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September 17, 2007

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.

September 17, 2007 in Globalization, Politics and Unions | Permalink | Comments (2) | TrackBack

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.

September 17, 2007 in Books, Economy and Unions, Notebooks | Permalink | Comments (1) | TrackBack

September 14, 2007

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?

September 14, 2007 in Labor Disputes | Permalink | Comments (1) | TrackBack

September 10, 2007

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.


September 10, 2007 in Globalization | Permalink | Comments (1) | TrackBack

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.

September 10, 2007 in Unionization/Deunionization | Permalink | Comments (0) | TrackBack

September 09, 2007

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.


September 9, 2007 in Economy and Unions, Unionization/Deunionization, You Tube | Permalink | Comments (0) | TrackBack

September 08, 2007

Labor Market Rigidity Questioned

From Dani Rodrik's Blog via  Naked Capitalism

Are Protective Labor Market Institutions at the Root of Unemployment?  A Critical Review of the Evidence


A rapidly expanding empirical literature has addressed the widely accepted claim that employment-unfriendly labor market institutions explain the pattern of unemployment across countries. The main culprits are held to be protective institutions, namely unemployment benefit entitlements, employment protection laws, and trade unions. Our assessment of the evidence offers little support for this orthodox view. The most compelling finding of the cross-country regression literature is the generally significant and robust effect of the standard measure of unemployment benefit generosity, but there are reasons to doubt both the economic importance of this relationship and the direction of causation. The micro evidence on the effects of major changes in benefit generosity on the exit rate out of unemployment has been frequently cited as supportive evidence, but these individual level effects vary widely across studies and, in any case, have no direct implication for changes in the aggregate unemployment rate (due to ``composition" and ``entitlement" effects). Finally, we find little evidence to suggest that 1990s reforms of core protective labor market institutions can explain much of either the success of the ``success stories" or the continued high unemployment of the large continental European countries. We conclude that the evidence is consistent with a more complex reality in which a variety of labor market models can be consistent with good employment performance.

September 8, 2007 in Economy and Unions, Labor Markets, White Paper Reports | Permalink | Comments (0) | TrackBack

September 05, 2007

CEO McMansions and Corporate Performance

Here's a fun paper via Marginal Revolution:

Where are the Shareholder's McMansions: CEO's Home Purchases, Stock Sales, and Subsequent Company Performance

We study real estate purchases by major company CEOs, compiling a database of the principal residences of nearly every top executive in the Standard & Poor's 500 index. When a CEO buys real estate, future company performance is inversely related to the CEO's liquidation of company shares and options for financing the transaction. We also find that, regardless of the source of finance, future company performance deteriorates when CEOs acquire extremely large or costly mansions and estates. We therefore interpret large home acquisitions as signals of CEO entrenchment. Our research also provides useful insights for calibrating utility based models of executive compensation and for understanding patterns of Veblenian conspicuous consumption.

September 5, 2007 in Firms, White Paper Reports | Permalink | Comments (0) | TrackBack

Union Dues as an Investment?

The Motley Fool recently tackled the following question: Union Dues: A Good Investment?

I have no choice but to completely deconstruct the answer:

Labor Day brings the end of summer, the beginning of school, and an annual reminder that "the folks who brought you the weekend" used to carry some serious clout. Unions' influence has since dwindled, and by last year only 12% of workers counted themselves card-carrying members.

The "answer" to this ostensibly objective question sets the stage with this first paragraph. Notice its negative tone. Yes, it is a fact union membership has declined but absent context and some background it does nothing to help directly answer the question on whether or not union dues are a good investment.

The author is implying that union influence has not dropped but dwindled and now only 12% of the workforce is unionized. Well if union membership has dropped down to 12% it must not be a good investment - that's what's implied and what readers take away from that first paragraph.

But what does that 12% signify and does the percentage of workers who belong to unions have anything to do with whether or not joining a union is a good idea for an individual worker or a group of workers seeking to unionize their firm?

First of all unions, even at the height of their growth in the United States only represented 35% of the workforce. Most people are surprised to hear that. It's been my experience that when asked even learned people guess the unionization rate was over 70% in the 1950's. Another thing to consider is that the workforce has grown. 12% of the 2007 workforce could actually be a higher number of union members than 35% of the 1955 workforce. On the other hand both these numbers would also take on a different meaning if we made it the percentage of possible unionized jobs (by law not all jobs and occupations are eligible for unionization, jobs not eligible have accounted for a large percentage of job growth in the last two decades).

The point I am making is that even if the 12% number did matter the way the author presents it doesn't really tell us much.

However, if you're on a manufacturing line, or you're a teacher, police officer, firefighter, or librarian, the odds remain pretty good that a union representative will come knocking at your door. If you're thinking about signing up, you may be wondering what those union dues buy.

The author mentions 4 public sector jobs and 1 private sector (manufacturing) leaving out the entire private service sector and the quasi-public health care sector. The implication is that unions are only for government workers or manufacturing.

It is of course always problematic to look at union dues, organization fees, church tithes and the like as a purchase but fair enough I'll roll with it.

Let's set politics aside for a moment in favor of economics.

Is the author admitting the political bias of the first two paragraphs?

After all, unions promise to make your standard of living better through increased wages and benefits. The first thing to know? It's no guarantee, especially when an entire industry faces challenges. Despite strong unions in the auto industry, thousands of jobs have been eliminated at GM (NYSE: GM), Ford (NYSE: F), and Chrysler. And unions haven't prevented slashed pensions at airlines like UAL's   (NYSE: UAUA) United Airlines and Delta Airlines (NYSE: DAL).

Ahhh - The no guarantee argument. Of course there are no guarantees in life and this goes back to what I just said regarding viewing union dues as a purchase. When you join a union you are not purchasing better wages and benefits rather you are providing financial support to an institution which facilitates you and your coworkers ability to have a voice on the job, collectively bargain with your employer and protect you and your coworkers in exercising these rights. Naturally, when workers have these rights it usually leads to better wages and working conditions.

I said usually.

Of course if a particular firm is in financial distress, or mismanaged a labor union isn't going to be able to maintain higher wages or even maintain the firm as a going concern. A labor union isn't some magical institution that is going to stop firms from going out of business or find hidden stacks of money to distribute among the workforce of a financially failing employer. But wait, does that mean workers in firms (or industries) that are going through a hard time or in financial distress better off if they dumped their unions?


By virtue of being a member of a labor union and having a labor contract prevents by law (and the power of collective action) the arbitrariness of the firm in taking unilateral action in slashing your pay, benefits and working conditions. With a labor contract your living standard is protected during its duration. This allows a worker to plan their financial life with some security. When a firm gets into trouble the cost saving measures the firm makes will have to be negotiated with the workforce. Again, even during a time of hardship like this workers have a say and sense of control over what cost saving measures will be instituted.

If my employer is going through a financial crisis I much rather sit down and negotiate  whether or not there will be a wage freeze, giveback, change in percentage of health care payments or how layoffs will happen (will there be right of recall etc). That's much better than showing up one day  and noticing a pay cut or something more horrible. There are also plenty of cases where the union examines a firm and helps them find cost savings that won't hurt the workforce, such win-win solutions are common.

So the question the article's author must answer is if a non-union workforce fares better when an industry or firm is in distress than a unionized workforce. I can bet the author doesn't want to touch that one as it is fairly obvious.

To find out whether your union dues will be money well spent, ask some questions:

  • How much are the dues? Are they calculated as a percentage of your pay or as a flat fee? If they're a percentage of your pay, find out whether any future pay raises will be counted fully or partially toward that calculation. Don't assume that your union dues can be deducted from your taxes. They can, but they must (when combined with other professional expenses and other miscellaneous items) exceed 2% of your adjust gross income before you can start deducting them.

Of course it is a fair question to find out what fees are associated with joining a union (or any organization for that matter) but what does this have to do with how well of an investment decision it is? Is the author suggesting the cheaper the union the better the investment? I have no problem with looking at union dues as an investment as an academic exercise but please don't treat the question like this. Does a cheaper stock mean the stock is a better investment?

How will your dues be spent? If your local or national representatives can't answer that question, it may be a sign that the union isn't acting as a good steward of your money.

Your local union representative is trained   in negotiating labor contracts, defending workers' rights on the job etc. Your local union representative can give you a breakdown of what union dues money is spent on as easily as your boss or supervisor can tell you what's in the company's 10-K report.  Does the author know anything about labor unions? The union representative isn't the Steward of your money, your union dues aren't an investment fund, the union representative is the steward of your  workplace and contract. If a member is concerned about the union's finances they can attend  union meetings  and get the union's financials for free from the government.

Find out whether the union stays active all the time, or whether it only gets organized when contract talks start. Ideally, you'd like your union to be paying attention to job matters even when they're not knee-deep in negotiations.

It is normal for unions to become more active when it is time to negotiate a contract. Just like above where the author put out that a union rep should be able to answer a question that in reality they would not know here to the author is taking advantage of something almost every union does, get more involved and active for contract negotiations, and making it seem like this is a bad thing. Yes, the union needs to pay attention, thats why there are rank and file stewards enforcing the contract on a day to day basis, but you cant expect or want the union to be doing major mobilizations on a daily or weekly basis. You do that when there is more on the line, like contract talks.

Talk to your shop steward to find out what kind of successes the union has had on behalf of workers, individually and as a group, in the past. What kind of resources does the union have to help you pursue a problem or a contract violation? If you can talk with an employee who has used the union grievance procedure to try to remedy a job wrong, that's even better.

Take a look at the contract, your salary, and your benefits and compare them to others in your industry. Are they better, or about the same? Even if they aren't ideal, has the union successfully staved off the erosion of benefits (like health and retirement perks) that has hit many workers?

Does the union actively defend the contract? If you work in a place where the culture means that employees don't claim the rights they have in the contract, you may find your dues don't come back to you in the form of the overtime pay or other apparent benefits.

These are fair.

If you ask all these questions and you aren't satisfied with the answers, you have one more reason to think about joining -- pay your dues and get to work changing the organization from the inside.

I don't understand this final paragraph. Well, I understand it but I am not sure what the author is trying to convey. If s/he is saying that even if a union seems bad it still may be worth joining just to change it and make it better. I'm all for that and did the same over 10 years ago when I was a union member. After all a union is an organization and an organization is only as strong as its members.

But the end of this article doesn't really wrap anything up and never answers whether or not unions are a good investment. Instead all it managed to do was create a few questions that focus on topics which won't help a worker decide on whether nor not joining a union is right for her/him.

September 5, 2007 in Paycheck Economics | Permalink | Comments (4) | TrackBack

United Auto Workers vs Toyota Round 16

There are two troubling facts about the U.S. auto industry.

1. US Auto employers' US operations have been in decline for the past 20 years resulting in plant closings and layoffs.

2. Foreign Automakers have been opening plants up in the United States at a fast pace, but the US autoworkers union has been unable to organize any of them.

As time goes on more than half of all automobiles made in the USA will be made at foreign owned auto plants by non-union workers. For the current and retired members of the UAW it is important that the union establish a presence and foothold within these foreign plants. Yesterday's NY Times featured an article suggesting that the UAW's luck may be changing for the better.

Hardly a Union Hotbed (NY Times Login Required)

September 5, 2007 in Globalization, Organizing, Unionization/Deunionization | Permalink | Comments (0) | TrackBack