Follow-up on Yesterday's R.C. Blog Post

The Heritage Foundation published the following blog entry on its site this morning. It echoes my sentiments from yesterday's R.C. post regarding unions...

Will Unions, Again, Kill Our Economic Recovery?

One of the great untold stories about the Depression is that there were really two of them. By the mid-1930’s the U.S. economy was well along the road to recovery with the number of unemployed dropping from 13 million in 1933 to 7.6 million in 1936. The Supreme Court, bowing to the court packing pressure of FDR, approved the Wagner Act and the economy tanked again. The reason? National Right to Work Committee’s Mark mix explains:

“This measure, which is still the basis of our labor relations regime, authorized union officials to seek and obtain the power to act as the “exclusive” (that is, the monopoly) bargaining agent over all the front-line employees, including union nonmembers as well as members, in a unionized workplace.”

As Amity Shlaes observed in her recent history of the Great Depression, “The Forgotten Man,” within a few months after the Wagner Act was upheld, industrial production began to plummet and “the jobs started to disappear, with unemployment moving back to 1931 levels,” even as the number of workers under union control was “growing astoundingly.”

Given the reality of unions in the workplace, the law meant that efficiency and profitability were compromised, by forcing employers to equally reward their most productive and least productive employees. Therefore subsequent wage increases for some workers led to widespread job losses.

Now the left wants to enact the Orwellian named “Employee Free Choice Act” which effectively eliminates the secret ballot in union organizing elections. The Corner’s Peter Kirsanow explains what this means to average Americans like Joe the Plumber:

“The Union targets Joe’s employer for unionization. There are 100 employees in the proposed bargaining unit, so under EFCA the union only needs to convince 51 of them to sign authorization cards for the union to be certified as the collective bargaining representative for all 100.”

The Union leaders are pretty sophisticated at organizing. After all, it’s what they do. Pretty quickly they identify both the employees most receptive to unionization as well as those most opposed. Joe falls into the latter group so the Union never even attempts to get him to sign a card. In fact, since most of the pro-union employees work a different shift, Joe’s not even aware a union drive is going on.

The Union gets 51 employees to sign cards and gets certified by the NLRB as the collective bargaining representative for all employees — including Joe, who had absolutely no say in whether he wanted a union.

The Union and Joe’s employer begin negotiations but can’t get an agreement within 120 days. Under EFCA, a government-appointed arbitrator then writes the “contract”. The arbitrator puts a union security and dues check-off clause in the “contract”, thereby requiring Joe’s employer to deduct $45 a month from Joe’s paycheck and remit the amount to the union. The arbitrator also orders Joe’s employer to pay a 5% wage increase — an amount that squeezes the employer’s margin. The employer considers lay offs to avoid losses. Joe is near the bottom of the seniority list.

Under EFCA, the arbitrator’s order is binding for two years. Joe and his co-workers can’t reject it. Joe’s company can’t reject it.

Let’s review: Joe had no choice in being represented by the union.

He had no choice in paying union dues. He had no choice in accepting the arbitrator’s order that might lead to his lay-off.

Who's Next Onboard the "Socializing America" Train? It's the Automakers!

From the September 29 R.C. Blog:

"The Congress and Federal Government need to get out of the business of providing unlimited financial support, bailouts, incentives, and plum financing to private enterprises. It has been going on for decades and is spiraling completely out of control with this latest problem. If Congress sets a precedent for federal bailouts of private companies that have a tremendous impact on the economy and stock market, who will be next? Ford? GM? United Airlines? The auto and airline industry already get significant "financing" and incentives from the government, but they'll come looking for much more after this bailout package passes."

As predicted, the "others" would soon line up and they are. Any bailout of the auto industry in America is merely a band-aid on a much larger problem.

The "real" problem with the Big Three is the same problem they have been dealing with since the 1970s -- the unions. If the Big Three operated with the same workforce and efficiency as Toyota, Honda, and Nissan, they would be in a much stronger financial position.

When the unions went away from protecting American workers from unfair labor practices in the early and mid 20th century and began holding the private sector hostage to outrageous demands for pay, health benefits, work hours, etc., it began taking its toll on U.S. business. This is the core reason why the U.S. manufacturing industry in the Midwest is already gone and why the automakers are next. It may take another decade or so, but the Big Three will die or get gobbled up by the New Big Three -- Honda, Toyota and Nissan...

I've said it for years, and I'll say it again, American unions are crippling American business. They were vital at a moment in time when the American workers were being treated like slaves (read "The Jungle" by Upton Sinclair); today, they are simply a thorn in the side of American ingenuity and productivity.

From today's news wires:

Momentum is building in Washington to aid wounded U.S. automakers with cash to help their finance arms and possibly even money to help seal a deal for General Motors Corp. to acquire Chrysler Llc.

Officials "at the highest levels" of the Treasury, Energy and Commerce departments have talked to top automaker executives on the topic, presidential spokeswoman Dana Perino said yesterday. "It's a possibility that they could qualify under it."

Congress recently authorized $25 billion in low-interest loans designed to help automakers develop new energy efficient technology but to also help keep the companies afloat amid hard times.

Each of Detroit's Big Three automakers are burning up cash as the U.S. auto market downturn continues with no end in sight. Analysts say GM and Ford are spending more than $1 billion per month more than they bring in. They add that GM could reach its minimum operating cash level of $14 billion sometime next year. GM's sales are down 18 percent, and the company has lost $57.5 billion in the past 18 months, although much of that comes from noncash tax accounting changes.

Chrysler's figures are unknown because it's a private company. But industry analysts say the automaker apparently is in the most dire condition, and its owner, Cerberus Capital Management Lp, is in talks with GM, the combined Nissan Motor Co. and Renault SA and others about selling the company.

Perino said that the administration is "working as quickly as we possibly can" to finalize the regulations necessary to release the $25 billion in congressionally approved loans to automakers, but she wouldn't put a specific time frame on it or rule in or out any further federal aid, beyond the loans, to stave off bankruptcy by any of the U.S. automakers.

Republican presidential candidate John McCain and Democratic presidential nominee Barack Obama have called for the $25 billion to be expedited. Obama has also said the loan program should to be doubled to provide $50 billion.

The slump has set off fierce lobbying on behalf of the auto industry ahead of the U.S. presidential election, with supporters arguing that a bankruptcy of an automaker would have a cascading impact across the country.

David Cole, chairman of the Center for Automotive Research, estimated that a failure of GM or Ford could threaten as many as 2 million jobs.