People Who Oppose Labor Unions Believe That Unions

There are many reasons why some executives don’t like labor unions.

• They tin create an “the states versus them” culture within companies and organizations, instead of putting everyone on the same team

• They tin can create a culture of entitlement

• They tin restrict flexibility and hurt competitiveness

• They tin can drive companies to move jobs out of the country, to places where at that place are no unions

• They can become career employment for their leaders, who pay themselves well (much ameliorate than the workers they’re representing)

• They can maintain ludicrous compensation and benefit levels for jobs based purely on seniority

• They can strength companies to treat all matrimony employees every bit, regardless of the relative skill and value of particular employees–thus reducing incentives for people to do a great job

• Etc.

Simply unions came into being considering company owners weren’t sharing enough of their companies’ wealth with the rank-and-file employees who helped produce it. Look at the news headlines over the by few weeks — employees are speaking out against low pay and no benefits. Hostess Brands, the maker of the iconic Twinkie, is closing because of a collision with its union employees, but a judge recently ruled that Hostess management will nevertheless receive bonuses earlier the company is liquidated. Employees at American Airlines, Wal-Mart and fast food bondage in New York City are protesting unfair pay practices. Members of the International Longshore and Warehouse Union Local 63 Role Clerical Unit in California are hitting over charges that final operators have outsourced jobs.

And, unfortunately, with the decline of labor unions, that lack of sharing is again increasing.

Namely, nosotros’ve developed inequality then extreme that it is worse than any fourth dimension since the belatedly 1920s.

Contributing to this inequality is a new religion of shareholder value that has come to be defined only past “today’s stock price” and non past many other less-visible attributes that build long-term economical value.

Like many religions, the “shareholder value” religion started well: In the 1980s, American companies were bloated and lethargic, and senior management pay was so detached from performance that shareholders were an afterthought.

But now the pendulum has swung too far the other mode. Now, it’southward all about stock operation–to the signal where even expert companies are now quietly shafting other constituencies that should benefit from their being.

Nigh notably: Rank and file employees.

Neat companies in a healthy and balanced economy don’t view employees as “inputs.” They don’t view them equally “costs.” They don’t try to pay them “equally fiddling as they accept to to proceed them from quitting.” They view their employees as the extremely valuable avails they are (or should exist). Most chiefly, they share their wealth with them.

Consider the following:

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they always have before.

ii) Wages equally a percent of the economy are at an all-time low. 1 reason companies are so profitable is that they’re paying employees less than they ever have earlier.

When presented with these facts, many people invoke i of two arguments. Outset, engineering science is making employees irrelevant. Second, low-skill jobs command depression pay.

Both of these arguments miss central points: Technology has been making some jobs obsolete for 200+ years now, but information technology is just recently that corporate profit margins accept gone through the roof. But considering y’all can pay full-fourth dimension employees so little that they’re below the poverty line doesn’t mean you should–especially when retention is oft a problem and your turn a profit margin is extraordinarily high.

More broadly, what’s wrong with this?

What’s wrong is that an obsession with a narrow view of “shareholder value” has led companies to put “maximizing current earnings growth” alee of another disquisitional priority in a healthy economy: Investing in human and concrete capital and future growth.

If American companies were willing to trade off some of their current earnings growth to make investments in wage increases and hiring, American workers would have more coin to spend. And every bit American workers spent more money, the economy would begin to grow more quickly again. And the growing economy would aid the companies begin to grow more than quickly again. And so on.

Merely, instead, U.Southward. companies take become so obsessed with generating near-term profits that they’re paying their employees less, cutting capital investments, and under-investing in future growth.

This may assistance make their shareholders temporarily richer.

Just it doesn’t make the economy (or the companies) healthier.

And, ultimately, as with any ecosystem that gets out of whack, it’s bad for the whole ecosystem.

So, for the sake of the economy, nosotros accept to fix this trouble.

Ideally, we would fix it by getting companies to voluntarily share more of their wealth with their employees. But the “shareholder value” faith has at present been and so thoroughly embraced that any suggestion of voluntary sharing is viewed as heresy.

(You’ve heard all the responses: “The only duty of a company is to produce the highest possible return for its owners!” “If employees want to brand more money, they should become start their ain companies!” Etc. Beyond basic fairness and the squad spirit of we’re-all-in-this-together, what these responses lack is any appreciation of the value of personal loyalty, memory, respect, and pride in the workforce. People love working for companies that treat them well. And they’ll get to the mat for them.)

Anyhow, it would be great if companies would start sharing their wealth voluntarily. But, every bit nevertheless, with a couple of notable exceptions (Apple recently gave its store employees a raise information technology didn’t need to give them), they’ve shown no signs of doing that.

So if companies tin can’t be persuaded to do this on their own, maybe it’s fourth dimension for executives to rethink their view of labor unions.

Healthy capitalism is not about “maximizing near-term profits.” It is virtually balancing the interests of several critical constituencies:

• Shareholders

• Customers

• Employees

• Guild, and

• The Environment

It’south time more than of our business organisation leaders started to understand that.

More from The Daily Ticker:

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