The Merits of Labor Unions

A divine attribute that the Bible emphasizes is fair judgement. Ezekiel 18 and Acts 10: 34-35 are just two of many instances where God’s fair and just quality is highlighted. As God’s followers we are called to imitate Him. This is why God commands the Israelites to exercise fair judgement through Moses in Deuteronomy 1: 16-17 and why impartiality is stressed in Proverb 24: 23.

We often fail at applying this wise lesson on topics that have populist, politically correct positions and politically incorrect, unpopular positions. Going to an ultraliberal, Marxist university meant that I was inundated with pro-union arguments from both instructors and students. Similarly, I noticed that my 14 year old cousin was learning about labour unions in school. His assignment depicted unions in a wholly positive light. The end result was my cousin’s opinion of labour unions as working solely for the good of workers.

There is no denying the value of labour unions. Labor unions once represented over one-third of American workers fifty years ago (see “Executive Excess” report). Today, only 7.4% of private sector workers are unionized. The inverse relationship between declining labour union presence and skyrocketing salaries of CEOs suggests that unions are important checks against executive overpay.

The Marxian view of labor unions is that they are a valuable guard against the exploitation of workers. Unions also deal with corporate management on behalf of their workers in order to attain the best possible wages for union members. Both of these purposes serve the union’s general mission to do what is best for union members. Both purposes, however, do not always achieve this mission.

When unions short-sightedly focus on their mission without considering the bigger picture of the company’s health, they can become detrimental to the company. They forget that since the company employs union members, the company’s well-being is, in effect, what is best for the workers in the long run whether or not that means that an increase in wages is a realistic demand for the immediate future.

GM is a good example of how unions can play a major role in the failure of a company. This is not to say that the UAW and CAW are solely at fault for the current state of GM. A 2005 editorial in Bloomberg Businessweek entitled, “How To Keep GM Off The Disassembly Line” shrewdly examines how three key interest groups within GM (management, unions and stakeholders) all play important roles in GM’s past, present and future.

Management made a few key mistakes that led to the shrinking of GM’s market share over 30 years. They failed to learn from the popularity of the compact car in the 1970s and realize that a similar popular trend favouring fuel efficiency and environmental cleanliness was occurring with the hybrid vehicle. They maintained too many brands rather than investing more research, development and marketing dollars in fewer nameplates like Asian car manufacturers. GM’s management definitely dropped the ball in a number of ways over a number of years, but unions were not always helpful to the situation either.

The fact of the matter is that there are at least two sides to every debate. As Proverbs 18: 17 humorously explains, “The first to present his case seems right till another comes forward and questions him”. The case for unions has been presented first. See the follow up to this post entitled, “The Drawbacks of Labor Unions” to hear the case for unions questioned.

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