Leveling Up
One long-run alternative to UAW workers accepting lower-and-lower wages and benefits in order to stay competitive with non-union factories would be for the workers to start earning higher wages and more generous benefits. Heck, we could even shift to a labor law regime that makes it feasible to organize workers at those non-union factories. And yet you don’t seem to see this discussed at all in the “liberal media.” Strange.
Meanwhile, one thing to note about the leveling down strategy is that collective bargaining in Detroit’s factories has an impact on the wages in non-union factories in Dixie. Driving wages down at the unionized firms, or breaking the union and then driving down wages, will probably drive down wages at the non-union shops too.
58 Responses to “Leveling Up”
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December 3rd, 2008 at 12:50 pm
Well, excellent. Then we get cheaper cars, a healthier auto industry, and more people are better off.
December 3rd, 2008 at 12:53 pm
Matt,
I don’t suppose you can be enticed into taking on Richard Posner, who wrote, in his recent post “The Future of Conservatism,” that “Liberals are wrong to promote unions (described by one wag, albeit with some exaggeration, as the parasites that kill their hosts)”?
I don’t suppose it makes sense to devote a whole post to rebutting just one, pretty general sentence, but maybe you can take on the his notion that we’d be well served to “enter a post-ideological era in which policies are based on pragmatic considerations rather than on conformity to a set of preconceptions rooted in a rapidly vanishing past.” Then maybe you could have an aside that takes apart his nasty anti-union line.
December 3rd, 2008 at 12:54 pm
Can we also make states cut out and demand repayment of local free gifts, differential taxing, and other subsidies?
I used to live in a state bidding for a foreign auto plant, and the numbers were pretty clear — they offered so much to the automaker that it would have been far cheaper and vastly more likely to employ local workers for the local governments to have created their own jobs. I was relieved when another state’s even greater sucker giveaway was selected.
December 3rd, 2008 at 12:55 pm
Right. The threat of unionizing helps non-union autoworkers get higher wages than the ordinarliy would. Without that threat, a lot of their leverage collapses.
December 3rd, 2008 at 12:59 pm
Driving wages down at the unionized firms, or breaking the union and then driving down wages, will probably drive down wages at the non-union shops too
And if GM goes BK, a foreign owner that decided to import modded Brazilian Chevys would put the squeeze on those Noble Southron assembly plants too.
Then we get cheaper cars
Woohoo! That’s the Wal*Mart mentality we need here. Though lowering the hourlies doesn’t do much about the ongoing obligations promised to retired workers in lieu of wages 20 years ago.
December 3rd, 2008 at 1:08 pm
I think that horse has left the barn already, Matt. The new UAW-Big 3 contract not only turns the decades-old retiree health insurance system into a Voluntary Employee Retirement Benefit managed exclusively by the union (similar to turning a defined-benefit pension into a defined-contribution pension) — it also includes two kinds of wage tiers: a lower tier for new hires than for incumbents, and a lower tier for non-production workers than for production workers.
Those tiers just saved Toyota and Honda untold millions, since from now on they’ll only have to match those lower tiers in order to keep up with the UAW. And the UAW is going to have an even harder time talking to unorganized workers in anti-union areas after they’ve conceded the founding principle of the industrial unionism on which the UAW was founded — industrial solidarity across job classes.
I’m not blaming UAW for agreeing to that contract. I think it’s a more accurate reflection of the current power of the UAW WRT the auto industry in the US than the previous 40 years of contracts. If union density in your industry slips from way over 50% to a third or less, you’re going to lose lots of power, and sooner or later that loss of power will be reflected in the contracts.
December 3rd, 2008 at 1:09 pm
It’s funny that every time a vote of the workers at one of the non-union plants is held, unionization gets defeated.
I’m sure this has nothing to do with the all-out war on union organizers by the Reagan-Bush market fundamentalists. I mean, what workers would ever like healthcare, a decent wage and pensions?
Meanwhile, the Ford CEO earns 40 million dollars while his company is begging for a bailout. In Japan, the Toyota CEO makes 1 million dollar a year and his company makes a profit. But busting unions is surely the most urgent problem facing auto companies.
December 3rd, 2008 at 1:18 pm
Having high, union proteced wages for a industry’s workforce will only lead to technologically savvy, highly productive companies who stay competitive by improving their product rather than squeezing their employees or buying influence in government to get lower taxes. I, for one, would not want to live in such a world.
December 3rd, 2008 at 1:21 pm
OT: Christopher Hitchens is a fucking moron.
That is all.
.
December 3rd, 2008 at 1:25 pm
Toyota, Nissan and Honda are run by “Reagan-Bush market fundamentalists”?
No, the US are. Organizing labor has become more difficult than ever, and union membership here is extremely low compared to most other rich countries. Not surprisingly, income inequality in America is extremely high.
But I’m sure one has nothing to do with the other, and saving hundreds of millions of dollars by cutting the wages of incompetent executives wouldn’t improve the financial situation of GM&co. Better blame the unions! And regulation!
December 3rd, 2008 at 1:25 pm
Al, your examples would be relevant if we did not live in a country where companies were able to illegally harass and fire workers attempting to unionize. Feel free to deny that claim, but surely you must recognize that as long as we disagree about whether that is a persistent phenomenon, we will disagree about whether unionization efforts in the south represent the legitimate desires of the workers there.
December 3rd, 2008 at 1:44 pm
I’ve seen Matt’s, and now commenters’, references to employers’ harassing and firing workers for attempting to organize. My completely non-rhetorical question is: where can I read about this stuff?
I’m generally anti-EFCA, due to the possibility for abuse–I’ve lived in Michigan, so I know what union bullying looks like. But I’ve not lived in the manufacturing South, so I honestly have no idea whether management bullying goes on in factories there (surely liberals can at least allow for the possibility that these folks just don’t want a union).
But even if we grant that management bullying is a problem that prevents workers’ will from being realized, shouldn’t the solution be to eliminate management bullying, rather than to allow bullying by both sides?
December 3rd, 2008 at 1:50 pm
I bet if we banned unions and the minimum wage from the U.S. auto industry, we could get more factories here. We need our population to become just as wage-competitive as Vietnam, China, and India.
December 3rd, 2008 at 1:59 pm
Bottom and AL, here is a start:
http://www.nytimes.com/2007/09/04/business/04uaw.html
Amazingly after such support from Toyota management, the vote failed.
December 3rd, 2008 at 2:06 pm
Bottom, take a look at this report, which examines management coercion in 62 organizing campaigns in Chicago in 2002.
December 3rd, 2008 at 2:07 pm
The biggest problem with unionization is that it promotes unemployment. Unions raise wages for those who have a union job, but hurt those people who are unable to find a job.
To quote Larry Summers, Obama’s choice to head the National Economic Council:
(See here:
http://www.econlib.org/library/Enc/Unemployment.html)
As one who is concerned about inequality, I’d think this would worry you. By far the worst form of inequality is between those who have a job and those who can’t find one. I’d much rather use the tax system, wage subsidies, etc., to ameliorate the problem of wage inequality.
December 3rd, 2008 at 2:08 pm
when there is a secret ballot election with respect to unionization at the Japanese auto plants in the US, under completely fair procedures, unionization always loses.
Uh huh. Not that that’s what right-to-work laws were designed to accomplish or anything.
A useful experiment might be to bust the UAW in Michigan and watch wages and benefits fall there–let’s going from an average of $28/hr. with decent insurance to, say, $19 with poor insurance. The nonunion Toyota worker in Tennessee will see his $24/hr. drop to $17 and his benefits get worse or more expensive.
Then hold your union election.
December 3rd, 2008 at 2:08 pm
Funny how, in Japan, they do things differently:
Toyota Cuts Bonus Payments for Managers as Sales Fall
http://www.bloomberg.com/apps/news?pid=20601101&sid=aDHdXpiEATK8&refer=japan
If I read this right, in Japan unions play a role in deciding managers’ pay. No wonder the CEO only makes 1 million a year, and the company makes a profit even in those difficult times.
December 3rd, 2008 at 2:11 pm
I’m sorry, but nothing in that article is damning, much less illegal (unless there is more to the story). The first part quoted is pure fact–if you pay your workers above-market wages, there’s more gains to be had from moving plants to lower-cost countries. Surely union supporters aren’t denying this?
As for the second passage–it seems quite plausible to me that the employees were fired for releasing documents they were told not to release, which would hardly be illegal.
And again–even if we take for granted that management is bullying employees, why is the solution to also allow union bullying, rather than to prosecute management bullying?
December 3rd, 2008 at 2:13 pm
The biggest problem with unionization is that it promotes unemployment. Unions raise wages for those who have a union job, but hurt those people who are unable to find a job.
To quote Larry Summers, Obama’s choice to head the National Economic Council:
So Reagan/Friedman/Rubin’s nonsense is not completely yet. Supply and Demand, right? That sort of argument is soooo 90’s. Many European countries have both very high union membership rates, and very low unemployment.
Ideally like in Holland for example, union bosses agree to pay cuts when times are tough, but demand to share in the wealth when growth returns. Unions have a negative effect only when management/workers relationship is very poor.
December 3rd, 2008 at 2:18 pm
Unions have a negative effect only when management/workers relationship is very poor.
Not that that’s what Taft-Hartley was designed to accomplish or anything.
http://en.wikipedia.org/wiki/Taft_Hartley#Treatment_of_supervisors
December 3rd, 2008 at 2:26 pm
“Many European countries have both very high union membership rates”
It’s well known that Europe has had very high structural unemployment for decades relative to the U.S., (although I’m sure you can always find exceptions for certain countries at certain times). This despite the fact that the U.S. has absorbed tens of millions of immigrants.
Again, unemployment is a form of inequality that gets too little attention. It’s much worse than most other forms of inequality that we like to worry about.
December 3rd, 2008 at 2:29 pm
“Whether or not companies are “able to illegally harass and fire workers attempting to unionize” has nothing to do with that fact that, when there is a secret ballot election with respect to unionization at the Japanese auto plants in the US, under completely fair procedures, unionization always loses.”
If unionization always loses, why do the companies fight so hard against it? They’d save a lot of money and time by just letting the vote take place.
We seem to have moved a long way from Henry Ford. who when asked why he paid his employees so well, answered, “So they can be able to buy the cars they build.”
December 3rd, 2008 at 2:31 pm
I’m sorry, but nothing in that article is damning, much less illegal (unless there is more to the story). The first part quoted is pure fact–if you pay your workers above-market wages, there’s more gains to be had from moving plants to lower-cost countries. Surely union supporters aren’t denying this?
Threatening to fire workers is illegal. Selectively firing union supporters is also illegal. Implementing expensive misinformation campaigns to deter union organization is legal, but suggests that we should enact public policy to counter it.
Of course, whether you think US workers should fear having their jobs moved overseas is an issue for debate. But my outlook is the following: the problems in our economy our demand driven. We need to increase pay for blue collar jobs and reduce income inequality to address this. We should support unionization in order to address this and to the extent that companies attempt to export jobs overseas in response, we should pass public policy to make this more difficult. In general, the idea that free trade is always a good thing is a huge joke. If you believe that things like unionization are good for building a balanced and healthy economy in the long run, you can also oppose free trade when it threatens those interests. The principle that free trade is always a good thing depends on the idea that the optimal short term unregulated market arrangement is always the optimal long term arrangement, which is not consistent with a host of well established policies in the western world. You may disagree with this, but, frankly, I don’t expect a lot of support for unionization from you then. Of course, I would still expect you to oppose illegal activities on the part of companies. There is a backlog of employee grievances being processed by the judicial system at any given time. Unfortunately, any favorable result is always uncertain, puts a burden of proof on the employee and pays damages years later. This is especially a problem when you have a Republican administration that has no intention of providing any regulatory oversight to help address the problem in a more timely manner.
December 3rd, 2008 at 2:36 pm
Again, unemployment is a form of inequality that gets too little attention.
If you care so deeply about inequality, compare it in Western Europe and the US for all workers (employed, unemployed, semi-employed etc…) then come back.
What really gets too little attention is the explosion in inequality here that people seem to accept, because of “Joe the Plumber” syndrome (Next year, I’ll be a billionaire too!).
December 3rd, 2008 at 2:38 pm
“It’s well known that Europe has had very high structural unemployment for decades relative to the U.S.,”
Prove it. What’s less well known is that we use actual figures for European unemployment, whereas in the US the employment figures are massaged through the political process. I’ve read where the actual unemployment rate in the US is as much as seven or eight points higher than the “official” rate.
December 3rd, 2008 at 2:38 pm
“Right. The threat of unionizing helps non-union autoworkers get higher wages than the ordinarliy would. Without that threat, a lot of their leverage collapses.”
I don’t see that as obviously true. Take another set of high-skilled, labor intensive workers—IT workers. There are very few IT workers who are unionized, yet perversely according to your theory, they command high salaries. Further, the non-union autoworkers are already in completely different states from the unionized autoworkers and they could already be moving to Detroit if it was a serious concern. I don’t see why you should think it is self-evident that their wages aren’t already at the market clearing level.
December 3rd, 2008 at 3:00 pm
Sebastian, it’s not a matter of debatable theory. The evidence exists to show that unionization raises the wages of nonunionized workers.
December 3rd, 2008 at 3:04 pm
30: I don’t suppose it’s obviously true, but the pay of IT workers is entirely irrelevant. They are probably paid more because they are more highly skilled and in greater proportional demand. Certainly it is clear that the existence of higher paid union workers exerts some positive upward pressure on non union pay in any given industry, but it’s possible that the effect could be negligible, but, personally, I doubt it.
December 3rd, 2008 at 3:31 pm
“It seems to me to be perfectly reasonable for a company to be able to tell workers that the UAW plants elsewhere in the country had to close because they became unprofitable…”
And equally reasonable that the unions should not be able to come to the workplace to make their case, that employees be prohibited from discussing unionization while at work, and that employers can actually compel employees to sit in meetings where they’re told that the plant will close down if they unionize? That all seem fair and balanced to you?
December 3rd, 2008 at 3:48 pm
33: Look into Walmart’s anti-union practices. They have a habit of selectively firing workers that have attempted to organize unions.
December 3rd, 2008 at 4:52 pm
“collective bargaining in Detroit’s factories has an impact on the wages in non-union factories in Dixie. Driving wages down at the unionized firms, or breaking the union and then driving down wages, will probably drive down wages at the non-union shops too.”
No, it probably won’t, because of geography, the way in which closed-shops limit labor competition and mobility, and the type of work involved. You know these facts, but you’re making a mistake by applying an old paradigm here.
We on the Left have moved beyond the notion that there is a certain amount of “work” out there that needs to be done, demanding a certain number of “jobs,” and that we should support unions to get the most money we can for doing them. That paradigm formed the basis for the old argument against trade or allowing technological innovation in the workplace, for instance, based on the idea that there are a certain number of, for example, auto workers who do auto jobs, and anything that upsets that balance is disadvantageous to those workers.
Matt, you have some basic economic knowledge so you now recognize a different paradigm in most areas – you need to apply it here. The labor market for auto labor – and the wages for auto workers – is not set by the number of auto workers versus the amount of auto work there is to be done. This is true for two reasons.
First, geographically, what sets the market for factory wages in Texas is the Texas market for workers with that level of education and competence. That workers in other areas of the country get paid much more for broadly similar work does not affect them a bit if that work is not profitable enough to be hiring / actually competing with and draining people off from the local supply of labor.
Second, the unions themselves with their wonderful collective bargaining closed-shop agreements make it impossible for their ever to be a migration of workers to take advantage of those high-paying jobs. So, low-paying employers in Texas have to worry exactly none about losing employees to Detroit. The unionized employees who work really far away earn a higher wage, and their positive effect on the wages of the employees in Texas is exactly zero.
On the geographic points, saying this, of course, does not deny the fact that we have a national labor market if one extrapolates enough. Our labor market is larger geographically the larger the incentive and time differences, so someone from Michigan won’t move to Austin from one day to the next for a slightly better job, but his children will make the move for a much better quality of life. So, if Detroit were able to maintain high enough wages for a long enough period of time, people would start to move there and the wages would come to an equilibrium. However, there is point two, they are all union shops where this competition is not allowed to happen, and more importantly, in the scheme of our national economy, the effect of a few GM factories on the entire semi-skilled workforce of the state of Texas is less than a drop in the bucket.
You can argue against this point that you see national signaling in certain industries, with salaries converging despite differing local labor market conditions. There is no evidence of that here, but just to speak hypothetically, it also won’t happen here because the only signaling lesson Toyota would draw from GM’s failures is that it had better not ever pay such wages, because that road leads to bankruptcy.
Otherwise, as a third point here, the only industries where you see such convergence are industries with a mobile labor pool with specialized skills that take substantial investment to acquire, doctors being a good example. Here you have exactly the opposite – far from a national market for autoworkers, everyone Toyota hires in its US factories is completely inexperienced in automotives, because they believe that the only thing you’ll learn by working in a competitor’s plant is how to do things the wrong way. Consequently, the wages of Detroit auto workers has zero influence over the wages of Texas auto workers, the main factors in Texas instead being, for example, how much the other plants doing similar work in that area pay.
in all, collective bargaining at closed shops for dying companies in Detroit doesn’t have squat to do with what factories in the South pay, except insofar as we are considering subsidizing unprofitable plants and keeping that work from heading down South. GM could drop all of its wages tomorrow, and the wages that Toyota pays would not go up or down a dime. Toyota is already striving to be as efficient as possible, and they sure as heck don’t need the fear of price competition from GM to drive them to do better.
December 3rd, 2008 at 5:03 pm
Actually, Wal-Mart’s a good case of how you do the whole thing:
Look up Nelson Lichtenstein’s article “How Wal-Mart Fights Unions” in the Minnesota Law Review. http://local.law.umn.edu/uploads/images/6723/Lichtenstein_FinalPDF.pdf
Example 1, 1972: “Jack Shewmaker, one of Walton’s rising stars, had been overheard telling store manager Robert Haines that “if he caught any employees with union cards, he should fire them even if he had to hire all new employees.”50 Then, when Connie Kreyling, a young but highly competent office manager, began to talk up the union idea among her workmates, she was summarily fired by Haines when she arrived for work on a Monday morning.51 The Retail Clerks took her firing to the NLRB.52 There Haines was shown to be a liar—he claimed that he had fired Kreyling for poor work habits rather than “protected” union activity.”
Example 2, 1982: “When Walton and his brother Bud flew down to
Searcy just before the election, the company founder assembled
the workers to tell them “he’d strip them of their profit-sharing if they voted for the union.”107 Walton told them he had five hundred job applications on file, some from the evangelical, antiunion students at nearby Harding College.108 Warming to the subject, he offered a threat that was then and now an explicit violation of the labor law: “He told us that if the union got in, the warehouse would be closed. . . . He said people could vote any way they wanted, but he’d close her right up.”
Example 3, 2000: “Wal-Mart adopted the same kind of technological fix after nine meat cutters won a 2000 NLRB election in a Jacksonville, Texas Supercenter.173 When Wal-Mart got word of the unexpected union inroad at Jacksonville, the company cauterized the wound in the most radical fashion. Henceforth, Wal-Mart announced that it would cease cutting meat in its stores altogether. 174 This was almost certainly a form of illegal retaliation
against its newly union-certified butchers.175 But for Wal-Mart, that was an insignificant detail that could and would languish in the courts.”
Example 4, 2004: “Thus, Brent Rummage, a former youth minister with the Church of God of Prophecy, who had been admitted to the Wal- Mart management training program, was supposed to report any union talk to his store manager.209 But when his own mother, who worked in the same Hillview, Kentucky store to which he was assigned, ventured that unions might not be so bad, Rummage balked.210 “I wasn’t going to report my mother,” Rummage told a reporter.211 Likewise, Stan Fortune, a Wal-Mart manager in Weatherford, Texas, refused a command to fire an employee suspected to talking to a union.212 According to Fortune, “I told him, ‘I’m not firing him. That’s illegal.’ . . .He got in my face and said, ‘You fire him or I’m going to fire you.’”213″
And so on.
December 3rd, 2008 at 5:14 pm
Vermando:
1. You don’t think the fact that auto plants in the South are in right-to-work states might have something to do with the price?
2. UAW workers at the Big Three are actually union shops, not closed shops.
3. You don’t think that relative bargaining power influences wages? Or minimum wage laws?
December 3rd, 2008 at 6:52 pm
Steven,
Thanks for the insightful question. My responses:
1) I don’t know. I’m addressing the claim in the context of the bailout that that having non-right-to-work guys in Detroit raises the wages of the guys in Dixie, and the decrease of the wages in Detroit would decrease the wages in Dixie. I think this is not true because I don’t think that this labor market is a specialized national one, the guys in Detroit pose too small a risk of hiring away talent to cause the guys in Dixie to raise wages, and the general effect of that small, more highly paid group of factory workers is too small to reach across our national economy at the semi-skilled level.
Obviously, it would be great to see the gap decrease the other direction, and I don’t know what would be the best way to raise the wages of the fellas in Dixie, if eliminating right-to=work laws would do that or have other effects. Possibly if they could organize then the companies in Dixie would be scared enough of the threat of organizing to raise their wages – I’m sure you’re familiar with this “threat” effect that union workers can have on non-union workers in the same industry. In that case, then their inability to organize could prevent the successful organization of their counterparts in Detroit from having a positive effect on their local wages. I don’t know if this is true, and I sure don’t know how to measure this effect when taking into account the ripple effect that this policy would have, e.g., on total employment. I would certainly be more confident in its applicability if we had national, industry-wide unions a la the European model.
In the meantime,those states are right-to-work states and the unions are not industry-wide. So, I don’t think that this observation affects the contention that the fellas in Detroit can see their wages drop without it hurting the workers in Dixie.
2) Thank you for the correction. I was using the term colloquially without regard to its special meaning in this setting, in which it obviously is a technical term with such a specialized meaning – apologies for the mistake. I don’t think, though, that it changes the analysis.
My understanding of the difference is that in a union shop all of the employees are required to be members of the union, while in a closed shop employees can choose whether or not to join the union, but in any case the union is designated at the exclusive representative of all employees and employees. Is this correct?
If so, then I think that the analysis either is unchanged or applies with even greater force. In a union shop scenario, if you cannot work at the factory without being a member of the union and you cannot negotiate your own contract, then the local labor market is closed enough to outside labor that employers in Dixie don’t have to worry about their top talent moving to Detroit. This would seem to be especially true for top talent – since a virtue of union contracts is usually their standardization, companies with unions would seem to be more restricted in their ability to tailor offers to steal away more talented employees from their competitors by offering them personalized contracts out of line with the union norms, though in situations with substantial wage differentials I’m not sure this really matters.
In any case, it is certainly not a concern in the situation at hand – the Detroit factories are not hiring enough and are not stable enough to lure enough workers from the factories in Dixie to cause those factories to raise their wages. They have not posed this threat for the last several years, and they will continue to not pose this threat for the near future, bailout or not. The wage differential in this regard acts like the wage differential between two countries between which there is no immigration – even if the workers in the higher wage area manage to get their higher wage to persist, the workers in the lower wage area do not see the benefit if they cannot move into the higher wage area to take advantage of it. I believe that this holds with both a union shop and a closed shop.
3) I suspect that both relative bargaining power and minimum wage laws influence wages, possibly positively. I don’t think, though, that either one of these factors means that workers in Dixie would be hurt if the wages in Detroit would decrease to a level closer to the level in Dixie.
As you mention, the lower wages in Dixie could be the result of their lack of a union and the states’ lack of a minimum wage law, in addition to the usual supply and demand reasons often cited – the high supply and lack of competition in Dixie for workers with this level of education and competence. I do not know if such laws or policies would actually lead to higher wages in Dixie, or even the industry nationwide as a whole.
A reason these factories are in Dixie is obviously that the labor is cheaper and / or has less relative bargaining power. They have been great employers, if you would take away this advantage, whatever the cause, there is a good chance that the factories would move away, or, as a more realistic hypothetical, would never have bothered to come in the first place. If this regionalism is not your concern, then you can make an argument for these policies on the national level which might hurt Dixie but which would give the workers as a whole more relative power and thus, hopefully, higher wages and benefits and better working conditions.
I am not sure, though, if this holds true even on an industry-wide perspective – if the only option for the foreign car companies had been to build in areas where labor would have the same relative bargaining power as the UAW has vis-a-vis the Big 3, then I’m not sure that they would have invested here as much or at all. To determine this would obviously take a really nice analysis of their other options qua international trade and technological alternatives and how the higher wages would affect their total cost position, data and analysis which we either don’t have or don’t have the will to put together. Still, I do not assume that they would have found an investment in a Detroitized South attractive.
In any case, the higher wages of the workers in Detroit does not increases the relative bargaining power or strengthen the minimum wage laws of the workers in Dixie. Nobody in Dixie can use the threat of leaving for a job in Detroit as a threat, and Detroit’s factory workers’ salary levels have not yet cause the governments in Dixie to raise their minimum wage laws to keep up. So, again, while I accept that such policies may be part of a good strategy to increase wages, I don’t think either of them supports the claim that the workers in Dixie should be concerned about the salaries of the workers in Detroit because a decrease in the latter could lead to a meaningful decrease in the former.
One thing I have exempted from all of this, of course, is the effect that simple mass layoffs in Detroit would have on the wages of workers in Dixie. I have not considered this because I think it is small – the number of workers employed by GM is dwarfed by the number of total semi-skilled workers in this country. Likewise, the increase in the number of job-seekers in Dixie moving there after being laid off in Detroit would be dwarfed by both the already very large labor pool and the expected increase which will be cause by this recession, including the bursting of the housing boom and the loss of all of those construction jobs. I only spoke of the positive effect on Dixie wages created by employees threatening to leave for Detroit, while Detroit could also be holding up wages in Dixie by preventing people from moving there. I don’t think this would really be a significant effect in the case of GM going under, but I wanted to acknowledge it for the sake of completeness in case I forgot something.
December 3rd, 2008 at 7:45 pm
Vermando:
1. Could be through “threat” or through union contracts, but your point is taken. Also, what do you mean “if we had national, industry-wide unions a la the European model”? I know we don’t always do pattern bargaining the same way, but the UAW is an industrial union that organizes across the country.
2. “My understanding of the difference is that in a union shop all of the employees are required to be members of the union, while in a closed shop employees can choose whether or not to join the union, but in any case the union is designated at the exclusive representative of all employees and employees. Is this correct?” No. A union shop is where everyone who’s hired by the company automatically joins the union, although there is an opt-out provision in the first four weeks. A closed shop is where only members of the union can be hired by the company – this model usually comes with a hiring hall or similar arrangement.
3. I was just arguing against the idea that education and supply of workers are the only factors in determining wages.
December 5th, 2008 at 4:06 am
Steven,
We’re obviously getting to the end of the thread, but just to wrap things up:
1. When I said ‘national, industry-wide unions a la the European model,’ I was thinking of what I understand to be the model in, for example, Germany or Belgium, where companies of a certain size in in certain industries cannot open up non-union shops. So, the scenario of, when Toyota et al want to open local factories, they are confronted by laws that said, “great, but you will have to hire UAW labor wherever you are.” That would, I think obviously, change the dynamics of union v. management bargaining in Dixie.
2. Thank you greatly for the insight. So, a union shop is something like the New York public schools with the UFT, then? (my wife is such a teacher and UFT member). In that case, can the company hire individual employees on individual contracts, or do the contracts of the newly hired employees have to conform to the union contracts?
I ask because this could change the dynamics, theoretically, vis-a-vis Dixie and Detroit – if Detroit was in good financial shape and movement to those better jobs was a threat, then workers in Dixie could use that as leverage and the disintegration of those Detroit jobs could hurt the workers in Dixie.
3. Agreed.
Many thanks for helping me to clarify my thoughts.
December 10th, 2008 at 1:25 am
PARIS, Ill. — The UAW filed a federal lawsuit against auto supplier ZF Boge today, stating the company’s decision to close its Paris, Ill., manufacturing plant is a breach of contract.
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