It’s likely the way you look at unions isn’t from an unbiased, objective perspective. Obviously, labor and management that have ongoing issues with each other will see things differently, but often people that really have no attachment to unions at all will harbor deep felt opinions, potentially stemming from a specific political persuasion. Since it’s very difficult to put this aside, let’s try to see the pros and cons from each of the two perspectives.
Labor
The Pros: The ability to organize labor made a tremendous impact in our development as a nation. It pushed well beyond legislation and led the fight in workers’ rights, safety, wages, etc. While the majority of the safety and worker rights strides reside in history books, wages and benefits, are clearly where unions benefit the worker today. Millions of people would be living far worse lives without their union jobs. It’s also important to note that union conditions set the norm and established practices for the general working environment which has great impact on non-union workers. Simply put, without unions workers would be worse off.
Cons: Working in a union comes with several prices. The most obvious is the union dues that are paid by union members. But there is also a price in flexibility. Union worker may be able to move to another company, but they are general locked out of moving to another industry. That means once a teamster, always a teamster. Doing something else means starting over, and one of the biggest benefits of a union is the pension, which is generally not transferable to another line of work. Another aspect of flexibility is the inability to go beyond your designated position or do more than the contract stipulates. Once you are at the top of list, that’s where you’ll be until you retire, no matter how hard you work compared to others. If you want to move up, you need to go elsewhere, again at the loss of benefits.
Management
Pros: A professional and reliable workforce provides union companies the ability to staff consistently. Many non-union shops face labor issues daily that kill profits and hinder competitive abilities. For example, a non-union carpenter may not have the motivation on a given occasion to get out of bed before dawn, whereas a union carpenter may have more long term incentive to do so. Also, drawing from a professional labor pool on a project basis allows companies to bid work even when they aren’t exactly sure who is going to do it.
Cons: Clearly the cost is big issue here, but it’s not just the money. The unions have power and when times are good, they push for benefits for their members. While this makes sense, when the pendulum swings back the other way and money is tight, those wages become non-competitive. This means that non-union companies can undercut prices because the market price for labor is lower than the union contract. So more than just a higher cost. It’s really when the labor costs gets significantly beyond the market price that the company can’t compete.
The result of any discussion on this topic always leads back to the side of the table you’re on as this is an ongoing negotiation for the ages. This has been an attempt to look at the pros and cons of unions from both sides, and while it’s obviously a more complex topic than can be covered here, it’s hoped that when you discuss this topic you’ll go beyond your own point of view to that of other people’s perspectives.
More Resources:
Dr. Douglas Rice helps individuals about financial matters in a variety of ways. In addition to his financial advisory practice, he also writes, speaks, and conducts seminars about money and financal planning topics. To learn more, start with his blog, Taking Risks and Reaping Rewards, which can be found at www.douglasrice.com. There you can collect your free copy of one of his books, Reflections on Conventional Wisdom. Also, you can follow him on twitter @drdouglasrice
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Well balanced presentation. Quick reminder on several restrictions for tax deductions for union dues. They cannot be claimed by someone who uses the standard deduction and are allowable only as itemized deductions on Form 1040's Schedule A. Other curtailments are that union dues and most other miscellaneous deductions are allowable only for the portion in excess of 2 percent of adjusted gross income, and individuals who are subject to the alternative minimum tax cannot claim miscellaneous deductions.
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