Unions under Fire as Benefits, Pensions Bleed Budgets

Unions under Fire as Benefits, Pensions Bleed Budgets

A funny thing happened during the Great Recession: Americans soured on Big Labor. Though backstopped by one of the most labor-friendly administrations in decades, unions have lost favor with the public and have recently failed at some significant organizing attempts – most recently from the workers of Delta Airlines.

This is good news for U.S. competitiveness.

Beginning in 2007, the public’s support for unions plunged. A Pew Research poll conducted earlier this year found that only 41 percent of Americans held a favorable opinion of unions, while 42 percent had an unfavorable bias — the first time those lines had crossed. In an American Enterprise Institute study updated in May, 57 percent of those surveyed thought unions had too much power. In a 2009 poll, only 8 percent of those surveyed had a “great deal” of confidence in unions — only marginally ahead of Congress.

Is the economy to blame for the disaffection with organized labor? Gallup reports that during prior recessions, affection waned. However, they suggest that the current drop may also reflect the public’s resentment over the Obama administration’s effort to keep unionized government workers on the payroll at the expense of private sector employees.

The Drag of the Detroit Unions
Perhaps the disenchantment is even more profound. The dramatic events of the past few years have brought Americans face to face with the high costs imposed on our country by unions. As Congress debated bailing out the auto companies, who wasn’t shocked by reports that Detroit’s Big Three were paying wages and benefits of over $70 per hour, compared to Toyota’s $48 (at U.S. plants), and average private sector pay of $25?

While unions traditionally blame CEOs for incompetence or for outsourcing jobs, many in our country began to understand that manufacturers have been driven overseas by necessity. In his book Overhaul, former car czar Steve Rattner cites the Harbour Report, “an authoritative statistical source,” which showed that “the Detroit Three needed just over 32 hours of labor to build a car, versus 30 hours for Toyota. That represented a huge advance over 1995, when GM had been at 46 hours, Chrysler at 43, Ford at 38 — and Toyota at 29.” In other words, considering that Detroit was turning out more expensive and complex cars, U.S. producers had become as productive as the ever-capable Japanese. The competitive disadvantage faced by the Big Three was, as we all learned, in wages and excessive benefits.

Unions have also taken a beating over the past year as mayors and governors face looming budget deficits, the result in large part of soaring public service union costs. Governor Chris Christie has made media waves — tsunamis really — by daring to confront New Jersey’s teachers unions, whose demands he has pilloried as greedy and excessive for these tough economic times. With the documentary Waiting for Superman indicting teachers unions country-wide for their failure to put children first, animus against the powerful unions has increased.

Delta’s Failed Unionization
The confluence of these trends may account for the surprising defeat of the International Association of Machinists and Aerospace Workers Union in its attempt to organize Delta Airline’s 13,000 baggage and cargo handlers last week. The failure came on the heels of a similar loss for the Association of Flight Attendants, who had hoped to sign up Delta’s cabin personnel. Next up will be a vote among reservation and gate agents.

Though Delta has long operated as a mostly nonunion airline, the win for the company is surprising on two fronts. First, Delta’s acquisition of unionized Northwest took it deeper into organized labor territory. Second, the Obama administration has made it easier for union organizers to win elections. The National Medication Board, which oversees aviation industry labor relations, changed the voting rules in July to record only “yes” or “no” votes cast in an election. For the past 70 years, nonvoters were counted as opposed to unionization. The change is expected to allow union activists to have more impact in influencing the results.

The Delta votes represent the largest private company unionizing effort to take place in the U.S. in 50 years. As such, it is viewed as a bellweather. It is also viewed as a test of just how far the Obama administration will go to support its friends in organized labor. The National Mediation Board stepped in to require a second vote earlier this year on the attempted unionization of 100 flight simulator technicians; in the mandated do-over the union again lost. Two of the three NMB board members currently are former union heads.

Delta’s votes, while the largest, are not the only recent defeat for organizers. In October, employees at three Coca-Cola bottling plants in Georgia rejected becoming part of the International Brotherhood of Teamsters, and workers at a fast food company in Minneapolis turned down affiliation with the Industrial Workers of the World. Maybe most encouraging in this Thanksgiving season, employees at a Michigan turkey processing plant spurned the United Food and Commercial Workers group.

Time will tell whether these votes are a harbinger of things to come. We can expect pushback from the Obama administration. There are reports that the NMB may overturn the Delta flight attendants vote. Aggressive support of unions may put President Obama yet again on the wrong side of the people, and could further impede our country’s ability to compete.