The Rise of Union Greed
Since the dawn of the industrial revolution through the early twentieth century, unions came to represent millions of Americans, many of whom depended largely on union bargaining to help them achieve the American Dream of prosperity, stability, and freedom.
But recently, many unions have become a poster-child for greed and malfeasance, refusing to confront the economic realities of a down-market. What’s even more inflammatory is that unions have begun to take a hard-line stance at a time when union membership as a percentage of the workforce has fallen by 50% over the past 30 years. Today, only one in six workers is a union member (including the public sector). But the downfall of unions has only emboldened their fight to maintain influence. We will examine 3 specific cases of exorbitant union greed that is fleecing our economy, hurting workers and employers alike.
Our first case should not be a surprise to anyone following the headlines in the past few months. United Airlines, forced into bankruptcy for a variety of reasons, has sought to get out-of-control costs down. For example, United pilots won, as recently as 2000, a 28% pay increase. What does this translate to? Approximately $319 per hour for more senior pilots, or roughly 33% more than the industry average. This cost structure helped drive United into bankruptcy. At a time when lawyers, consultants, and others were discontinuing fees to help maintain business, United was forced by the unions to give its employees a raise. For our next case, we’ll turn to the transit workers of New York City. Before a recent raise, the average New York transit worker made nearly $54,000 a year, or roughly double what they could make in the private sector. But this salary was not enough for the union. Even during a time when New York City lost 125,000 jobs since September 11th―and is facing its worse fiscal crisis since the 1970s―the union demanded a wage increase to avert a strike. With its hands tied―a strike would cost the city millions a day―the city capitulated. This occurred at a time when many of NYC’s private sector employers were cutting wages and bonuses, forcing the Mayor to raise taxes meet a mounting deficit―thanks in part to union demands.
But New York’s example pales in comparison to the Dockworkers Union on the West Coast, which recently improved their positioning by putting the kibosh on new technology that might improve efficiency and productivity. But first some context: The average Longshore worker already earns in excess of $90,000 in base pay alone (not counting benefits). With many union members making over $130,000 a year with overtime (and no health insurance costs passed on to them), this makes the average Longshoreman’s income higher than most college professors and physician. But what amounts to near extortionist incomes was not enough to keep these card-carrying members satisfied. According to the Industry Standard, the real win was getting concessions from management not to employ automated tracking systems equivalent to bar-code scanners or FedEx or UPS tracking systems. Why? The union was afraid these might limit job growth in the future.
Now more than ever, unions and management must partner to pull-out of the economic downturn. These examples highlight how out of touch most unions are with economic reality. Just as unions shared in the growth of the booming eighties and nineties with huge raises and benefits improvement, unions should share in the cost-cutting and technology efficiency gains of today to get our economy back on track.