Absent collaboration, union slide continues

There is an un-discussed reason why the percentage of U.S. workers represented by unions has dropped to record lows. And it’s not that organizing costs or barriers to unionization are too high.

It’s that union leadership is largely stuck in a rigid model of operating that doesn’t work any more. The reality is that adversarial strategies and tactics, which invariably raise costs, don’t work in a flat, global, hyper-competitive world.

The proof is in the numbers. In the private sector, labor unions now represent only 6.9% of U.S. employees.

It’s 37% in the public sector, but that percentage is dropping, too, as public sector jobs are out-sourced because of budget pressures at all levels of government. In Wisconsin, the fall-off will be even sharper in the public sector with the elimination of collective bargaining and mandatory union dues payments.

For the combined sectors, unions now represent only 11.8% of all workers. It was 20.1% three decades ago.

Look at what happened at Briggs&Stratton in Milwaukee over the last generation. Without canonizing the managers, the unions there were known to be particularly adversarial, including protests in front of the CEO’s home. Such actions beget reactions.

Business executives usually don’t say much in the face of such tactics; they just move. Briggs had 10,000 workers in Milwaukee; it now has some 2,000. It moved south to non-union plants. Note: the jobs didn’t go overseas.

In contrast, the Steelworkers Union at Bucyrus International (now part of Caterpillar) collaborated with management on a consumer-driven health plan that reduced costs by more than 20% — with no loss in health care. Workers and executives are on the same plan. Result: Bucyrus expanded in South Milwaukee and added lots of union jobs.

The key is collaboration, the opposite of adversarial relations. If business and labor can’t work on innovative solutions, the business gets in trouble and jobs are lost.

Look at GM. The president and pundits are hailing its recovery from a near-death experience as a triumph for government intervention. It certainly is that. Taxpayers will get all their bailout money back. Hooray for a blended system; GM was too big to allow to fail.

But just injecting new capital post-bankruptcy is only part of the story. Unions and management were at the brink, and they knew it, so they had to collaborate. The company and its unions agreed to huge concessions on benefits. It was the bloated, under-managed benefits that were a big part of what made the American automotive industry uncompetitive.

There is no reason why health care packages need to cost $28,000 per employee, the Cadillac plans that unions fought to protect. The word “Cadillac” implies value, but it’s a misnomer. Other companies are delivering equivalent or better care for one-third of that staggering total.

Actually, there is an inverse correlation between quality and price in health care. Cheaper is better. The low cost providers have their acts together and therefore usually offer the best quality.
But just try to get union leaders, used to defending every inch won in past negotiations, to move off their outmoded thinking. I tried for more than a decade on health care delivery and made only a small dent.

The absence of collaboration, combined with an unstoppable sharp rise in health costs, spelled a confrontation with reality down the road. That collision happened in 2010 in Wisconsin when at GOP-controlled legislature and Republican Gov. Scott Walker blew the whistle on runaway benefits. It was adversarial politics at its worst, a holy war.

The Republicans cost-shifted to public employees to balance the state deficit. And now we have an ultra-adversarial recall election upon us.

Had both sides collaborated on an innovative solution, ala what is happening in spades in the non-union private sector, costs could have been reduced without a loss of any health care services.
Right or wrong, Gov. Walker concluded that the unions would never budge in a meaningful way, so he moved unilaterally.

In reality, though, purely partisan, adversarial reforms are harder to make stick. ObamaCare, a partisan reform, is under attack in the states, in Congress and in the courts. It may not stick. Walker’s reforms are under attack in the recalls. They will not endure as a whole if Democrats get back into control.

Back to the private sector for a possible way out of the adversarial straight-jacket: as GM returned to the black, workers got more than $4300 in profit sharing bonus checks in 2010. They’ll probably get checks again this year. Ford and Chrysler also paid profit sharing in 2010. Now there’s a collaborative model that could work really well. If stock options (in effect, profit sharing) stimulate executives to better performance, why not workers, too?

Unlike bloated benefits, when a company needs to cinch its belt in tough years, no payout needs to be made.

The over-riding point of these reflections is that adversarial models are generally lose-lose, while collaboration produces innovation, competitiveness and win-win.

Without a better model for worker-management relationships, expect to see the union numbers take another dip next year.

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