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Labor Unions For Dummies

November 24, 2014 | Filed Under Budget, Business, Capitalism, Gary Krasner, Jobs, Pensions, Public Employees Unions, Unions | Comments Off on


Labor Unions For Dummies

By Gary Krasner

Let me describe one larger point regarding public employee unions. It relates to the anti-competitiveness of unions generally, the same idea that Richard Epstein often writes about. But I’ll greatly simplify it for you.

Companies are not in business to make jobs. They’re in business to make profits. (It’s no different than when you invest your money.) Jobs are necessary to make profits.

Hiring labor is part of the cost of doing business. The object is to keep that cost down, but not to the extent that it will affect the performance of the company.

That means people who are capable and perform well are what businesses need, and it is why they compete with other companies to get such workers.

Example: In my profession, prepress computer operators who were fast and accurate could negotiate for higher wages. Through that reputation, they were in demand. Poor workers were not.

Such workers do not need unions. Mediocre and poor workers need unions. Unions benefit those who are the worst at their job.

In a union, talented, hard workers cannot get a raise for their talent and hard work. They get raises for seniority and supporting the union bureaucracy and leadership.

Companies will pay good wages for good workers. But only as much as they can afford to pay, and still make a profit.

If you want to make the kind of salary of an investment banker, you do not enroll in the Burger King College of hamburger flippers!

If an employer is forced to pay more than he can afford, then the company will go out of business. Simple as that.

What causes labor costs to go up? Minimum wage laws, excessive regulations etc. Jobs will be cut, or the company goes out of business. It’s a fact.

What causes labor costs to go down? A larger supply of labor competing for the same number of jobs. Example: amnesty for illegal immigrants. Simple as that.

Now, what happens when the labor union represents government employees? It’s a ticking time bomb, as famed union boss George Meany, and Presidents FDR and JFK believed.

They predicted what has already occurred. Union demands, no matter how exorbitant, are met for 2 reasons:

A. Mayors and Governors are beholden to the unions for campaign contributions–Municipal unions outspend corporations in political contributions, especially when considering manpower.

B. Unlike private businesses, government can’t decide to go out of business when faced with exorbitant union demands.

Except that after 30-40 years, when pensions and health benefits must be paid, that’s when citizens realize that politicians were all too happy to kick that debt can down the road.

Detroit is just the largest city today to reach insolvency. There are many more watching that ticking time bomb. Just don’t expect Cuomo or Jerry Brown to warn us before it explodes.

The moral? Pretty obvious.

1. Municipal employees cannot unionize. There simply is no adversarial negotiating between workers paid by taxes, and elected leaders paid by taxes. Neither represents the taxpayer’s interests.

2. Wealth comes from commercial, profit-making enterprises, which in turn pays the wages of all municipal employees. Thus, paying for government employees is an expense incurred by private business.

3. Only a business is able to, and has the right to, decide what any person’s labor is worth to said business. Not government.

4. Increasing the minimum wage always reduces available jobs. Proof: Democrats would not limit the increases to $10-15 per hour if it were not a fact.

5. This is part of what David Mamet and others describe as the tragic view of life. Free market capitalism does not produce fairness and equality. It just works better than any other system of commerce ever created by Man.

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