Once Again, Trade Unions Are Irrelevant

September 1, 2019

Life's a funny thing, in that when you get older, it comes to you how much you didn't know how much you knew, even when you knew it.

 

When I used to work in the garment center, manufacturers had a choice between an alliance with a union, or they could deal with one of the Five Families. The unions were a safer choice for a host of reasons, but sometimes it was hard to tell the difference between the two. At bottom, both were protection rackets pretending to be something else. Like any mobster, even if there wasn't a problem, they managed to come up with one. They had to justify those dues somehow. But union membership for the workforce provided one saving grace for the manufacturers: Since all of the factory employees worked under the same salary and benefit rules, no manufacturer had a labor cost advantage over the other. What this meant it was up to the smarts of your purchasing and production team to get the product out with a fatter markup than what you sold it for. That's how you became successful, and it was a challenge I relished. I will never forget my father mentioning a competing manufacturer who was driving him nuts. He kept undercutting him on price, and he couldn't figure out how the hell he was doing it. Six months later, he picks up a copy of Women's Wear Daily and sees a notice about the competitor filing Chapter 11. That's how he did it. He sold himself right out of business.

 

Naturally, when the wave of imports came, the unions (and their legendary dysfunctional and corrupt internal politics) disappeared along with the manufacturers. The needle trade would be no more, except for a few cramped boiler rooms in Chinatown. The next wave of immigrants was now behind the old Singer blackheads, doing the piecework. This provides an informative backdrop for the meaning of labor economics as it is experienced in this country in the 21st Century.

 

This Labor Day, the horns will be honking again for the labor union movement, which today is a fossilized, corrupted movement that has long lost relevance, and is more destructive to labor's well being than it is beneficial. Moreover, they have gone well beyond the scope of their original mission of ensuring labor equality in the economy to out and out rigging and corruption. The past two weeks alone have seen the New York City Police Benevolent Association in a fury for the firing- not the prosecution, mind you- of a police officer involved in the killing of an impoverished man for selling loose cigarettes. Being fired for killing with impunity is apparently a violation of labor dignity. The New York City Transit Workers Union has been accused of bilking the Transit Authority for over a billion dollars in overtime. The union leadership has denied this, having been reduced to performing an impression of Marina Oswald. But anyone familiar with labor practices in public transit could hardly be surprised. They've been looting the City for decades. And who pays? Every poor working stiff at a toll booth or a subway turnstile. The Hotel Trades Council of New York has been pushing Mayor DeBlasio to restrict hotel development, and thanks to a campaign contribution from them, they may get their wish. New York City is not only the planet's number one tourist destination, those visitors cover a lot of expenses for us locals. In Los Angeles, the City is sitting on a solar power contract that would provide energy at just two cents a kilowatt hour, the lowest price ever paid for solar. The local utility's IBEW union is blocking it because it involves shutting down three gas powered plants, blocking the way in a city with some of the most polluted air in the nation. They've run ads attacking Mayor Garcetti's clean air agenda. None of these initiatives have a single thing to do with rights or equality, and each one is corrosive to our society and our collective well being.

 

It goes further. On Long Island, a gym teacher can earn as much as a Harvard professor. The New York State United Teachers union has exploited a system of educational Bantustans, with 142 districts, each with its own bureaucracy, each with its own Superintendent, who are paid in excess of $300,000 per year, and will retire with a pension close to equal that amount, part of it funded by working people who need to starve themselves to pay their outsized property taxes. Nothing like ratcheting up the cost of shelter even further in the name of worker's rights. The teachers have been practically held harmless from the rising costs of health insurance since the taxpayers cover 75 to 80% of the cost, while they are simultaneously squeezed by the cost of their own insurance hikes. These annual increases act like a built in "escalator clause" without ever having to renegotiate a contract. Long Island residents, in even modest homes, are today paying more to fund a K-12 education as they are for a degree at Columbia. The police are no better. Recently, under pressure from the local PBA, a new precinct was opened in one of the lowest crime areas in the nation. Thanks to the way the PBA contracts are structured, there is more looting INSIDE the precinct's walls than there is outside of them. None of this exactly reeks of a "pro-labor" agenda. As I said from the beginning, this is little more than an extortion racket. This is why gangsters go to their grave without one regret or a sense of shame: this is how the world actually works, they reason, so they did what they had to do.

 

And for the 93% of the work force that isn't unionized? Thanks to the globalization of the economy, a relentlessly regressive tax policy and a predatory health care system, they've been reduced to roadkill. As the economic stresses of Depression Era Germany taught us, it doesn't take much to provide a scapegoat like imports or immigrants to give this anger an outlet. The frustration is palpable. But the means to restore labor equilibrium won't come from organizing, or restricting immigration, or halting free trade.

 

The call is coming from inside the house.

 

If globalization, automation, and the costs of health care are creating structural imbalances on the American labor force, there is hardly a weaker remedy imaginable for this state of affairs than unionization. This Labor Day, there being a Presidential primary in progress, labor leaders are making all kinds of demands on the candidates to facilitate organizing and protecting their franchise. They actually got a commitment from none other than Bernie Sanders, of all people, for a special carve out on Medicare for All, because some unions have some sweet plans they've got for themselves, and there is no way they're giving those up, even if it screws up the workings of an insurance plan the rest of us desperately need. The hypocrisy stinks to God's nostrils. "Solidarity forever" indeed.

 

The time has come for progressive "think tanks" like the Roosevelt Institute and the Economic Policy Institute to stop shilling for unions. They're about as relevant as the Elks Club, and no less provincial. The plain fact is that unionization has a very limited potential to rectify the structural inequality embedded into today's economy, and anyone who thinks a massive organizing effort will undo it is running a fool's errand. In fact, unions are more likely to exacerbate inequality than ameliorate it. Aside from that, there's no groundswell of support from the American labor force for them. The only ones who push them are the ones who are still extracting rents, or writing think pieces about them.

 

There is just so much bandwidth available to forward an agenda. I suggest that those who are truly interested in restoring some measure of eudaimonia in the labor landscape stop forcing these anachronistic constructs on a disinterested workforce. Reversing decades of regressive tax policy, meaningful health care reform, genuine anti-trust enforcement, and curbing private equity will do more for the rehabilitation of the American workforce and the economy at large than any union organizing effort can. If that isn't obvious, it just means you're being paid to think otherwise.

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Donald R. Davret, Investment Advisor Representative

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