Why Chattanooga VW workers rejected the UAW

Rick Moran
Washington Post columnist Robert Samuelson has a slightly different take on why the UAW lost the Chattanooga vote.

Essentially, Samuelson places the vote in an historical context that reveals why the old industrial unions are disappearing:

What bolstered unions after World War II was the dominance of American business. Companies faced little or no competition. In autos, the Big Three (General Motors, Ford and Chrysler) had almost all the market. American Telephone & Telegraph enjoyed a near-monopoly of phone service. Government regulatory agencies restricted competition among airlines (the Civil Aeronautics Board) and truckers (the Interstate Commerce Commission) by limiting the number of companies that could provide service on any route.

Together, modest competition and technological superiority produced what economists call "rents" -- excess returns that could go to shareholders (in higher profits), workers (in higher wages and fringes) and consumers (in lower prices or higher-quality goods and services). Labor-management bargaining determined how much of the rents workers would receive. Unions' influence also extended to many nonunion firms -- say, IBM -- that imitated union benefits, at least in part, to avoid being organized.

But the system broke down in the 1970s and '80s under pressure from nonunion domestic firms (Wal-Mart), foreign companies (Toyota) and new technologies (Microsoft). Government deregulation of airlines, trucks and telecommunications intensified competition. "Rents" -- the system's linchpin -- faded and vanished. Prodded by Wall Street, companies increasingly focused on cost-cutting to protect profits. Business became more hostile toward unions. Older, heavily unionized firms grew slowly or not at all; unions had little success in organizing new high-technology sectors.

The upshot: Private-sector unions lost their power to protect jobs and raise incomes. Unions were caught in a vise. If they pressed for higher wages and fringe benefits, they risked destroying jobs. Companies might lose sales to lower-cost rivals; or they might move to anti-union states or low-wage countries. Even protecting existing compensation levels became hard because -- in extremis -- companies might fail. On the other hand, if unions abandoned traditional bargaining goals, they might infuriate rank-and-file members and be accused of "selling out."

Many of the built in advantages unions enjoyed in the 50's and 60's have fallen by the wayside, including federal deregulation of unionized industries and the growth of right to work states. Forced to compete in a free market, the unions are failing to close the sale as workers look at Detroit and wonder if it's worth it to have the UAW speak for them.

The unions appear to be too hide-bound to change, so it is likely they will continue to lose membership and influence in the coming years.

Washington Post columnist Robert Samuelson has a slightly different take on why the UAW lost the Chattanooga vote.

Essentially, Samuelson places the vote in an historical context that reveals why the old industrial unions are disappearing:

What bolstered unions after World War II was the dominance of American business. Companies faced little or no competition. In autos, the Big Three (General Motors, Ford and Chrysler) had almost all the market. American Telephone & Telegraph enjoyed a near-monopoly of phone service. Government regulatory agencies restricted competition among airlines (the Civil Aeronautics Board) and truckers (the Interstate Commerce Commission) by limiting the number of companies that could provide service on any route.

Together, modest competition and technological superiority produced what economists call "rents" -- excess returns that could go to shareholders (in higher profits), workers (in higher wages and fringes) and consumers (in lower prices or higher-quality goods and services). Labor-management bargaining determined how much of the rents workers would receive. Unions' influence also extended to many nonunion firms -- say, IBM -- that imitated union benefits, at least in part, to avoid being organized.

But the system broke down in the 1970s and '80s under pressure from nonunion domestic firms (Wal-Mart), foreign companies (Toyota) and new technologies (Microsoft). Government deregulation of airlines, trucks and telecommunications intensified competition. "Rents" -- the system's linchpin -- faded and vanished. Prodded by Wall Street, companies increasingly focused on cost-cutting to protect profits. Business became more hostile toward unions. Older, heavily unionized firms grew slowly or not at all; unions had little success in organizing new high-technology sectors.

The upshot: Private-sector unions lost their power to protect jobs and raise incomes. Unions were caught in a vise. If they pressed for higher wages and fringe benefits, they risked destroying jobs. Companies might lose sales to lower-cost rivals; or they might move to anti-union states or low-wage countries. Even protecting existing compensation levels became hard because -- in extremis -- companies might fail. On the other hand, if unions abandoned traditional bargaining goals, they might infuriate rank-and-file members and be accused of "selling out."

Many of the built in advantages unions enjoyed in the 50's and 60's have fallen by the wayside, including federal deregulation of unionized industries and the growth of right to work states. Forced to compete in a free market, the unions are failing to close the sale as workers look at Detroit and wonder if it's worth it to have the UAW speak for them.

The unions appear to be too hide-bound to change, so it is likely they will continue to lose membership and influence in the coming years.