Unions Forever?


Federal Express. MCI. Microsoft. Wal-Mart. USA Today. Nucor Steel. Apple Computer. Cable News Network.

These companies have two things in common: They represent the future of American enterprise. And they are not unionized.

Indeed, it is hard to imagine a company built on innovation, flexibility, and teamwork that could survive the rigid job categories, work rules, and periodic games of labor-management chicken that characterize union shops. So the question arises, Are unions obsolete? Or have they just been battered by greedy bosses and union-busting Republican politicians?

We've heard a lot of the second charge lately. Unions' share of the work force has been steadily shrinking since its 1945 peak of 35.5, falling to 16.1 percent in 1990. But commentators like to mark unionism's decline from 1981, when Ronald Reagan fired striking air-traffic controllers.

Reagan's legacy was often invoked when Caterpillar's perennial contract dispute turned into Caterpillar's perennial strike (nine since 1944). The company threatened to hire permanent replacements for striking workers. And in negotiations, management sought to do two things unthinkable in traditional labor contracts: to pay new workers on a lower scale than current employees and to base the new contract on Caterpillar's particular circumstances rather than follow the pattern set by John Deere. That threat and those demands struck at the union movement's central tenets.

The rhetoric of solidarity has long obscured the reality of unionism: Unions drive up wages by pitting workers against workers, insiders against outsiders. Through a combination of social sanctions, physical intimidation, and government favoritism, a union maintains a worker cartel. That's why hiring permanent replacements is management's most powerful weapon and why union allies in Congress want to outlaw it.

Union supporters like to talk about the "right to strike" as a basic principle of democracy. But it's an awfully fuzzy one. In labor law, it means you can quit your job, in concert with your fellow workers, and get it back later—sort of. Whether your employer has to give you the job back depends on a lot of mind reading by government officials. Were negotiations "at an impasse"? Was management "bargaining in good faith"? Was the union?

The real right to strike is something very different from a guaranteed job. It means, quite simply, the right of workers to withhold their services at the same time, without fear of civil or criminal sanctions. As such, it is a fundamental right of free people.

And it is a potent bargaining tool. Few private employers can afford simultaneous 100-percent turnover, even temporarily, so a strike threat encourages negotiations. And once a strike is on, resolving it is almost always preferable to training a whole new work force, at least if workers have any special skills. Were the air-traffic control system subject to market pressures, firing the strikers would have been much harder and banning them for life inconceivable.

Thinking of the right to strike in this way suggests the fatal flaw in traditional unionism, and a direction for a reborn union movement. Old-fashioned unionism pretends that all workers are the same, that the only difference among them is whether or not they enjoy union privileges. Insiders are valuable, outsiders worthless, but all insiders are equal. Only seniority distinguishes them.

To see the absurdity of this notion, consider the nation's largest union, the National Education Association. Anyone who has ever been a student, parent, or teacher knows that some teachers are extraordinary, some mediocre, and some abysmal. But in defense of union egalitarianism, the NEA attacks every public policy that would reward good teachers or screen out bad ones. On an individual basis, it fights just as hard for an incompetent teacher as for an exemplary one—harder if the bad teacher has seniority.

Treating employees as interchangeable is not only degrading to good workers and infuriating to good managers, it is an invitation to hire permanent replacements. If the only difference is the union label, you might as well pay less.

This notion of employees as homogeneous mush carries over into unions' view of industry. Nowadays, union leaders like to draw damning comparisons to Japanese companies with lifetime employment and greater equality between management's and labor's pay. But U.S. unions eschew the company identification that makes that system work. They do not want workers at competing companies to see themselves as competitors rather than brother unionists.

Hence the zeal for pattern bargaining, which establishes a floor for wages and other contract terms. Under pattern bargaining, neither a company's conditions nor the skill of its workers is as important as the industry to which the union has assigned it.

Caterpillar, which makes mostly construction equipment and exports 60 percent of its output, is arguably not in the same industry as Deere, which concentrates on farm implements and sells mostly domestically. Breaking the pattern is far more important to the company's future flexibility than any specific dispute over wages and benefits. And what better time to make such a demand than in the midst of a recession that shoved Caterpillar $404 million into the red last year and pushed local unemployment to 9 percent?

Fortunately for Caterpillar workers, they are not the same as either workers off the street or Deere employees. They are highly skilled both in their trades and in their specific knowledge of Caterpillar's production. And they are well paid. In this eyeball-to-eyeball confrontation, a federal mediator made both sides blink.

American unions face a choice. On it depends their future.

They can continue to pursue their current course, taking their old-fashioned ideology to the only workplaces where it still applies—the monopoly shops owned and operated by government. Or they can reinvent unions as organizations that primarily serve workers rather than fight management.

The first is the road to short-term gains and long-term disaster. Public-employee unions have it easy at the bargaining table. Their opponents are politicians who can collect from the "customers" whatever the union demands; taxpayers, unlike car buyers, have no choice. Already, the NEA has displaced the Teamsters as the nation's largest union. The American Federation of State, County and Municipal Employees, is number four, surpassing the autoworkers.

But this strategy casts union members not as the hard-working salt of the earth but as another special-interest group ripping off the taxpayers, most of whom also work for a living. It will create both a tax revolt and a backlash that will taint all of organized labor.

And, as the air-traffic controllers can testify, it is a lot easier for a resolute politician to fire a bunch of highly paid public employees, and to survive the dislocations of retraining a whole new work force, than it is for a company manager to clear the assembly lines. The government employer faces no competitors with well-trained workers; the public is more sympathetic to management that represents taxpayers; and plenty of replacements will cross the picket lines.

Rather than commit suicide this way, unions can adopt an entrepreneurial vision. Instead of treating workers as indistinguishable factory drones, they can offer them skills that will command both respect and high wages. That means getting into the training business—a business companies often neglect for fear of investing in workers who will then move on to other jobs. As umbrella organizations supported by dues, unions wouldn't face that disincentive.

And "training" does not necessarily mean "retraining." It means continuous improvement of employed workers. It means helping people keep up with new technologies, new equipment, new quality techniques. And, given the state of American education, it means reading, writing, and arithmetic—and English lessons for the foreign born.

In a working world where upward mobility often depends on literal mobility, national unions can offer other services to their members: portable benefits tied to the person rather than the job; a national "hiring hall," a computerized listing of job openings; loans to pay for relocation; a community in a new town. The list is limited only by worker needs and union creativity. The point is to invest in workers and to help workers collectively invest in themselves, to make union workers especially valuable to employers and unions especially valuable to employees.

Achieving such a vision requires a fundamental change in the way unions see themselves. Such change is difficult—far harder than picking political fights. But the alternative is an ignominious death.