Be afraid on Labor Day
by Dan Crawford (Rdan)
Business Insider offers one sort of opinion by Mike Shedlock… what I can gather from the short article are the implications that outsourcing over the globe is a consequence of unions, that we should be more like Louisiana, and there is no economic literature on labor to offer some alternative explanations. And serves notice to public employee unions of what is next…you privileged workers are next after we finish off what is left of the private unions. Really nice offering.
Now this particular effort might reflect some lack of understanding on the unions part, but absolves any decision by Cessna management for stupid decisions it appears. Be afraid is the message.
Here’s the deal. The Hises and the union in general appear ready willing and able to “hurt the whole Wichita economy” if they do not get what they want.
I have to ask “How stupid is that?”
The answer is “tremendously stupid”.
It is far better to have a good paying job and no job security than no job at all and no prospects of a job. That’s what it boils down to, and like it or not, that is the economic reality.
I do not know what salaries are, but a 10 year contract with only a 4.2% pay cut does not strike me as a bad deal. Those who think otherwise need to compare it to the alternative: seeing all the jobs go to Louisiana, Mississippi, or outside the country.
By the way, wouldn’t residents of Louisiana and Mississippi be very grateful for those job, regardless of what the salary was? I think so. So the bottom line is this mess, is the unions would be to blame and only the unions to blame if Cessna moves elsewhere. The union will also be responsible for wrecking the entire local economy if it happens.
Take the contract and run! It’s for 10 years! Because …. You Don’t Know What You’ve Lost Till Its Gone, Then It’s Too Late. In this case, it will be gone forever.
Will management accept a 4.2% reduction and a 401k for the next ten years ?? Will the almighty shareholders accept a 4.2% cut in the dividend for the next ten years ???
Seems like a fair deal to me. Time to down tools.
Mish is an Austrian School neoliberal. As such, his worldview has built into it a tremendous blindspot: while he assertedly believes that all collectivism is bad, he does not see that corporations that are legally individuals are, in fact, a collective of shareholders and management. It is this blindspot that allows him to take sides with one collective over the other.
A consequence of his anti-union stridency is the implicit admission that labor has no liberty, that labor has no choice but to accept what management offers. So what liberty does libertarianism promise exactly?
Tao
why it’s the liberty of a poor man with a family to feed to “bargain” as an individual with a giant corporation that can take his job to china if it doesn’t like the wages he says he needs.
and of course it is the liberty of the young and strong to “compete” with their fellow workers who might be a little slower. this way the young get to work harder and the old get to stop eating. fair enough.
the “efficiency of markets” will always pressure wages toward subsistence level or less, mixed with periods of no wages at all and periods of revived animal spirits when a new technology gives workers with the right skills a temporary competitive advantage… so they can walk around imagining themselves the darlings of evolution.
the tragedy here is that they nevr learn. even when a union has bought them a high standard of living, they will complain about the union, be easy suckers for bosses who tell them that they are being held back by the union, or in danger of losing their jobs because of the union. and of course sometimes its true and not just a management bluff. because the day its cheaper to build a factory in vietnam than it is to pay the wages a person needs to live on in Cleveland… “the question answers itself.”
A lot depends on the demographs of the union. Lots of old guys who will be up and out in 10 years or lots of young guys.
Both should take the deal and start making plans. Cessna is leaving no matter what. It is just a matter of time. Cessna can do a strategic default no problem but the workers can’t.
The workers need to start being strategic too. Pay down debt, don’t buy a house or sell the old one and rent. Defer having children. Go to night school and work on skills that might get you that next job in an area with a growing economy. Do some research on where the next jobs will come from and where they will be located. Hard work I know with lots of uncertainty but what are the options?
I don’t know why Mish has a hard on for unions but maybe his mom was frightened by a union orgainizer when pregnant. His point of view in an era of low union power doesn’t make sense.
Nice hatchet job piece on an otherwise harmless looking web site. But lo and behold who should happen to be in charge at Business Insider? It’s none other than that paragon of honest opinionating, Henry Blodgett. For those who have lost track of the bonafides of Mr. Blodgett and how that may reflect upon articles appearing within the “pages” of Business Insider, from Wiki.
“Henry Blodget (born 1966) is an American former equity research analyst, currently banned from the securities industry, who was senior Internet analyst for CIBC Oppenheimer during the dot-com bubble and the head of the global Internet research team at Merrill-Lynch. Blodget is now the editor and CEO of The Business Insider, a business news and analysis site, and a host of Yahoo TechTicker, a finance show on Yahoo.”
Funny how employees are always responsible for things going wrong in business. If unions and employees make such a difference in the success or failure of business why is it that they don’t share more in the profits when things go right
Mish is a freaking idiot. He believes we should turn back the clock of employer-employee relations to circa 1890-1900. Personally, I can’t consider that “progress”.
Having been thru several rounds of contract negotiations as a former employee/salaried exempt foreman of the very same Cessna Aircraft Co., he’s mistaking the pre-contract “negotiation by press release” as “line in the sand” positions of both sides.
Kansas is a “Right to Work” state. Which means that Union membership is optional. Which means that guys have the choice of whether they go on strike or not. The typical contract negotiation always has pronouncements about “the sky falling” by both sides, but eventually, a contract is worked out.
All the kids have been laid off at Cessna for two years. Those employees remaining are high timers, many of whom have high skill sets that are easily transferable to other industries. Cessna tried to move single engine production to Independence Kansas back in the 90’s, to “reduce labor costs”. Ask them how that worked out, at least initially. It was a lot more expensive proposition than they anticipated.
Nobody in Wichita is going to buy into a 10 year contract. When given the choice of screwing themselves financially rapidly, or a long slow, painful slide into serfdom, they will go with “A”.
@dilbert dogbert,
My guess is that Mish’s disdain for unions goes back to his prior career as a newspaper photographer (think I have that right?), which was probably a union job. As I recall his story, when he lost that job he was out of work for three years until he was able to create opportunity via his blog.
To me, the issue isn’t even about unions. If we truly live in a world where labor is a commodity whose price is determined by the so-called “free market,” then people who labor are not free to choose and, therefore, are trapped in the “serfdom” that Hayek said wasn’t possible in a free market.
So what liberty does libertarianism promise exactly?
Somebody on usenet said it best a long time ago:
“All the freedoms you can afford, and not one drop more.”
might as well send the jobs to china.
no one in america can afford to buy a plane any more anyway.
i will try:) sorry cant remember where i posted before. there is the question of the gap in the resume. there are no guarantees ill be hired. but then again i said i would give it my best shot:).
Mish believes that pooling resources in shared interest should only be available to capital and management.
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Kansas is a “Right to Work” state.
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But I’m guessing that non-competes and employee poaching restrictions are hunky dory.
Mish thinks this was a great country before Roosevelt was elected…i never figured out if he was talking about FDR or Teddy…
I’ll be interested in hearing what the outcome of these labor negotiations are. Right now it seems pretty typical rhetoric in the weeks before a contract ends. Just a guess, but I bet on about a 3 year deal with a small pay raise (maybe lump payments), but with pretty large increases in employee medical contributions and possibly pension plan adjustments towards the defined contribution end of the spectrum. Not hugely dramatic.