May 2, 2014
By James Sherk
United Food and Commercial Workers Local 23 members probably didn't expect their union to fight in court to cut their pay. But in 2011, the local did exactly that to some employees at the Giant Eagle grocery store in Edinboro, Pa.
Giant Eagle’s management wanted to reward the hard work of two dozen employees. So it gave them raises above and beyond their union rates. The workers were thrilled; Local 23 was not.
The raises would lift the pay of several junior employees above that of more senior union members. Instead of celebrating its members' recognition, Local 23 filed a grievance.
The arbitrator sided with the union and ordered the pay increases rescinded. Courts upheld the ruling on appeal.
Local 23 got what it wanted — a uniform contract treating everyone the same. The union’s victory illustrates the problem with today’s labor movement.
Economically, unions function as labor cartels: They restrict the supply of labor so as to increase its price -- like an OPEC of workers instead of oil. They do this by negotiating collective bargaining agreements covering every worker at a company.
Such collective contracts necessarily ignore individual effort. One contract could hardly reflect the individual contributions of hundreds of workers. Even if it could, few unions would want it to. They prefer that workers see their union — not their own efforts — as helping them get ahead. After all, why would workers making more than the union rate want to pay union dues?
So when Sen. Marco Rubio, R-Fla., proposed permitting such individual raises, the Teamsters derided it as a “Bosses' Pet” provision.
This approach turns off most workers today. Computers have automated many of the routine tasks of yesteryear. In the knowledge economy, individual skills and talents are workers’ chief assets.
Why would a graphic designer, a website developer or a PR specialist want a collective contract? It would ignore what they bring to the table. And yet unions offer only that.
Small wonder that just one in 10 nonunion workers say they want to organize. Or that union membership has dropped to single digits in the private sector.
Workers don’t want to buy what unions are selling. Yet polls also show many workers want a greater voice on the job. The labor movement needs to reinvent itself for the 21st century.
Reinvented unions — perhaps called "employee associations" — would stop trying to cartelize the labor market. Collective contracts appeal to few workers, and such cartels stand little chance in today’s increasingly competitive economy.
Few companies today can pass on the higher cost of union contracts to consumers. Unionized companies typically wither in the marketplace. Instead, employee associations would focus on two things: adding voice and value.
Many workers want their company to hear their concerns. But sheer size often separates senior management from rank-and-file workers.
What the president of a large company knows of worker concerns typically comes filtered through lower levels of management. Employee associations could provide workers with a direct voice, communicating their concerns to senior levels.
Management and employee associations could discuss things such as how to restructure benefit plans, problems with workplace policies and other problems on the job.
They could also convey concerns about mid-level supervisors — concerns those supervisors would not flag themselves. Many employers would welcome such feedback — if it were not coupled with crippling union contracts.
Employee associations could also create value for workers – helping them navigate the global economy. They could provide job training (as many construction unions now do). They could also give workers advice in managing their 401(k)s or create networking opportunities.
Employee associations could also certify workers’ skills and experience. Right now, a resume can only tell employers so much about a worker’s abilities.
Many employers will voluntarily pay premium wages for better workers — if they can identify them. Employee associations could help fill that gap with skill certifications. They could also teach unemployed workers how to search effectively for work.
Services like these would help workers work their way up the job ladder, yet few unions offer them. Instead, most unions tie membership to working for a particular employer. They assume workers will stay with that company and offer services accordingly.
The collective contract only applies to employees at one company. Such a setup makes little sense in today’s increasingly mobile economy.
Employee associations, adding value and voice, could significantly help modern workers. Many employees would voluntarily join to enjoy such benefits -- far more than would join a union that goes to court to get their raises canceled.
Originally appeared in the Washington Examiner
Research Fellow, Labor Economics
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