Saturday, January 11, 2014

Machinists Union Makes Wise Use of its Mulligan

We are told that there are jobs out there that Americans just won’t do. But increasingly, there are also jobs that union members just won’t do. And that’s one reason why only six percent of the private sector labor market is unionized these days. They’ve priced themselves out of the market.

Unions don’t often grasp that reality. But this past week, a majority of the Machinists’ Union experienced a unique moment of clarity and voted to save their jobs. After voting themselves out of work the first time around, Boeing generously granted the Machinists a Mulligan, which they used wisely.

The machinists did not concede to Boeing so much as it conceded to reality. As the New York Times’ columnist Thomas Friedman phrased it, the world is getting flatter. There are fewer barriers to keep industries from moving someplace where the business climate is more hospitable. 

A week ago, this paper lamented the machinists’ vote with the headline: “Boeing union vote seen as a big setback for workers.” Well, more than half of the Machinists saw the deal as a job saver.

In truth, it was workers taking control of their futures and saving their jobs. There are plenty of people who are eager for work and many of those believe that a slightly lower wage and benefits package than Boeing workers currently receive is still a good deal.

The old slogan for trade unions was that you never give anything back. You only take more with each new contract. But in the new world, commerce can no longer be hoarded and monopolized. Boeing telegraphed that a few years ago when it moved its corporate headquarters to Chicago. If Seattle’s machinists were unwilling to accept concessions, then their work was going elsewhere.

Washington’s government has created a hostile climate for employers. Washington’s workers compensation system is the nation’s most generous and, therefore, the nation’s most expensive for employers. The Department of Ecology is preparing a slew of job killing environmental regulations. These new rules would complicate economic growth and encumber job creation. When combined with its belligerent labor union environment, Washington was becoming a less and less attractive home for Boeing and other employers.

Rather than criticize Boeing, the aircraft manufacturer should be commended for giving its unions a second chance. If the union had insisted upon keeping its economically unreasonable compensation package, then it would have contributed to its own demise.

History is a hard lesson for most unions. And as Santayana warned, those who fail to learn from history are condemned to repeat it. Historical ignorance is why so few private sector workers are unionized these days. Jobs are migrating from overpriced and unreliable unionized labor markets to either right-to-work states or overseas. Secondly, workers smart enough to appreciate this trend are electing to eschew unions in the first place.

What the state governments and unions have to realize is that they cannot insulate themselves from economic realities. We don’t make running shoes in this country anymore because Vietnamese will do the same work for a fraction of the cost. Your shirt was probably made in Cambodia or some other Asian country. My iPhone is made in China because China actually trains people to do that work and they’re willing to do it for far less than an American. 

Meanwhile we encourage our college students to major in women’s studies.  And once they graduate they enter the workplace with a sense of entitlement that they haven’t earned.

Another dynamic working against trade unions is that the rest of the world is also happy to have the work that unions just won’t do.  If Washington, both state and the capital of the United States, insist upon artificially inflating wages, even more jobs will move to China, or to Africa or Latin America. There are plenty of people in the world willing to work, which is why the poverty rate worldwide is falling, while ours is rising.

Since China opened itself to capitalism, and allowed free enterprise to set wages and prices, China has lifted two thirds of a million of its citizens out of poverty. Previously, China’s abhorrence of “income inequality” guaranteed that everyone starved.

Jobs and prices are set by markets and no job is worth more than it produces. But, as economist Thomas Sowell once observed, “Asking liberals where wages and prices come from is like asking a six year old where babies come from.”


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