. And I don't think non-unionized companies are unpleasant to work for.
I think my biggest concern with unions is they foster an "us" vs. "them" attitude between employees and management. This is why, I believe, Westjet doesn't have strikes. The union isn't necessarily concerned about budgets and cashflows. Its mandate is to get the best working conditions and the highest salary. I don't even think they are that concerned about maintaining workers for the future. For example, if there is a 10% cut to a school districts budget, and the teachers union declares they have to let go 10% of the teachers (mostly the new hires), they are being disingenuous. Everyone could take a 10% pay cut and then everyone could keep their job. (Of course, upper union managment couldn't afford $1000 pants anymore*.) These are the types of compromises that other companies make all the time. Smart companies know that everyone taking a pay cut while times are tough will significantly save training money in the future when business picks back up. These are the types of things that unions aren't really concerned with.
I think unions may have outlived their usefulness. I think people should be free to enter into legal contract with whoever, and however, they want. I think workers and management, pulling together with the same goal (success of the business) is a much more effective strategy. Of course, if I ever get a unionized job with a pension, forget I said any of this.
*I'm serious. I'll tell you about it someday.