Unions and Government: A Suicide Pact for Everyone

The U.S. Department of Labor and the National Labor Relations Board (NLRB) are taking action to make it easier for union bosses to force non-union plants to organize.  This flies in the face of economic reality, although it does fit nicely with Obama's ideology and his re-election campaign strategy.

International trade is a fact of life, and as much as the unions hate the fact, they are forced to compete with workers in other nations.  Those foreign workers are willing to work at wage rates far below what the unions view as "fair" (which in their case translates to "wages higher than non-union workers").  The unions' drive to organize more and more workers, and thereby artificially force wage levels upward, does nothing but put a brake on domestic economic growth and retard job-creation -- and without those jobs, ultimately, overall domestic incomes will be reduced. 

In addition, when overall jobs are lost, those remaining to be filled tend to pay lower wages.  It's a simple supply-versus-demand equation.  When there are more unemployed people than there are unfilled job openings, employers are then able to bid down their wage scales.

What the union leaders (and the Obama administration) seem too short-sighted to realize is that this policy, and the resulting overall reduction in jobs and domestic wages, will also impede the ability of Americans to buy domestically produced goods when said goods are sold at costs driven by increased wage levels not moderated by the recognition of competition for those very jobs.

So in their effort to "help" unions, the Department of Labor and the NLRB will hobble our economy.  Reducing domestic economic activity will have a ripple effect around the globe, reducing the level of exports of those very things that are produced largely by union labor, which will result in layoffs of union members.  It will also force the government (at both federal and state levels) to raise taxes to make up the revenue shortfalls from taxes on lost wages and lost profits due to reduced private-sector activity, and force potentially massive layoffs among public-sector union members. 

So any reduction of total domestic income will reduce the amount of revenue the U.S. government is able to collect in taxes, and that will also reduce Americans' ability to purchase "foreign goods made with cheap labor."  Increasing taxation appears to have exactly the same impact as increasing tariffs and other impediments to international trade. 

The unions' official line against "foreign goods made with cheap labor" always carries a subtext of cheap labor equating to shoddy products.  For years the United Auto Workers unions demanded more and more money for their members.  So the question must be asked: if there were a correlation between what the Big Three auto companies were paying the workers who assembled Fords, Chevys, and Chryslers and the quality of their output, why did Japanese carmakers eat their lunch in the '70s -- a situation from which the former group never totally recovered?

Could it possibly be that union demands for "fair" (i.e., higher and higher) wages and benefits have absolutely nothing to do with the quality of their output?  This conundrum is apparent in the public sector as well.  The teachers unions, while claiming that their wage demands are really "for the children," continually equate more money for teachers with improved results in education.  Just how well is that working out for us?

So good job, Mr. President.  Yeah, we should give you another four years to see what other jobs can be "created or saved" -- or, as appears much more likely, destroyed.

One final note.  I'd bet real money (but not $10,000, of course) that every union labor leader, every senior staffer at the Department of Labor, and every senior member of the NLRB carries an iPhone or a BlackBerry or something similar -- none of which they will willingly surrender, and none of which are made with union labor, and effectively all of which are imported after being produced by "cheap foreign labor."  Go figure.

Jim Yardley is a retired financial controller for manufacturing firms, a Vietnam veteran and an independent voter.  Jim blogs at http://jimyardley.wordpress.com, or he can be contacted directly at james.v.yardley@gmail.com.

The U.S. Department of Labor and the National Labor Relations Board (NLRB) are taking action to make it easier for union bosses to force non-union plants to organize.  This flies in the face of economic reality, although it does fit nicely with Obama's ideology and his re-election campaign strategy.

International trade is a fact of life, and as much as the unions hate the fact, they are forced to compete with workers in other nations.  Those foreign workers are willing to work at wage rates far below what the unions view as "fair" (which in their case translates to "wages higher than non-union workers").  The unions' drive to organize more and more workers, and thereby artificially force wage levels upward, does nothing but put a brake on domestic economic growth and retard job-creation -- and without those jobs, ultimately, overall domestic incomes will be reduced. 

In addition, when overall jobs are lost, those remaining to be filled tend to pay lower wages.  It's a simple supply-versus-demand equation.  When there are more unemployed people than there are unfilled job openings, employers are then able to bid down their wage scales.

What the union leaders (and the Obama administration) seem too short-sighted to realize is that this policy, and the resulting overall reduction in jobs and domestic wages, will also impede the ability of Americans to buy domestically produced goods when said goods are sold at costs driven by increased wage levels not moderated by the recognition of competition for those very jobs.

So in their effort to "help" unions, the Department of Labor and the NLRB will hobble our economy.  Reducing domestic economic activity will have a ripple effect around the globe, reducing the level of exports of those very things that are produced largely by union labor, which will result in layoffs of union members.  It will also force the government (at both federal and state levels) to raise taxes to make up the revenue shortfalls from taxes on lost wages and lost profits due to reduced private-sector activity, and force potentially massive layoffs among public-sector union members. 

So any reduction of total domestic income will reduce the amount of revenue the U.S. government is able to collect in taxes, and that will also reduce Americans' ability to purchase "foreign goods made with cheap labor."  Increasing taxation appears to have exactly the same impact as increasing tariffs and other impediments to international trade. 

The unions' official line against "foreign goods made with cheap labor" always carries a subtext of cheap labor equating to shoddy products.  For years the United Auto Workers unions demanded more and more money for their members.  So the question must be asked: if there were a correlation between what the Big Three auto companies were paying the workers who assembled Fords, Chevys, and Chryslers and the quality of their output, why did Japanese carmakers eat their lunch in the '70s -- a situation from which the former group never totally recovered?

Could it possibly be that union demands for "fair" (i.e., higher and higher) wages and benefits have absolutely nothing to do with the quality of their output?  This conundrum is apparent in the public sector as well.  The teachers unions, while claiming that their wage demands are really "for the children," continually equate more money for teachers with improved results in education.  Just how well is that working out for us?

So good job, Mr. President.  Yeah, we should give you another four years to see what other jobs can be "created or saved" -- or, as appears much more likely, destroyed.

One final note.  I'd bet real money (but not $10,000, of course) that every union labor leader, every senior staffer at the Department of Labor, and every senior member of the NLRB carries an iPhone or a BlackBerry or something similar -- none of which they will willingly surrender, and none of which are made with union labor, and effectively all of which are imported after being produced by "cheap foreign labor."  Go figure.

Jim Yardley is a retired financial controller for manufacturing firms, a Vietnam veteran and an independent voter.  Jim blogs at http://jimyardley.wordpress.com, or he can be contacted directly at james.v.yardley@gmail.com.