Unions-Firms-Markets

Government Reports First Rise in Union Membership in 25 Years

According to the annual BLS Union Membership News Release, the number of workers belonging to unions rose for the first time in 25 years.

In 2007, the number of workers belonging to a union rose by 311,000 to
15.7 million, the U.S. Department of Labor's Bureau of Labor Statistics
reported today.  Union members accounted for 12.1 percent of employed wage
and salary workers, essentially unchanged from 12.0 percent in 2006.  In
1983, the first year for which comparable union data are available, the
union membership rate was 20.1 percent.  Some highlights from the 2007
data are:

--Workers in the public sector had a union membership rate nearly five
     times that of private sector employees.

   --Education, training, and library occupations had the highest unioniz-
     ation rate among all occupations, at 37.2 percent, followed closely
     by protective service occupations at 35.2 percent.

   --Among demographic groups, the union membership rate was highest for
     black men and lowest for Hispanic women.

   --Wage and salary workers ages 45 to 54 (15.7 percent) and ages 55 to
     64 (16.1 percent) were more likely to be union members than were
     workers ages 16 to 24 (4.8 percent).

Read the entire news release HERE

Writers Guild Strike

The Writers Guild strike is entering its 12th week and the union leadership is finding itself faced with a difficult decision - end the strike with a settlement similar to that of the recent Directors Guilds negotiations or to bunker down and prolong the strike.

This is not a fork in the road the union leadership expected to reach. If it is true that every action we take as individuals or as institutions opens the door for more choices then the labor action by the Writers Guild has brought them to a point where either choice they make at this juncture is problematic.

The recent Directors Guild settlement falls short of the demands of the Writers Guild, particularly in addressing the primary issue of new media. Jonathan Tasini, Executive Director of the Labor Research Association points out several problems with the Director's Guild settlement on his blog Working Life:

   My take: I think this is really a problem. It goes to the very question of union jurisdiction and what kind of world we will see in ten and twenty years. The DGA only gets jurisdiction over product currently under contract. That means that all non-union work--such as reality shows--will remain outside the new media jurisdiction.

    And any work done under those thresholds will not be covered. The industry is precisely moving to a lower-cost structure--doesn't that sound familiar? It's the "kid-in-the-garage" problem--content coming from everywhere and everyone. As I described it in a panel discussion I just spoke at this week, it's similar to the off-shoring of work in manufacturing. You have the world of the WGA, where the standards are decent, with wages, health care and pensions. And, then, you have Big Mediastan--that would be the world where there is no union, where there are no residuals, no pensions, no health care. The above provision agreed to by the DGA seems--seems--to allow the growth of Big Mediastan.  As an aside: it is one reason I believe that a critical component of the WGA's future--and that of the Screen Actors Guild--is to focus intensely on organizing the young kids today who are cranking out material using IMovie and other software. The unions have to get those younger--and older people--who are now producing content into the union now so that they don't become this mass of unorganized, low-wage labor that has no connection to the labor movement.

    If the WGA agreed to those terms, it would basically be giving up on an important issue: union jurisdiction.

On the other hand, if the Writers Guilds' leadership prolongs the strike they face a serious risk of losing the  dispute. As today's NY Times  and LA Times articles point out there is pressure within the WGA to put an end to the strike. Some members are beginning to feel that if they can't win in 12 weeks they wont win by holding out one day more.

There are a couple of fascinating aspects to this strike that force us to ask some questions. For one, the Chief Negotiator for the Writers Guild is David Young who was profiled in a Wall Street Journal article a few weeks back:

Mr. Young worked for a time as a plumber after he graduated from college in San Diego. As a union organizer, one of his highest-profile jobs came in the mid-1990s, when he worked for Unite, the garment workers union. Mr. Young helped lead an organizing drive against Los Angeles-based clothing manufacturer Guess Inc. Trying to unionize thousands of low-wage workers, many of them illegal immigrants, Mr. Young led an effort targeting Guess and its local suppliers that continued for several years.

After a series of setbacks the Writers Guild hired Mr. Young to bring his experience in leading aggressive, creative and strategic campaigns pioneered by service & industrial unions in the late 80's, a style of organizing and bargaining that has increased manifold within these unions and now appears to be spilling over to the professional unions.

By all accounts Mr. Young has done a tremendous job in following the "strategic campaign" play book and many  have been surprised at the result - The result being great PR, high profile supporters, impressive rank-and-file mobilization and unity between Guild members who are often separated by a wide gulf in terms of pay & prominence. Unfortunately none of this will get the result that is most important - a contract settlement with the types of gains sought by the Guild.

This type of union campaigning has been a real step forward by service and industrial unions because they signify Labor's willingness to retool in the face of new challenges and that when pushed Labor can mount a serious response. Yet the results of these type of campaigns have been mixed, in fact  if we use 1990 as a starting  point  labor union membership has continued to decline in the ensuing 17 years and there have not been many breakthrough collective bargaining agreements or new organizing in that time, despite pockets of success in certain geographic locations and specific industries.

What these types of labor campaigns are missing is economic analysis. By that term I am not implying number crunching. What I mean is that these types of campaigns need to also look at the context & institutional incentive regime within which the campaign takes place. An example -  in the WSJ article that profiles Mr. Young they speak about a campaign he worked on for the garment workers union in the 90s:

Trying to unionize thousands of low-wage workers, many of them illegal immigrants, Mr. Young led an effort targeting Guess and its local suppliers that continued for several years.

But the move backfired. The organizing effort failed, and Guess moved most of its California manufacturing jobs to Mexico, costing thousands of jobs. "It's a story of American manufacturing over the last 30 years: If workers try to organize, their jobs are taken away. They're fired by globalization," Mr. Young said last week, reflecting on that effort.

A serious "economic analysis" of this campaign, I believe,  would have revealed that the incentives in place for Guess to move were so great that any pressure applied on them would have only hastened the move. An understanding of this could have led to a much different strategy or at least the saving of a lot of time and money.

The same questions can be asked of the Writers Guild's current strategy. There is no question they have built the perfect campaign but have they assessed the incentive regime that is in place which will determine  which forks in the road  their campaign will lead them to?

New Book on Union Global Campaigns

Quitting Nurses Vindicated

The NY State Department of Health has found that 10 nurses who quit en masse did not jeopardize patients.

A state Department of Health inquiry has found that residents at a Smithtown nursing home "were not placed in jeopardy" by the mass resignation of 10 nurses in 2006, a spokesman said.

The health department's findings come less than two weeks before the nurses - all Filipino immigrants - are scheduled for a Jan. 28 trial in Suffolk County on charges of conspiracy and endangering patients in a pediatric ventilation unit at Avalon Gardens Rehabilitation and Health Care Center.

Read Full Article Here

Should workers have the right to quit their jobs? This is ostensibly a free country and supports free markets so how is it that private sector workers who quit their job could be brought up on charges? Is this a form of slavery? If the nurses were unionized could this have been avoided?

 

The New State Capitalism

Two articles today highlighting the "New State Capitalism."

From the Financial Times: The Unsettling Zeitgeist of State Capitalism

How can it be that Merrill Lynch, Citigroup, Morgan Stanleyand other big banks have been turning to foreign governments for financial lifelines with so little public controversy? Perhaps it is because the dangerous broader context of what is happening - the rise of "state capitalism" - is not sufficiently recognised. Indeed, the reality may be that the era of free markets unleashed by Margaret Thatcher and reinforced by Ronald Reagan in the 1980s is fading away. In place of deregulation and privatisation are government efforts to reassert control over their economies and to use this to enhance their global influence. It is an ill wind that blows.

From the WSJ: Davos Event Reflects Shifts in Power

When the elite of global business gather in Davos, Switzerland, for their annual retreat next week, the mood will be dramatically darker than just a year ago.

Since the World Economic Forum last met in Davos, fallout from the global credit crunch has transformed the outlook for the U.S. and global economies for the worse. Power and wealth have shifted from West to East, from major oil companies to petro-governments, and from U.S. banks and hedge funds to the state-controlled investment funds of the Middle East and Asia.

Berlin Moves to Block Soveriegn Wealth Funds

To counter the potential of foreign companies influencing the German state today's WSJ reports that Berlin is moving to pass a law which would allow the German state to intervene when foreign-state investors seek to take control of a German company.

Chancellor Angela Merkel wants a law that Germany could invoke in cases where it believes foreign-state investors are trying to buy German companies for what it considers mischievous reasons, such as to gain political influence. German law now allows the government to veto foreign investors only in the defense and cryptography sectors. Berlin wants to expand takeover defenses to cover any foreign investment that could threaten "public order or security," criteria that German officials contend are strict but critics call nebulous.
***
Ms. Merkel says she is aiming only at exceptional cases. Critics worry she is drafting a law so broad that it could block any investment by foreign sovereign-wealth funds or state-owned companies. The draft law doesn't limit intervention to only specific sectors. It also covers EU-based companies in which foreign governments control significant stakes. A spokesman for Ms. Merkel said only that the proposal is a work in progress.
***
The size of sovereign-wealth funds is one reason for Western angst. Private-sector economists estimate these funds control about $2.5 trillion of assets globally and are growing fast. German politicians worry that foreign states could effectively renationalize sectors Germany has privatized, such as energy utilities.

As mentioned in a previous post the rise of political actors in capital markets is a growing phenomenon both domestically and internationally.  Will other EU nations follow Germany on this?

Starbucks Anti-Union Campaign Revealed in E-Mails

From the Wall Street Journal

A series of emails by Starbucks Corp. managers sheds light on the company's efforts to thwart union organizing among its baristas.

The emails, which are part of a labor-dispute proceeding in New York and were reviewed by The Wall Street Journal, open a rare window onto the company's labor relations practices. Labor experts not involved with the case said the activity is not illegal. But the emails could prove embarrassing because they show managers using various methods to identify pro-union employees.

***

In other emails, managers discuss employee relationships to discern their union preferences. In one case, managers sought information about a Halloween party employees attended, and noted that a discussion about the union between two employees ended in part because they "were attracted to each other and this became the focus of their evening."

Starbucks vs. Mom & Pops

One of the enduring myths about market competition is that it necessarily implies winners and losers. We go on believing this despite the fact that when we drive along the highway we notice clusters of gas stations, burger joints & office supply stores all next to each other.

There's a new Slate article available which tells a story whose ending will be counter-intuitive to many.

Don't Fear Starbucks

Ever since Starbucks blanketed every functioning community in America with its cafes, the one effect of its expansion that has steamed people the most has been the widely assumed dying-off of mom and pop coffeehouses. Our cities once overflowed with charming independent coffee shops, the popular thinking goes, until the corporate steamroller known as Starbucks came through and crushed them all, perhaps tossing the victims a complimentary Alanis Morrisette CD to ease the psychic pain. In a world where Starbucks operates nearly 15,000 stores, with six new ones opening each day, isn't this a reasonable assumption? How could momma and poppa coffee hope to survive? But Hyman didn't misspeak—and neither did the dozens of other coffeehouse owners I've interviewed. Strange as it sounds, the best way to boost sales at your independently owned coffeehouse may just be to have Starbucks move in next-door.

Many have complained about the tough tactics labor unions use when trying to limit the competition by non-union employers. A side benefit of this article is the window it gives on how companies such as Starbucks ruthlessly attack their competition through means other than the market.

One thing the article doesn't touch on is how, if at all, Starbucks has caused labor market costs to rise (or fall) for mom & pop coffee shops. Based on data I have looked at with other retailers I would assume there has been a slight effect causing mom & pop shops to raise wages & benefits.

Terror Free Funds?

Barron's has a quick note regarding the possibility of an international exchange traded fund which excludes companies doing business with "terrorist states."

Legislators in various states have been pushing to limit state pension investments in companies that invest in or do business in countries suspected of sponsoring terrorist groups.

Over the last 2 years labor unions have become more aggressive in using the capital from their pension funds & related investments to influence corporate policy. It appears this phenomenon is not confined to the industrial relations arena as state governments begin to realize the new power they hold (via pension & other funds) to influence foreign policy, corporate behavior and even domestic policy. This also parallels the rise of Sovereign Wealth Funds which are funds controlled by states (countries such as China) that now contain a significant amount of capital.

Whether it is Labor Unions, States or Countries these developments present a serious challenge to the way capitalist economies have worked in the past. What we have here is the potential that billions of dollars in capital will no longer be seeking the highest return but instead will be seeking to influence political & economic outcomes.

Food Industry Requests More Regulation

In an interesting twist major US food corporations are asking for increased regulations.

Food Makers Get Appetite for Regulation (WSJ)

• The News: The food industry is seeking more government regulation on safety measures.

• The Alternative: Without a uniform standard, companies face a web of rules and audits from states and customers.

• The Bottom Line: Some calls for rules on imports may be protectionist. But they underscore the challenges of U.S. companies as they seek to ensure the safety of products sourced from around the world.

I've searched but couldn't find any union position on the matter. Union's have ceded space to corporations over the years to the point where they no longer have a major voice in industry regulation/lobbying.

Alan Greenspan: The Age of Turbulence

Alan Greenspan's memoir  The Age of Turbulence: Adventures in a New World was officially released today and I've just begun to digest it.

In the introduction we get a first (though not surprising) glimpse at Greenspan's contextual/functional view of unions:

Keynesian interventionism was still overwhelmingly the dominant paradigm in the mid 70s, though it was already on the cusp of decline. The consensus with the Economic Policy Committee was that letting the market set prices and wages was inadequate and unreliable and needed to be supplemented by "income policies." These differed from country to country, but generally set guidelines for wage negotiations between unions, which were very much more widespread and powerful than today, and management. Income policies fell short of all-out wage and price controls in that they were ostensibly voluntary. The guidelines, however, were generally backed up by the regulatory levers of government which were employed to "persuade" transgressors.

Given some thought this paragraph sheds light on the predicament of labor in 2007. The election of Ronald Reagan signaled a shift (though policy changes began before that) from Keynesian policies to more market based approaches. The "regulatory levers" would no longer work to actively persuade transgressors but to actively encourage them.

Union Rat Banned!?

Lawrence Township NJ has a local ordinance that bans balloon-type advertisements. A state appellate judge has ruled that this ban also applies to the famous inflatable rat unions use in labor protests.

How is an inflatable demonstration prop the same thing as a balloon-type advertisement?

Mexican Truck Explodes Killing 37

How fitting that on the day where the first Mexican trucks enter the U.S. we hear of a major trucking disaster in Mexico. I think it is a huge mistake, not just in terms of what this will do to labor markets and the economy, but also in terms of national security.

Mexican Truck Explodes

Sep 10 08:59 AM US/Eastern

PIEDRAS NEGRAS, Mexico (AP) - A truck carrying explosives for the mining industry exploded after running into another vehicle in northern Mexico, killing at least 37 people, a federal police official said Monday.

The two cars collided Sunday evening on a highway in Coahuila state, near the town of Sacramento, Luis Horacio de Hoyos said.

Soldiers, police, emergency officials, nearby residents and reporters were on the scene when the vehicle suddenly caught fire, igniting the truck full of explosives.

Maximo Alberto Neri Lopez, a federal police official, said 37 people were killed and 150 were injured. He said the explosion left a 3-meter by 15-meter crater in the concrete.

De Hoyos said three newspaper reporters from the city of Monclova were among the dead.

 

Union Busting

Fruits of Our Labor has a good post on Union Busting:

More people than at any time in the past 35 years need unions, but aggressively anti-union tactics in the private sector have taken away or suppressed worker's rights to organize. This process has been greatly assisted by a mass media which is extremely hostile to organized labor across the board (newspapers, magazines, television, radio and movies). Finally, the linking of liberal and Democratic Party causes to organized labor has made labor's political agenda subservient to these other forces.

Secret History of the Free Market

This looks like it will be an interesting book/film. One thought that comes to mind is if the labor movement was also the product of a shock. I believe there is a Richard Freeman paper that touches upon that.