Thank-you for sharing your thinking on this. At first glance, it would seem optimal to have some congruence in the 'unitization' of the negotiating parties. Just as a corporate conglomerate might naturally exploit competition between individual shops of organized workers, a 'union of unions' would seem to wield a similar cudgel over independent operators.
As usual, reality is more complicated than Econ 101. Interested third or fourth year econ majors taking, say 'Econ 340 - Topics in Labour Relations', will explore the concept of _sectoral bargaining_. They will come to appreciate that, even in the absence of formal, Sherman-grade monopolies (on either side), the very notion of 'industrial sectors' arises because of natural commonalities across similar types of enterprise.
The upshot is that both owners and workers can benefit from sector-wide, coordinated baseline of standards and expectations. Consider it as a short-cut to the equilibrium we might otherwise reach only after decades of sub-optimal workforce churn within and between enterprises.
In your example, you weren't negotiating w/ Hargrove in a vacuum. The UAW was able to offer both it's members _and you_ the stability of a local agreement that had some assurance of being stable with regard to both current _and future_ arrangements reached among enterprises in competition with each other, if not for business, at least for labour.
In theory, sectoral bargaining is subtle form of collusion that, in effect, unites the joint interests of owners and workers in a segment of the economy against the interests of the _consumers_ of those products and services. But the resulting elevation of both working conditions/wages and prices achieves larger social goals stemming from a productive function that operates as it tends to do in in places like NA and Europe, as opposed to the endless races-to-the-bottom that plague standards-free economies like China's.
Great comment. Thanks. I disagree that sectoral bargaining is a benefit to society. Walter Reuther brought the U.S. auto industry to its knees and contributed to the bankruptcy of GM and Chrysler in the global financial crisis, by imposing indexed pensions and spousal survivorship on auto assemblers beyond their ability to pay over the longer term, and because he could shut down the entire car assembly and parts industry he had more power than the employers. My arrangements with the CAW and Hargrove were more simply based on my view that we had the same objectives - good wages and benefits, safe working conditions, and a respectful workplace. Automodular became both the highest paying parts sequencing firm the industry and the most profitable based on transparency (I gave the union the same financial reports I received at the time I received them as CEO), trust, and a desire to achieve those mutual goals. There was no assurance of stability, quite the opposite. Since our business was contract manufacturing and contracts end, everyone understood from the outset that at the end of a contract if not renewed 100% of the hourly workforce and most of the related salaried would lose their jobs, and the terms of our agreements dealt with the severance and benefits in that event up front rather than at the time of the event.
Sectoral bargaining is a transfer of wealth from consumers to employees, with many of those consumers earning less than the wages and benefits of the sector. ILA pay averages from $85,000 to over $200,000 and the average for American workers is a lot less. CAW and UAW annual compensation is well above averages for similar work in other industries.
Europe is paying the price for its one-sided labor policies with Volkswagen now contemplating closing assembly plants for the first time in 80 years. The time always comes to pay the piper.
The "subtle form of collusion" that benefits owners and workers in one industry also fuels inflation which it its essence is a tax on the poorest in society, widening and not narrowing income inequality.
Osgoode Hall is the correct spelling. Thanks for the article. I disagree with its conclusions, and think the market works best without legislative interference beyond that necessary for crime free and civil discourse. Labor laws in Canada emerge primarily from left wing governments who try to impose their views on income inequality on employers. Income inequality is a natural outgrowth of individual effort, competence, education, and effort as well documented long ago by sociologist Vilifredo Pareto, exists in every society, and cannot be narrowed by reducing the output of wealth creating activities by legislation that negatively impacts productivity. Canada's per capita GDP has been falling since Trudeau took office and productivity shows no signs of improving as capital flees investments in Canada for better returns abroad.
The solution to income inequality from a policy perspective is a progressive income tax code (we have one), accessible and affordable education (we have that to some degree), and a merit based society that distinguishes people by knowledge and competence rather than by race, religion, sexual orientation or skin color. Regretfully, we have the latter under progressive governments.
Milton Friedman had the best grasp on what works in an economy - free markets. I agree with him.
Likewise, respect the time and care you devote to this.
Clearly, our ideological differences run deep and are very unlikely to reach any 'upstream resolution' through debate on any given downstream issue. Nevertheless, I sincerely value your experience and thoughts as a check on how strongly I ought to let those intellectual/sentimental commitments practically govern certain categories of policy preference and investment decision-making.
I can't join your endorsement of Prof. Friedman's "grasp on what works best", partly on account of his definition of "best", but also the narrow framing of socio-economic determination that you share.
That said, I can't think of a topic where your background and sensibilities might be more on point than the present one. With this particular case of a continental-scale port closure, it's actually unclear to me who has captured whom; what is unambiguous is who is being held to ransom.
It is certainly time to rethink this. The Teamsters and UAW broke UPS and the “Big 3” Ultimately the unions have driven prices much higher and for automakers it was not competitive to build everything here due to ultra high wages/benefits. Mexico is packed full of auto parts plants and assembly plants. The unions absolutely had an enormous impact on working conditions and wages generally all good. But too much of a good thing can ultimately be bad.
Famously Ronald Reagan wiped out the ATC union because they were a monopoly and refused to negotiate in good faith. I was a disaster for pilots like me at the time. Brutal lineups to depart and land. Ultimately it had to be done though, you can't let an entire industry be held ransom for the benefit of a small minority. His intention was to send a strong message to all unions and it worked. No fun for quite a while though.
Thank-you for sharing your thinking on this. At first glance, it would seem optimal to have some congruence in the 'unitization' of the negotiating parties. Just as a corporate conglomerate might naturally exploit competition between individual shops of organized workers, a 'union of unions' would seem to wield a similar cudgel over independent operators.
As usual, reality is more complicated than Econ 101. Interested third or fourth year econ majors taking, say 'Econ 340 - Topics in Labour Relations', will explore the concept of _sectoral bargaining_. They will come to appreciate that, even in the absence of formal, Sherman-grade monopolies (on either side), the very notion of 'industrial sectors' arises because of natural commonalities across similar types of enterprise.
Investopedia is a place to start: https://www.investopedia.com/sectoral-bargaining-6745367
The upshot is that both owners and workers can benefit from sector-wide, coordinated baseline of standards and expectations. Consider it as a short-cut to the equilibrium we might otherwise reach only after decades of sub-optimal workforce churn within and between enterprises.
In your example, you weren't negotiating w/ Hargrove in a vacuum. The UAW was able to offer both it's members _and you_ the stability of a local agreement that had some assurance of being stable with regard to both current _and future_ arrangements reached among enterprises in competition with each other, if not for business, at least for labour.
In theory, sectoral bargaining is subtle form of collusion that, in effect, unites the joint interests of owners and workers in a segment of the economy against the interests of the _consumers_ of those products and services. But the resulting elevation of both working conditions/wages and prices achieves larger social goals stemming from a productive function that operates as it tends to do in in places like NA and Europe, as opposed to the endless races-to-the-bottom that plague standards-free economies like China's.
Great comment. Thanks. I disagree that sectoral bargaining is a benefit to society. Walter Reuther brought the U.S. auto industry to its knees and contributed to the bankruptcy of GM and Chrysler in the global financial crisis, by imposing indexed pensions and spousal survivorship on auto assemblers beyond their ability to pay over the longer term, and because he could shut down the entire car assembly and parts industry he had more power than the employers. My arrangements with the CAW and Hargrove were more simply based on my view that we had the same objectives - good wages and benefits, safe working conditions, and a respectful workplace. Automodular became both the highest paying parts sequencing firm the industry and the most profitable based on transparency (I gave the union the same financial reports I received at the time I received them as CEO), trust, and a desire to achieve those mutual goals. There was no assurance of stability, quite the opposite. Since our business was contract manufacturing and contracts end, everyone understood from the outset that at the end of a contract if not renewed 100% of the hourly workforce and most of the related salaried would lose their jobs, and the terms of our agreements dealt with the severance and benefits in that event up front rather than at the time of the event.
Sectoral bargaining is a transfer of wealth from consumers to employees, with many of those consumers earning less than the wages and benefits of the sector. ILA pay averages from $85,000 to over $200,000 and the average for American workers is a lot less. CAW and UAW annual compensation is well above averages for similar work in other industries.
Europe is paying the price for its one-sided labor policies with Volkswagen now contemplating closing assembly plants for the first time in 80 years. The time always comes to pay the piper.
The "subtle form of collusion" that benefits owners and workers in one industry also fuels inflation which it its essence is a tax on the poorest in society, widening and not narrowing income inequality.
I know Michael is a keen student of the legislative considerations that undergird the operation of one specific type of market.
Thankfully, Osgood Hall is a diversified operation:
https://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=1331&context=all_papers
Osgoode Hall is the correct spelling. Thanks for the article. I disagree with its conclusions, and think the market works best without legislative interference beyond that necessary for crime free and civil discourse. Labor laws in Canada emerge primarily from left wing governments who try to impose their views on income inequality on employers. Income inequality is a natural outgrowth of individual effort, competence, education, and effort as well documented long ago by sociologist Vilifredo Pareto, exists in every society, and cannot be narrowed by reducing the output of wealth creating activities by legislation that negatively impacts productivity. Canada's per capita GDP has been falling since Trudeau took office and productivity shows no signs of improving as capital flees investments in Canada for better returns abroad.
The solution to income inequality from a policy perspective is a progressive income tax code (we have one), accessible and affordable education (we have that to some degree), and a merit based society that distinguishes people by knowledge and competence rather than by race, religion, sexual orientation or skin color. Regretfully, we have the latter under progressive governments.
Milton Friedman had the best grasp on what works in an economy - free markets. I agree with him.
I appreciate your thoughtful inputs.
Likewise, respect the time and care you devote to this.
Clearly, our ideological differences run deep and are very unlikely to reach any 'upstream resolution' through debate on any given downstream issue. Nevertheless, I sincerely value your experience and thoughts as a check on how strongly I ought to let those intellectual/sentimental commitments practically govern certain categories of policy preference and investment decision-making.
I can't join your endorsement of Prof. Friedman's "grasp on what works best", partly on account of his definition of "best", but also the narrow framing of socio-economic determination that you share.
That said, I can't think of a topic where your background and sensibilities might be more on point than the present one. With this particular case of a continental-scale port closure, it's actually unclear to me who has captured whom; what is unambiguous is who is being held to ransom.
It is certainly time to rethink this. The Teamsters and UAW broke UPS and the “Big 3” Ultimately the unions have driven prices much higher and for automakers it was not competitive to build everything here due to ultra high wages/benefits. Mexico is packed full of auto parts plants and assembly plants. The unions absolutely had an enormous impact on working conditions and wages generally all good. But too much of a good thing can ultimately be bad.
Famously Ronald Reagan wiped out the ATC union because they were a monopoly and refused to negotiate in good faith. I was a disaster for pilots like me at the time. Brutal lineups to depart and land. Ultimately it had to be done though, you can't let an entire industry be held ransom for the benefit of a small minority. His intention was to send a strong message to all unions and it worked. No fun for quite a while though.
You two have made me rethink this issue and I think you have a great point.