Labor Unions: The Life and Death of the Middle Class

Unionization created the middle-class.  Prior to labor unions most workers labored under extreme temperatures, in filthy environments, for long hours, at low wages.  Meanwhile owners, stockholders, and top brass, smoked cigars in luxury high-rises, and enjoyed long vacations in exotic locales.  A foundry workers had little chance of saving for a future or free-time to seek better opportunities.  Unionization changed that and created a working environment that allowed for the growth and development of the middle-class.  Despite what you may have been told unions have been good for America.

This is a brief history lesson, designed to understand why unions were good for America, but now threaten to destroy what they created.  If you love unions you’ll find things  to love and hate here.  If you hate unions you will find things to love and hate here.  My mother loves her Union and believes people who are not in the Union are abused and still working in smoke-fill factories.  My grandfather was a Union-buster who thought Union membership was for foul-mouthed drunken losers too lazy to give their boss the effort, but who would kill a man for simply breaking the picket-line.

A friend of mine once wrote in his blog that he sometimes doesn’t get my point.  He’s a hard left liberal and you might think he doesn’t get me because  I’m not a hard-left conservative, but that isn’t it.  It’s because sometimes I see both sides of the issue.  Sometimes both sides are correct and wrong at the same time.  If you only understand an issue by taking talking points from a political party or pundit, then you aren’t really thinking or educating yourself on the topic.

Nothing is as simple as it seems at first glance

Or is it?  I’m a fan of Occam’s Razor because so much of the time the simplest answer really is the correct one.  But seeing what is the simplest or most direct solution is not always easy.  Following the money is not always easy because those leaving the trail often conspire to erase or disguise the trail.  The history of labor unions is all about money.

I was taught at the University that labor unions evolved from medieval guilds.  Perhaps, but quite an evolution it would have been.  Medieval trade guilds were designed to protect industry and educated workers.  They were highly specialized and quite narrow in scope.

Today’s labor unions are broad covering unrelated industries and trades.  They are focused not on enhancing careers but on protecting and preserving them, growing benefits and wages without consideration of career advancement, and improving working conditions.  We can argue the merits and benefits but essentially this is the purpose of the modern labor union.

If the modern labor union evolved from the guilds how did we get here?  During the Middle Ages and through the Renaissance the condition for labors was harsh.  Business owners were referred to as “masters” and they commonly treated their employees as slaves, refusing wage increases and placing burdens upon them we would consider inhumane.  Adam Smith referred to this unfair condition in his 1776, Wealth of Nations.

As industrialization swept Europe factory conditions and child labor became increasingly oppressive.  Labor unions had been illegal in much of Europe for centuries but the people were pressed beyond their ability to cope and in spite of the law organizations of laborers began to form.  They formed not to enrich a slothful workforce but to liberate them from oppression.

These early unions were not very effective in the beginning but over time they grew in numbers and influence.  One early shoe-makers union tried to combat mechanization of the shoe industry but failed miserably.  However, a Carpentry union in Philadelphia successfully kept wages from being cut.

Unions Birthed the Middle-Class

By the early 20th century unions enjoyed protection under the law.  Membership flourished and child-labor laws and better wages freed children from 6-day work weeks and allowed them access to increased education and thus opportunity.  Union demands created a pathway to upward mobility for many children.  Better wages allowed people to begin to buy homes of their own.

In the early 20th century it was common for people to work 12 hour shifts six days a week.  My Grandfather told me his first job was at an iron foundry working such hours under the heat of molten steel often without a break for 6 hours at a time.  His job constantly threatened for infractions as minute as showing up for work one minute late.  When the union arrived the work week was shortened to five days a week and the workday to only ten hours a day.  The new-found free-time must have seemed unreal.

There is no reason to expect that labor conditions would have changed as dramatically as they have without the help of organized labor.  Humans are greedy.  We all recall the famous movie quote from the 1980s, “Greed is good.”  To a degree greed is good because it motivates us to achieve more than we otherwise might, however, greed also motivates us to cheat, steal, and oppress others.

Contained, greed impels us to higher achievement and unchecked, it can drive us to self-destructive actions.  Captains of industry, in their avarice, built huge empires and stockpiled great wealth for themselves and their legacies while neglecting, abusing, and holding in poverty those who made that wealth possible.  The backlash of their voracity in America and most of Europe was organized labor (Marxism in Eastern Europe.)

Violence Is In Their DNA

It is easy to understand how union members in those early days adopted violent tendencies.  Union membership was and to a large extent continues to be composed primarily of people with less education and less refinement.  Thus from a very early point labor unions have espoused tactics that are less than diplomatic.  Intimidation, Riots, and even murder were legendary amongst union members.  As early as the 1830’s unions were threatening violence against those who crossed them.

By the mid-20th century organized crime and organized labor were nearly synonymous.  One only need think of the infamous Teamster president, Jimmy Hoffa, to understand how connected the two had become.  It was this marriage of labor and crime that illustrates a fundamental evolution in union thinking.

As prosperity swept the United States following World War II, companies found it easier to comply with union demands for better wages and working conditions.  As workers began to worry less about dying at work, they began to focus on earning better wages while continuing in their current jobs.

As their homes grew and their lives more comfortable they began looking forward to their retirements.  In each instance the union provided a willing apparatus to further these needs.  For a small price of course.  Union dues began making their way into the hands of less than honest people.  As long as union-members were satisfied and pension funds seemed safe, no one objected.  Many too uneducated to completely understand what was going on with the Hoffas and the Lucchese family.

Unions Gave Us The Welfare State

As people began to realize that by binding together they could force powerful companies to give them a better life, that ideal spread.  Democrats were the first party to realize the power base that could be created by feeding union fantasies.  President Woodrow Wilson, was one of the first to promote ideals of a government hostile to business and motherly toward labor.

Following the first World War union membership hit 12% of the workforce but slipped during the “Roaring 20’s”.  But then came the Great Depression and with it extreme helplessness and despair. In 1939 overall union membership peaked at 39% of the workforce.

It is no coincidence that this is when essentially Roosevelt used union principles to “save” the nation with his New Deal.  The Federal Government swooped in guaranteeing retirement income, unemployment benefits, and even creating temporary public sector jobs.  The idea that the government and employers were responsible for the welfare of their human resources had become a permanent part of the American psyche.

Following the second World War companies began offering healthcare insurance and retirement packages even to non-union employees.  If you enjoy such benefits thank the unions.  Like it or not unions have deeply impacted even conservative mindsets.

Where did they go wrong?

Unions have contributed much to the middle-class and arguably they have molded American culture as well as the cultures of Western European countries.  But along the way they forgot that unions exist in the real-world.  They forgot that there is a partner in their employment that also must flourish if they are to flourish.

In reality if pensions are to be funded, pay checks written, and benefits provided, there must be a company able to provide goods and services at a reasonable price.  If the cost of manufacturing or providing a service becomes too great and a competitor can do the same product or service cheaper, then that company will falter and cease to exist.  The single largest cost for any business is labor.

When a labor union dictates wages a company loses control over that cost.  Unionized employees feeling safe and insulated within the warm cozy union lose sight of the reality that if their company is faltering they are in effect faltering.  They do not realize security does not come from the union but from the successful operation of their company.

This is why we see union personnel picketing for higher wages or benefits when their companies are on the edge of collapse.  They think the money magically comes from rich benefactors with an endless supply of cash.

No one wants to take a pay cut, lose benefits, or see fellow employees laid off.  But the economy fluctuates, free trade threatens jobs, and labor costs play a huge roll in the success of a business.  Employees are partners in business and they should see themselves as such.  If labor unions saw themselves as partners they would act differently.

Rather than insist on wage and benefit increases during difficult times they would be working with management to increase efficiencies and reduce waste.  It’s hard to expect this, though, when CEOs demand continuation of bonuses and luxurious salaries and benefits in spite of the fiscal soundness of their companies.

How Unions Threaten the Middle-Class

It is my contention that union demands improved the lives of so many people and created, at least in part, the American Middle-Class, but one might wonder how I came to the conclusion that they will also play a role in it’s destruction.  Simply put by not understanding when to be satisfied.

As I pondered the free trade trends and read through Adam Smith and other economic pieces, I could not help but to think of the labor union’s role in macro-economics.  As labor unions grow in power and their demands become more extreme, the cost of production skyrockets.  This motivates corporate managers to seek other ways to contain labor costs.

We saw this happen with the rise of free trade agreements.  Like tectonic fault lines economic pressure between American job losses and foreign trade surpluses builds.  The economic collapse of 2008-09 was, I believe, one of those economic earthquakes.  Blame corporations but at least in part it can be traced back to union demands that created an imbalance in costs and prompted outsourcing.

It all goes back to greed.  Corporate greed is not limited to CEO’s, stockholders, and senior management.  Corporate greed extends to union bosses and continues all the way down to the lowly line-worker making $35/hr.  And that is the problem with unions in America today.  They never stopped asking for more.  They are composed of humans,  humans who will always want just a bit more, even if in the long-run it just might destroy their companies and even their nation.

    • D
    • February 28th, 2011

    GREAT POST! I grew up as the daughter of a coal miner (diesel mechanic). My dad recognized the good the unions had done regarding working conditions particularly for safety and hours worked. But he also recognized the robbery the unions were perpetrating with protecting lazy bad workers while paying those workers the same wages as the productive employees.

    Unions were at one time good for the country and the private business working environment but public sector/government employee unions are today’s modern slave masters. The taxpayer has no choice when unions demand more then use that more to elect their own union supporting negotiator as a government official who then gives unions more so he can be reelected. This is ultimately slavery of the taxpayers.

    • DG
    • February 28th, 2011

    You no longer need to invade a country to overtake them, just buy their debt. And so, this issue is double barbed. And, we are so far gone, no cost cutting, union busting can get us out now. Our predicament really, though, can be traced back to the turn of the century partisanship, and re-election concerns of the lawmakers.

    I think generalizing about “in-evitible union character and nature”, is about as flawed at generalizing about private business owner’s personal philosophies. Yes, generalization of intent, however, will work with publicly traded companies. And, since the private companies are competing -like it or not- with global agenda companies, their actions will have great predictability: comply or go under.

    We are in the death throws of the middle class, world-wide. None of the outcomes are good for our kids. Nor is the latest news surprising, or even significant, when put against the obvious, emerging, greater Canvass of the next century.

    The true focus of the blogs should be on CORRUPTION (nothing else is fixable): patent theft by China, paid-for-politics that drowning out masses, busting dangerous monopolies, obvious loop-holes against our Constitution, and the very facsimile & appearance of corruption [should be forbidden]. The strangle hold over the US people by China, Big Oil, big banks, and the Fed Reserve company, is a good start.

    • My interests are wide and varied. Corruption may be something you think is “fixable” but I don’t. It is as fixable as changing human nature.

      Our blogs can be anything we choose them to be. They are an attempt to share our thoughts with the world.

      On my blog I tend to try to see the present through the glasses of the past. I like to explore wrong mindsets through common sense or an example in history.

      I may not always succeed but doing these researched essays helps me understand the issues as well as vent.

      Thanks for the comment. Oh and I agree that oil is a huge problem and the turmoil in the Middle East coupled with the Federal Debt and the decimation of U.S. manufacturing will be bigger more threatening problems next year. However, I write about what I understand best in any given moment. My grasp on the turmoil in Libya and Egypt is not good. I am aware but I have no insight to bring to that topic right now.

      I try to know my limitations and not spout off on stuff I know nothing about and can’t fully educate myself on.

    • DG
    • February 28th, 2011

    The other thing is that hand wringing over Unions is kinda outdated, since they are all but dead.

    I do wonder how “uneducated” or “educated” the youth today is about the working conditions around the time they came in and their downsides. ‘How one sided or no sided the education level of the young person’, would be very interesting.

    BTW. Time Warner’s young tech’s voted out their union in favor of doubling their wage a year ago. Most are unemployed by now, since working condition deteriorated so bad in efforts to eliminate the over paid employees.

      • Ben
      • April 10th, 2011

      RE:BTW. Time Warner’s young tech’s voted out their union in favor of doubling their wage a year ago. Most are unemployed by now, since working condition deteriorated so bad in efforts to eliminate the over paid employees.

      Excellent strategy, if true. Now Time Warner will be able to hire techs at market rates without the exorbitant costs associated with a typical union worker. It trades short term pain for long term fiscal viability and market competitiveness.

      The move on the part of the union techs not only illustrates their unrealistic understanding of business, but it highlights their own greed which threatened their own security. However, neither of the two choices given to the tech workers – keep the union or vote them out with the doubling of their salary – are economically viable and in the end this was proved.

      The third choice not taken and probably never thought of was to just vote out their union without the doubling of their salary.

      Gee, what a thought.

    • Ben
    • March 27th, 2011

    What strikes me (no pun intended, really, I didn’t mean it) about unions is how irrational and illogical they are. We only have to look at the protests which took place in Europe this weekend (March 27, 2011). Up to a half million in the UK took to the streets to protest cuts in what union members view as denied access to their entitlement while the government makes attempts to reign in spending. The union members fail to see their act at self-preservation will spell their ultimate demise. Just as their greed and selfishness created the scenario for failure, their belief in self above the good of their country will mean the destruction of both.

    Back on November 27, 2009, about the time of the GM meltdown, I wrote about the costs labor unions add to our products as compared to similar products made by the Japanese economy. The piece is accompanied by a simple poll question asking if unions are still needed in America today. If interested in the poll and the short piece about the costs unions add to our products, it can be found here:

    • DG
    • April 10th, 2011

    I agree with your assement, ben. Except you forget, wages are not ever going to affect Cable profitability. With about 5 options, there is nothing but a monopoly. I, and most service businesses, am in a business with hundreds on hundreds of competitors (even lawyers). I would love to only have a dozen competitors. Would give my right arm.

    I read many people often arguing for a company right to become trillion dollar companies, rather than 10 billion dollar companies, even when it means loss of your own blogging rights. Exhibit A, the anti net neutrality movement. Yes, you are asking TWC to allow equal access to all websites, yes they provide the lines, but allow anti-net-neutrality to prevail and you website may be barely accessible, while CNN flies. Certainly, they are making money providing the infrastructure or they would not be providing it now. You are arguing scope of wealth, v. the greater good. The alternative would be a government run Internet, where even more curbs on freedom would be imposed.

    Sometimes, people just need to be happy being millionaires for the greater good. I don’t like it any more than you.

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  2. In the end it seems that the intensified connection to end consumers has triggered a change of mindsets for all these disciplines.

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  1. March 25th, 2011

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