United They Fall
MOORE, STEPHEN
United They Fall Unions won't prosper if American corporations don't. BY STEPHEN MOORE LAST WEEK the machinists' union indignantly rejected the latest contract offer by bankrupt United Airlines,...
...The firm is losing hundreds of thousands of phone lines to competitors, and its landline business is surrendering market share to cell phones, e-mail, and cable telephony...
...The union complains with some validity that the firm is paying million-dollar bonuses to management even as it executes its downsizing plans...
...With $2 billion in debt and daily operating losses in the millions, United has to cut costs dramatically in the next several months or the airline will be out of business...
...One could only wonder whether the union bosses have lost all sense of economic reality...
...The United labor fracas raises the question of whether unions have so outserved their usefulness that they are now doing more harm than good for American workers...
...For example, one study recently found that when an employee works with a computer in front of him, his salary is likely to be $10,000 to $20,000 higher than if he is without one...
...The strategy makes about as much sense as Kobe Bryant and Allen Iverson running TV ads encouraging fans not to go to NBA games...
...Only one in six workers today is a dues-paying union member, and the percentage of private sector union workers is much lower than that...
...Think supermarket scanners...
...This would be the economic equivalent of the accounting profession trying to block the introduction of calculators...
...The Luddite attitude of "man versus machine" will not protect jobs or raise wage scales...
...More than half a million telecom workers have lost their jobs...
...The union's beef was with the decision to automate the tabulation of containers moving in and out of ports...
...Yet the comatose transit union, whose workers already receive about 30 to 40 percent more compensation than comparably skilled private sector workers, demanded even more concessions from the city...
...Simple information management...
...The unions are already losing hundreds of thousands of members every year, and their recent behavior suggests that Stephen Moore is president of the Club for Growth and a senior fellow at the Cato Institute...
...One of the most baffling and self-defeating of union tactics is the $1 million TV and radio campaign by the Communications Workers of America against Verizon, the Baby Bell of the Northeast...
...Said another: "The top ports in Asia, and in Europe, are at least a decade ahead of us...
...This reality—that workers can prosper only when the companies they work for do—has eluded many union officials...
...Overall telecom expenditures are down 45 percent this year—a cut in capital investment of over $30 billion...
...In each of these cases, the labor unions' irrational objections to technological change and economic reality have needlessly reduced the profitability and the competitiveness of American firms...
...In fact, the extravagant pay scales union members enjoy is one reason for United's swift plummet toward insolvency...
...That hasn't deterred the CWA from spending members' dues blasting Verizon's planned cutbacks of about 3,500 jobs in the New York region...
...But the larger economic reality here is that Verizon is losing revenue as government regulations force it to lease phone lines to competitor companies at fire-sale rates...
...Just the opposite: Throughout the last century, computerization and technological progress have been the driving force behind the increased productivity of workers and their higher salaries...
...In fact, pollster Scott Rasmussen has pointed out that on Election Day, three times as many voters were stock owners than union members...
...Through collective bargaining, United pilots and mechanics have extracted pay structures that are by leaps and bounds the highest in the industry...
...New York City is facing its worst fiscal crisis since the late 1970s (when President Ford allegedly told the city to "drop dead...
...I'm talking about everyday technology...
...labor bosses are intent on accelerating their own demise...
...It is precisely such self-destructive union policies that have made new age industries, including high tech, fiercely anti-union...
...BY STEPHEN MOORE LAST WEEK the machinists' union indignantly rejected the latest contract offer by bankrupt United Airlines, complaining that they were being unfairly rushed into a bad deal...
...Those bonuses do seem unwarranted given the wobbly financial condition of the industry...
...Lord knows where the money was supposed to come from...
...Our ports literally cannot keep up...
...The dockworkers, who with overtime can earn six-figure salaries, were essentially striking against the evils of technological progress...
...such costs have made the airline hopelessly uncompetitive against discount rivals like southwest and JetBlue...
...I'm not talking about Star Wars," one industry executive pleaded...
...Consider, for example, the narrowly averted New York Transit strike, in which the union was demanding massive pay increases from an all-but-bankrupt municipal agency...
...The unions are hardly innocent victims of the demise of United, which not that long ago was a financial titan among airlines...
...Over the past 30 years, union membership as a share of the workforce has fallen by half...
...In 2000, the telecom sector contracted by 28 percent and bled almost $1.7 trillion in lost share values...
...How is this going to help communications workers...
...Meanwhile the incendiary union ads heap abuse on Verizon and characterize management as a gang of corporate crooks...
...Federal officials cited out-of-control salaries as a primary explanation for turning down United's recent $1.8 billion-dollar loan guarantee request...
...Before President Bush invoked the Taft-Hartley Act to suspend the work stoppage, the American economy was losing an estimated $1 billion a day in output and, throughout the economy, thousands of union and nonunion jobs were put at risk...
...FedEx or UPS tracking systems...
...It would appear that the pilots and mechanics will soon discover an important lesson: The alternative to accepting reduced salaries will be no jobs at all...
...Then there is the headline-grabbing case of the dockworker strike on the West Coast this past October...
...As even the most casual investor knows, the last three years have been brutally unkind to the telecom industry...
...These workers understand that their 401(k) plans and their IRAs are dependent on the profitability of American industry...
Vol. 8 • January 2003 • No. 17
