Collective Bargaining = Collective Suicide
On Sunday, August 7, 2011, some 45,000 members of the Communications Workers of America (CWA), walked off the job and onto the picket line after their collective bargaining negotiations with Verizon broke down over the full gamut of employment issues.
On Friday, August 11, 2011, Verizon called in the FBI to investigate some 90 allegations of sabotage that occurred since the strike began. Landlines across the Northeast were cut, including those serving a hospital and a police station.
This is the largest strike that has taken place in the United States in the past four years. The relative novelty of the event, and the strong recriminations it continues to engender, should serve as yet another reminder of the massive dislocations that can take place under the current legal regime that makes strikes and lockouts standard-issue weapons in the arsenal of unions and employers respectively.
What does this strike teach us about the institution of collective bargaining? Let’s start by examining the multiple sources of conflict between Verizon and the CWA. Verizon is a large and diversified communications company that competes aggressively in multiple markets, including its struggling unionized landline business and its prosperous nonunionized wireless business.
For many years, the CWA negotiated highly favorable contracts for its workers. Those rich union contracts have proved unsustainable. Inevitably, they have neatly set the stage for the thorny issues of give-backs, or reductions in workers’ previous gains in such key areas as, pensions, job security, health care, sick pay, job conditions, grievance procedures, and paid holidays. The company is pushing a hard line considering its annual revenues are expected to reach about $112 billion for the current year, with reported earnings for the first six months at $6.8 billion. Verizon’s top five executives, over the past four years, have received $258 million in salary and options, for an average of over $12 million per executive—per year—in total compensation.
These numbers generate fierce resentment among CWA members. One field technician with 15 years of service with Verizon put it this way: "What they’re asking is hard for us to swallow because the company had profits of $22 billion over the last four years. They’re crying poverty, they say they can’t afford to pay us. We’re just not going to stand for it anymore."
Sentiments like these may have led the CWA and its members to think that a strike based on the general principle of ‘share the wealth’ would generate the support of the public. Tragically, the CWA has seriously overplayed its hand. The likely outcome of this strike is the CWA’s own shattering defeat.
Verizon’s bargaining position has nothing to do with either its poverty or wealth. It has everything to do with whether the renewal of the present CWA-Verizon contract makes economic sense for the company. The brute economics of the dispute has this bottom line: the wages of both union and nonunion labor depends on what each group contributes to the firm’s profitability. It does not depend on the overall profitability of the firm per se.
Continue reading my weekly column over at Defining Ideas.
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Jun '10
Re: Collective Bargaining = Collective Suicide
The thugs who engaged in sabotage should be in prison.
A friend of ours is missing his vacation while he and the other Verizon managers fill in for the strikers. He looks forward to this week down the shore all year. Now his wife and two little daughters don't just have this terrible rainy week impacting their vacation, they are trying to make do without dad.
May '10
Re: Collective Bargaining = Collective Suicide
What will unions do without Obama? He's the only thing preventing their complete collapse. Otherwise they just stagger blindly from defeat to expensive defeat.
A technical question on the NRLB: do they serve at the pleasure of the President, or serve fixed terms? In other words, can they be replaced in 2013, or will it take longer?
At any rate, we can all be thankful that the national union structure has spent almost all of its war chest in getting beat time and again in Wisconsin. They won't be able to muster much support other than making their goon squads available to attack Tea Party gatherings.
Dec '10
Re: Collective Bargaining = Collective Suicide
I like markets. As such, I like labor unions that function within a market. If corporations have the flexibility to select vendors, business locations, product development strategy, etc., why shouldn't those working for the corporation have the ability to collectively bargain for the best possible labor wage? That is, of course, assuming those employees freely make the decision to do so.
About the specifics of the Verizon dispute I know very little. But by what metric can a company making Verizon's profits be said to be suffering under unsustainable labor contracts? There may very well be an excellent answer to this question, but it is not contained in this post.
Aren't those workers part and parcel of why the company can make such profits? Sure, the wireless unit is making the money. Fine. But the landline unit delivered the initial capital and corporate infrastructure that made it possible to buy and develop the wireless unit. In a sense those workers are the venture capital. Is it so outrageous for them to *negotiate* wages that take this into account?
Government employee unions, btw, are a whole 'nother kettle of rotting fish.
Nov '10
Re: Collective Bargaining = Collective Suicide
The fundamental issue is contained in the last paragraph of Richard's post.
Companies are purchasing workers' services just like they purchase any other goods or services. Everyone of us must realize that our services are merely worth only as much as the marketplace is willing to pay for them. There is no other value to my labors beyond that other than a non-material value that which exists between me and God so that whatsoever I do in word or in deed I endeavor to do to His glory.
May '11
Re: Collective Bargaining = Collective Suicide
I used to work as an engineer in an ILWU factory in California. They are well known for using violence on their regularly scheduled strikes. The violence is of course always ignored by the police.
I want to know, when is the last time management has used sabotage or violence in labor negotiations?
Edited on Aug 16, 2011 at 7:20amMay '11
Re: Collective Bargaining = Collective Suicide
No, they are the labor. Venture capital is someone risking money on the success or failure of the business. Labor gets paid whether the business succeeds or fails. If you must use an inhuman analogy, labor is more akin to production machinery.
Machines are built and work if they are properly tended and maintained. People work if they are properly trained, safeguarded, paid and otherwise compensated.
Sep '10
Re: Collective Bargaining = Collective Suicide
KarlUB:
Aren't those workers part and parcel of why the company can make such profits? Sure, the wireless unit is making the money. Fine. But the landline unit delivered the initial capital and corporate infrastructure that made it possible to buy and develop the wireless unit. In a sense those workers are the venture capital. Is it so outrageous for them to *negotiate* wages that take this into account?
Aug 16 at 6:39am
Your logic escapes me. Verizon made a profit and chose to invest in wireless. If the land-line workers want to share in the profits from the wireless they can buy company stock. The land-line workers were paid for their labor. Unless their contract called for a share of future profits, which it did not, they have gotten what they were promised. Would you argue that if a worker used his earnings to buy a lotto ticket and won that Verizon should share in his winnings because they enable him to buy the lotto ticket?
Apr '11
Re: Collective Bargaining = Collective Suicide
Skyler
No, they are the labor. Venture capital is someone risking money on the success or failure of the business. Labor gets paid whether the business succeeds or fails. If you must use an inhuman analogy, labor is more akin to production machinery.
Machines are built and work if they are properly tended and maintained. People work if they are properly trained, safeguarded, paid and otherwise compensated. · Aug 16 at 7:27am
I'm far from an expert on business but I do believe you make a valid point Skyler. It may be similar to me buying a car at price X which faithfully served me well in transporting me safely and economically, relatively speaking. Now after ten years I purchase a new car at price Y even though my income has possibly doubled, this car might possibly be cheaper in price, safer and more economical. As far as KarlUB is concerned I shouldn't get rid of it because it has faithfully served me well the last ten years regardless of the cost to do so.
Aug '11
Re: Collective Bargaining = Collective Suicide
Dogpile on KarlUB!
Just kidding. Epstein explains his position against the point you raised in the complete column, which he posted as a link at the end.
Epstein is clearly trying to increase traffic to his column as part of an effort to demand a pay increase from Hoover. I saw through this instantly.
Edited on Aug 16, 2011 at 7:50amJun '10
Re: Collective Bargaining = Collective Suicide
Owl of Minerva: Dogpile on KarlUB!
Just kidding. Epstein explains his position against the point you raised in the complete column, which he posted as a link at the end.
Epstein is clearly trying to increase traffic to his column as part of an effort to demand a pay increase from Hoover. I saw through this instantly. · Aug 16 at 7:50am
Edited on Aug 16 at 07:50 am
More power to him.
Dec '10
Re: Collective Bargaining = Collective Suicide
If you must use an inhuman analogy, labor is more akin to production machinery.
Machines are built and work if they are properly tended and maintained. People work if they are properly trained, safeguarded, paid and otherwise compensated. · Aug 16 at 7:27am
[If] I purchase a new car at price Y even though my income has possibly doubled, this car might possibly be cheaper in price, safer and more economical. As far as KarlUB is concerned I shouldn't get rid of it because it has faithfully served me well the last ten years regardless of the cost to do so. · Aug 16 at 7:45am
Excellent point at the labor being more like the machinery. I think perhaps an even better analogy would be software as it improves with investment over time. That is until a technology shift makes ditching that software entirely and starting from scratch a better idea.
If Verizon wants to do that they should be permitted to do so. In the meantime, though, the 'legacy software vendor' should be permitted to explore what charges Verizon will bear.
Dec '10
Re: Collective Bargaining = Collective Suicide
I should note, btw, that when it comes to me being OK with Verizon firing their workforce and hiring another one I am making a distinction between what should be legal and what is ethical.
Legally, I think that should be their prerogative. It is the counterpart to the right of the workforce to strike, Ethically, though, it might be reprehensible. Just because something is legal doesn't make it right.
Why? Because people aren't machines. Or software. They are human beings. To treat them like machines or software is the ultimate manifestation of technocratic soullessness.
May '10
Re: Collective Bargaining = Collective Suicide
Owl of Minerva: ...
Epstein is clearly trying to increase traffic to his column as part of an effort to demand a pay increase from Hoover. I saw through this instantly. · Aug 16 at 7:50am
Edited on Aug 16 at 07:50 am
And I have happily supported him in this endeavor by going to the site and reading his essay!
Sep '10
Re: Collective Bargaining = Collective Suicide
Another wonderful piece for Defining Ideas.
Contrast the Verizon workers with the UAW who continually targeted a specific maker of autos to make a deal the auto maker could not afford by stopping one maker's production while allowing its competitors to fill the gap in supply. In this case the struck car maker had much less leverage than Verizon because they could provide only inventory until the strike was settled. In Verizon's case since they are mostly just operating a system that is in place, I presume the system continues to function without the workers more or less (Sabotage aside).
I have often thought that the anti-trust exemption offered to unions by the Clayton Act and denied to employers is the particular piece of legislation that if amended would largely fix these problems. If the unions represented only a part of the industry rather than the whole, the unions themselves would have to compete for market share. And if the union demands became out of line, manufacturers could cut deals with other unions for their labor.
Dec '10
Re: Collective Bargaining = Collective Suicide
That "like" above is from me, Ross. It has always seemed to me the GOP could find ways to be pro-commerce without being anti-union, and could also find ways to split unions representing people in the commercial marketplace from unions representing government.
Your suggestions are in that vein.
Sep '10
Re: Collective Bargaining = Collective Suicide