Where Have All the Unions Gone and Where Are All the Jobs?*
Economics is a simple field. Just about everything can be described in terms of supply and demand. If the supply of something is scarce but the demand for it is strong, its price rises. On the other hand, if there is a lot of supply but little demand, its price will go down.
Now, buyers and sellers can engage in certain strategies to weight the scales. For example, sellers of a product can band together (perhaps by buying each other out) to achieve some amount of monopoly power. Conversely, buyers of a product can collude to bid down the cost of purchasing.
This is, of course, true for the market for labor. And in the labor market, one classic way for sellers of labor (i.e., workers) to raise their bargaining power, and therefore their pay, is to band together into unions. What makes unions effective is that:
1. Union members commit to acting in concert
2. While it is easy for a company with a 1,000 person assembly line to replace a few people at a time without missing a beat, replacing all 1,000 at once would seriously crimp operations.
As a result, the cost of workforce dissatisfaction to a company with a unionized workforce is greater than the cost of workforce of dissatisfaction to a company without a unionized workforce. Therefore, a company with unionized workforce will, all else being equal, be willing to make greater concessions on pay and working conditions than the same company would be if its workforce was not unionized.
But a union is not a guarantee of anything. After all, a union can be broken. And all you need to break is to make sure there is a sufficiently large, inexpensive workforce capable of replacing the unionized workforce. There might be short term pain, but on paper at least, after that its all profit.
Which brings me to this story in the NY Times. Its about a small town in Iowa heavily reliant on the meat packing industry. Despite the Times’ clear and omnipresent bias that more immigration is always a positive thing, the following paragraph provides a good summary of the entire piece:
At that point, Mr. Smith returned to do night cleanup, earning $5.50 an hour with no benefits, but a vast majority of his former co-workers were turned away, he said, because the new owner did not want to hire union supporters. Instead, the company began actively recruiting in Mexico and immigrant communities in Texas and California.
If there are enough low-skilled immigrants, unions cannot compete. They chose to turn a blind eye toward illegal immigration because they felt it was good for business. Democrats also understood that decades ago and sided with unions. This is because Democrats felt it was good for society if factory workers could enjoy a middle class lifestyle. In the past decade, Democrats have changed. (The reason for this may be the subject of a future post.)
But regardless of politics, the facts are simple: except in very limited circumstances, one cannot simultaneously have strong both unions and virtually unrestricted immigration.
* With apologies to Bonnie Tyler. And my sympathies to American workers who also need a hero.
The impact of illegal immigration on meat packing worker salaries is well documented. Despite the conventional wisdom, illegal immigration, in particular, hurt low end unionized workers in meat packing, janitorial work and even in agriculture. I’m generally pro-immigration, but I think employers who hired illegal immigrants should have lost their businesses and possibly their citizenship.
Hey everybody; don’t worry about immigration. Same simple answer to that and almost everything in our society: make union busting illegal — state level first of course, progressive states first.
You heard it here first (maybe): a quick fix. Was thinking one way to break the cultural log jam on the way to criminalizing union busting (think social inertia biggest block) might be doing ballot initiatives in states where applicable (includes OR, CA, MO, Mi, OH). Some states initiatives go to legislature first for approval — back to voters to decide if not approved. In most states initiatives need 5% of the number of voters in the last governor’s election.
Then the brainstorm. Only 400,000 signatures needed in California. Workforce there something like 16 million. Nationally, 45% of workforce under $15/hr. Maybe 6 million California employees would line up around the block (!) to sign a petition to make union busting a felony.
Most natural practice in the world to protect one business (“a union is a business” as Jimmy Hoffa said :-]) from being strangled by a competing business, from being muscled in (or out of) the market place. Merely getting caught taking a movie in the movies, you’re doing a couple of federal years. 6% union density in private economy is like 20/10 blood pressure: starves every other economic and political process.
Like I said, the biggest barrier is probably cultural — we are just so used to our hidden behind the oceans blind ways we think this is the way things “eternally” must be. A petition(s) that millions may stampede to sign should clear off those scales.
Recruiting Fight for 15 type organizations would be an easy way to start. From grandiosity headquarters.
Just to be clear here, Iowa is a strong right to work state.. since 1977.
It’s called gov’t sponsored union busting.
http://statelaws.findlaw.com/iowa-law/iowa-right-to-work-laws.html
Immigrants don’t bust unions. Republican laws and regulations bust unions.
Which is why establishment “Repubicans” turn a blind eye to illegal immigration.
Kimel
The trouble with economics is that it is a simple minded field.
And the bosses will find any way they can to keep labor costs as low as they can… that is the flaw in unrestricted capitalism.
The state university here got rid of all it’s janitors who were paid civil service wages in order to contract out to a private business who provided janitors at minimum wage. Both contracting out and a minimum wage held below a living wage are results of Republican inspired politics.
Not bashing Republicans here. The Dems play the same games. Just trying to point out that reality has many causes not limited to your anti immigration hobby horse.
And I have been against immigration since the year the Rhine froze over.
“This is because Democrats felt it was good for society if factory workers could enjoy a middle class lifestyle. In the past decade, Democrats have changed. (The reason for this may be the subject of a future post.)”
Let’s hope not.
Angry union workers…
https://www.youtube.com/watch?v=WgGlbnfeClc
Perhaps not so much in meat packing–we do raise a lot of meat in this country– but your analysis of immigration affecting unions is also incomplete unless you erect protective tariffs on imports. You can hire a non union and perhaps undocumented immigrant to run your widget machine if you do not want to pay union scale. If immigrants are not available, you move your widget factory to a lower wage country. Indeed there are a number of U.S. industries which will disappear without immigrants–many undocumented. Native born citizens are unwilling to do the work and if wages were raised to convince more people to take the jobs, the industries could not compete with importers.
Terry,
Thanks for your comment. Your point is good but… Imports are always a substitute for domestic production, but their feasibility can fall with factors such as transportation costs, hard to replicate cultural conditions, etc.
Now, say X% of industries are protected by such factors and 1-X% are not. If you limit the importation of workers but not of trade, you protect X% of jobs. If you don’t limit immigration, you protect none.