Saturday, September 22, 2007

Collective Futility

A while back I had made some comments via email to Wunelle about a strike that was going on at the U of MN. I didn't want to publish those comments at that time, as it was probably not completely appropriate (since I am a supervisor (of only four people) at the U of MN I am technically considered part of management and therefore prohibited to discuss strike-related matters with union staff). Now that the strike is over I don't think there is any reason I can't make some general observations about the execution of the strike. Still, it is important to state up front that the opinions expressed are my own and do not represent the position of the U of MN.

I'll start right off by stating that I don't really have an opinion on the merits of the demands of the unions involved - I don't know enough about the labor market or the U's funding to be able to evaluate either side's claims.

However, it was interesting to watch this strike unfold and see how everyone involved dealt with it.

The strike was waged by four local units of the AFSCME clerical and health care workers union. The walkout was prompted almost exclusively by an impasse over wages. The way that the U and the union spun their views on the proposed wage increases was quite revealing. The U makes the case that they offered the union a 4.25% annual wage increase each year for the coming 2-year contract period. They state this as an 8.5% increase for the contract period. The union choses to portray this proposal differently. They make the case that their contracts already allow for annual 2% 'step' increases, so that 4.25% is really just a 2.25% increase, which they maintain doesn't even keep up with inflation. So, from the U's point of view the total wage increases (and the cost to the UMN budget) are well above the cost of living, while the union portrays it as a 'step' increase (that they are entitled to as an acknowledgment of their dedication to the U and their increased value as an employee) - plus a 2.25% cost-of-living increase that doesn't keep up with inflation. As a comparison, those of us who are not represented by the unions were given a 3.25% cost of living increase (and nothing more), so no matter how you look at it the union folks could have gotten less.

Four years ago when it was contract negotiation time for these same union units one of the four struck for better wages while the other three units took the contract the U offered. That strike lasted 15 days and ended when the strikers just couldn't afford to stay out any longer. The settlement was kept quiet, but from the information available it was fairly clear what the final result was. The union was given the same cost of living increase that was initially offered by the U, but the union members were given a lump sum bonus that totaled about $1M. While that $1M helped sweeten the pill of having to accept a contract that wasn't especially appealing, it is interesting to note that during the strike the U saved about $2M in salaries for the striking workers who, of course, did not get paid while they were on strike. The union can claim that the strike was good for the union, but it certainly can't be said that the strike achieved its goal of squeezing more money out of the U. A true skeptic could say that the only folks who benefited from the strike were those who chose to cross the picket lines and report for work. They got the same lump-sum bonuses and didn't have to give up their pay to get them.

I agree with the folks who do not feel that their jobs pay all that well (the union pegs their average salary at $34,000), but it is hard to say that the U is under-paying them when there seems to be an ample supply of folks with the necessary skills willing to work for that pay. This is something that I think is misunderstood by many people. The wages that a company pays are simply the cost of buying the labor of their workers. The benefits offered are simply part of that overall package, and exist mainly because they can be bought by the employer for less than the perceived value to the employees, so they are a cheap way of increasing the value of the compensation to the employee (at least they were cheap before health care costs shot up). Wages are not a measure of how much the workers are appreciated, or a statement about what is a reasonable amount to try to live on, they are simply a measure of what the market demands for the work required. If it was hard to find folks to do this work there would be competition between employers and the price paid would go up. This is commonly seen in cases where special skills are needed, and there is therefore a smaller pool of available labor and the cost of that labor is higher. I might think otherwise, but unions tend to even take this pay-for-labor thinking a bit farther (albeit unintentionally) by arguing against merit pay. They effectively remove the case that can be made that folks need to be paid more to reward them for doing a good job (the related idea that unions DO support is that folks should be rewarded for longevity with across-the-board increases for all regardless of merit).

Unfortunately for these unions at a university, it is just not an effective strategy for them to strike. In the first place, the U is not hurt by them being out on strike. This is not to say that these workers don't do good work that contributes to the success of the U, but that they do not have an impact on the U's ability to produce income. Unlike a normal business, the U does not lose income if its workers are not producing. Also, the U can not do anything to generate more funds to pay its employees more - all it can do is ask the state for more money and then allot where it goes. The last several years it has been given less than it asks for, and so has had to find ways to get by on less than it 'needs', and so generous wage increases are not likely to happen. Also, with a few minor exceptions their cause doesn't seem to generate support from other unions in any way that might make their strike more effective. I am not sure, but I think it may be the case that other unions at the U are legally prohibited from staging sympathy strikes, and with the U involved in so few interactions with other unionized businesses there isn't much in the way of outside support. All I have seen is that unionized UPS drivers will not cross the picket lines. However, they still will make deliveries and pickups from a central location, so it is still possible (and only somewhat inconvenient) to do business with UPS. And the other package haulers all have no problem crossing the picket lines, so the U has no difficulty due to the actions of the UPS drivers, it just costs UPS a bit of business to allow their drivers to uphold their union code of honor. In a case like this a strike might even be counter-productive. Not only will there not be issues like bringing in replacement workers, but it may be realized that many things work just fine without some of these folks around, and maybe not all of them are even needed.

As I had suggested to Wunelle in private the U was not interested in improving their offer and the workers could not afford to stay out any longer than last time. Nobody who lives from paycheck to paycheck can afford the luxury of a several week strike. Throw in the loss of health coverage that would occur once a person missed an entire pay period and that is just too much. So, yesterday the union came back to talk again about settling, and agreed to end the strike with the offer that the U had made a few days ago - the same cost-of-living increase plus a $300 lump sum bonus for each employee. In the end the outcome is very much the same as last time they struck - a net loss for those who chose to walk out and a tiny net gain for those who chose to stay at work. That gain probably doesn't cover the grief taken by those who crossed the picket lines to go to work, and once there had to help do the work of those who walked out.

It will be interesting to see how things proceed from here. The union members have not yet voted on the proposed contract, so it still may not be entirely over, but it seems unlikely that they would reject a contract when they have no other option (I don't know if they can strike again, but I doubt it). I have to think that the union members might get fed up with their leadership. Twice now they have led the union out on strikes that resulted in net losses to the faithful members. Both times the leaders appeared to enjoy 'playing union' and leading a strike. I would have expected somber reluctance toward the idea of a strike, especially when the membership consists of folks who can't afford to miss a paycheck and the union has no real capacity to offset those losses, but the leaders looked like they thought this was a fun game they were playing. Even once the strike was done the leaders appeared to have enjoyed the exercise and talked about how good this was for the union as an organization. I couldn't help thinking that it may have been the straw that breaks the unions back. Few of the 2/3 of the union members who crossed the picket lines seemed to think this was a good idea. I don't think that many of them are much inclined to work to dissolve the union, but the leaders may find a gaping lack of support the next time the union holds elections.

So, the grand total as a result of the strike is a net loss in compensation for the union workers as a group, a backlog of work for them to handle when they return (unless someone else worked extra to handle it during the strike), and general bad feelings for everyone at the place. It may not be fair to lay this all at the feet of just one party when it clearly takes two to tango, but I still have to say: Nice work AFSCME!


wunelle said...

This seems a complex phenomenon--not the strike per se and whether employees are helped by the union (you cover that very well) but the whole phenomenon of unionism and a market which is not "free" in a traditional sense. The University, as a subsidized governmental entity, populated with many very educated and really diverse employee groups, is not the usual corporate gorilla against which employees must lock arms.

The idea of some quasi-political entity which can organize and speak for an employee group is sensible enough, but (as I know I've said a hundred times) I think an entity like this is very quickly engaged in perpetuating its own existence as the first order of business. And we see this all the time: the unions taking up a sometimes-irrational "strategic" position about things that the workers individually may not really be on board with. If the union leaders can sell it to the workers, it becomes policy; but one group having to sell something to the larger group rather makes my point.

Companies, in turn, can adopt draconian positions as a strategic foil to the unions' unreasonable demands, and the result just seems adversarial and blow-hard-ish.

I can think of a number of examples where unions were needed to keep some corporation from chewing up its employees and leaving them behind like work-to-death concentration camp victims. But sometimes the cure is as bad as the disease.

Anonymous said...

Very intelligent and thoughtful commentary, free of the irrational emotion that drove most of the discussion. Good work.