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Labor Lessons from Canton
In the end, it was a landslide. The United Auto Workers (UAW) pulled out all the stops to unionize a Nissan Motors automobile assembly plant in Canton, MS. Yet after a bitter campaign, it lost convincingly, by a 62-to-38 percent margin, with 2,244 employees voting against and 1,307 for unionization. Prior to the vote, the UAW had rolled out the heavy artillery, enlisting the support of Senator Bernie Sanders and Democratic National Committee Chairman Tom Perez, as well as a raft of left-leaning Hollywood stars and a large cadre of skilled union organizers. Their expensive and well-orchestrated campaign hammered home this familiar union theme: workers will only receive fair treatment on the job if they join forces to resist management, which seeks to wring every last cent out of its captive workers.
The UAW hoped that success in Canton would give it an entry point in the union-resistant American South, where it might augment its membership rolls, which have plunged from about 1,528,000 workers in 1980 to about 409,000 workers in 2015. And if the UAW could make a comeback, perhaps other unions could rebound as well and reverse the long-term trend: Union membership in all market sectors, public and private, has dropped from about 35 percent of the work force in 1954 to about 11 percent today—all with no major change in the statutory framework governing labor relations.
Ultimately, the UAW in Canton was outgunned by two forces. The first was the Nissan management team, which pressed the workers hard on a simple theme: why rock the boat when the wages and working conditions at the Canton Nissan plant are far better than anything else available to the employees?
The second was the workers themselves. Nissan workers earn on average $25 per hour, far higher wages than they could garner from alternative local employment. Those wages are stable because they rest on productivity gains, which endure, and not on monopoly power, which can be cut down by more efficient rival firms. Getting this message across requires staying on the right side of a fine legal line. The national labor law’s guidelines for elections require employers, including supervisory employees, to bring a grammarian’s touch to their political messaging. Statements of fact and predictions of future affairs are fair game for union elections, but threats of retaliation against employees, whether express or implied, count as unfair labor practices, which could expose an employer to a reelection even after winning. Indeed, in Nissan’s case, there may yet be a second round, given that UAW Secretary-Treasurer Gary Casteel railed that “Nissan waged one of the most illegal and unethical anti-union campaigns that I’ve seen in my lifetime.”
The magnitude of the union’s loss suggests that employers like Nissan are in a good bargaining position. They have potent rejoinders to union promises of higher wages, greater benefits, and greater job security. Management can tell the workers in plain language that the issues they face are structural, not personal. Gone are the days when a tariff wall protected American auto workers against foreign imports like a fortress. Once the Japanese, Korean, and German firms gained access to American markets, the bargaining landscape was transformed. Raising wages raises production costs, which could price Nissan cars out of the market, with catastrophic losses for workers, their local managers, and Nissan shareholders.
These trade-offs were not lost on the astute Nissan employees. On the positive side, the union could gain somewhat better terms for union members at the bargaining table. But on the negative side, the union takes a cut of worker salaries in the form of substantial union dues. Nor do unions run on pure oxygen, for their operations require at least some level of uncompensated employee participation. Winning short-term gains also increases the risk of workplace disruption from strikes, plant closings, and lost work, all of which can happen if the contract is too favorable to employees. It is no wonder that Nissan management had the vocal support of a strong cadre of pro-management workers who foresaw too much risk from unionization. All economic alliances are uneasy, but the Nissan workers concluded that management, not union leaders, would better enable them to secure their long-term survival and success in a global marketplace.
And the unions know all this too. This is why they pushed so hard in the early Obama years for the misnamed (and temporarily shelved) Employee Free Choice Act (EFCA), which would have allowed unions to circumvent secret ballots in elections. The unions know that many workers are reluctant to object to unionization publicly but will vote against unionization in a secret ballot of the sort that happened in Canton. EFCA’s proposed card-check arrangement would spare unions from the dangers of elections, and it would also force employers to accept an initial two-year contract through compulsory arbitration on a bargaining field tilted heavily in the favor of the unions. The current legal arrangements under the National Labor Relations Act generally allow a well-run management team to beat back a well-run unionization effort. There is a larger pie for management and labor to divide if the union does not get to play a role.
To be sure, the current legal rules are a tangled mass. I have long argued that the pre-New Deal labor law that allowed employers to enter into “yellow-dog” contracts under which individual workers agreed not to join (or promise to join) a union while on the job gets rid of most of this clutter. The employer knows that it faces competitive pressures, so it has to keep workers from quitting. But freed of union shackles, it can expand its workplace without having to negotiate a costly administrative apparatus under which the National Labor Relations Board oversees virtually every aspect of management, union, and worker relationships.
But whatever the defects of the American labor, they pale in comparison to the situation in France and other European countries. The key difference in the two systems is that most of the elaborate French code on employment is embedded in a huge work code, the Code du Travail, which, from its inception in the early years of the 20th century, was a socialist document treating all employers as enemies of the working class whose conduct had to be checked every step of the way. The current tome contains 3,324 pages, with detailed rules for every aspect of the employment relationship, from hiring to firing. These dense, general rules are then compounded by detailed rules for each specific industry. Squeezing the entire employer-employee relationship into a nationwide omnibus code makes it impossible for individual firms like Nissan to finesse the brunt of the labor law by beating back a union’s organizing drive. In France, the only path forward is to tackle the entire code through reform legislation. But current law produces enough winners among current workers that strong unions—most notably the militant left-wing CGT (translated as “the general confederation of labor”)—take to the streets to preserve the status quo.
The 2016 French national elections vaulted former investment banker Emmanuel Macron into the presidency on a promise to make significant modifications to the labor code. The question is whether his early crest in popularity can survive the rigors of confrontational politics, in which entrenched unions hold a lot of high cards. The current conceit is that the Code has become obsolete over time, but the more accurate view is that it was always a huge political and economic mistake, whose costs have only increased as labor markets evolved from mass assemblages of workers on hourly wages to a protean workforce filled with gig workers and moonlighters.
Ideally, Macron should propose that France allow contracts at will—any worker can be fired or quit at will—knowing that the overall flexibility of labor markets will ensure a safe landing for both able firms and competent workers. That at-will regime largely survives in the United States apart from the labor and the antidiscrimination laws, and it has helped fuel the creation of innovative firms like Amazon, Facebook, Microsoft, and Uber. But the need for legislative approval has forced Macron to seek out much more modest proposals that will reduce the costs of dismissal either for poor conduct or economic downturns.
The stakes are enormous, but unless and until France loosens the legislative labor noose, it can expect to retain its persistent 10 percent unemployment rate and a two-tier labor market in which the ins have huge protections, leaving the outs to fight over the crumbs. France would do far better with an American regime under which workers in Paris could emulate those in Canton, Mississippi by saying no to a union and working directly with management.
© 2017 by the Board of Trustees of Leland Stanford Junior University
Published in Culture, Economics
Good news for Nissan and US workers. Now if only Ohio can break the union chokehold on its industries too.
Meanwhile, in Washington State, Unions have a stronghold that is backed by law.
If you opt out of membership, you still pay dues.
Such a powerfully destructive and corrupt force. I love (in a bittersweet sort of way, more like love to hate) reading the union newsletter that comes in our mail every couple of weeks. It is infuriating, and it just amazes me how blind people can be to support such unapologetic partisan nonsense.
As a recent example, the latest newsletter praised a “victory” that saw a government sued for millions of dollars. What were they guilty of? Well, they allowed certain workers to do a job that was not a part of their union designation, thereby depriving union workers of that work. So, if you’re working in an office and your light goes out, you had better not reach up and change that bulb… thank goodness justice prevailed and the taxpayers got to shell out millions to see that this kind of gross abuse would never happen again.
Wow. This was great stuff. I have been anti-union my whole life, despite knowing many great Americans who were members. I truly believe the people at the top of the Unions (at least, the ones who aren’t in the Mob) are Communists. Richard Trumpka most likely carries a copy of Mao’s Little Red Book in his jacket pocket.
I think Trump is pro-Union, but he may be starting to understand the damage Unions are doing to America. I dream of the day when Trump writes an Executive Order that outlaws Unions, by removing the requirement to pay Union Dues à la Scott Walker, in the entire Federal Government.
The UAW shrank under the impacts of global forces on auto manufacturing. In the absence of such forces, the one labor reform I would like to see in the US would abolish public employee unions. Their bargaining with bureaucrats and elected officials on the other side of the table who have no incentive to conserve taxpayers’ money has brought us massive and unfunded pension liabilities at the state, local and federal levels. Yikes!
According to OpenSecrets, UAW contributions to Democrats in 2016 was $1.2 million, and to Republicans… zero.
(On that page you can examine the contributions for each election year.)
It wouldn’t outlaw unions, and it should be done everywhere. Nobody should be forced to join an organization or to pay dues to an organization like that. I’d argue that this is really a violation of our right to free association.
Also, the whole thing about political contributions is insane. Unions campaign for democrats and against republicans, and spend millions to do so. That you can designate “your dues won’t be used for political activity” is blatant nonsense. Your money goes to the union, and into their coffers. They spend millions upon millions acting directly against your political interests and values. So, that’s cured by saying “well, it wasn’t your money we spent on that. Your money was spent on XYZ.” Complete nonsense.
Unions are, for all practical purposes, criminal organizations, and they should be treated as such.
Seems like a pretty clear conflict of interests as well. They “bargain” with politicians and bureaucrats… but they also give them gobs of money. The public sector unions and the teachers unions are some of the largest donors, and we’re supposed to believe that these “negotiations” are fair and honest? They buy politicians and actively seek to destroy any politicians who they cannot buy.
While it can be argued that there might be some sensibility to (non-forced) private-sector unionization, the idea of public-sector unionization is utterly batty. On one side, you have the powerful and organized unions. On the other side, you have virtually unrepresented and entirely disorganized taxpayers. That’s not to mention the organizations that are so badly damaged on account of unions. As I’ve repeated many times before, the primary function of unions is to protect bad workers. They virtually ensure that jobs done by government workers are done as poorly as possible, and that there cannot and will not be any accountability of the sort that allows our private sector to be efficient and provide valuable services.
You could relocate your plant to Texas. Yes, it’s hot in the summer, but it’s great fall, winter and spring. And there is lots of history here, too. New stuff to see and learn.
Seawriter
It may depend on industry, and I haven’t looked into this for 16 or so years, but I thought there was the option of sending those forced ”dues” to a charity instead?
Whoever the consultants were who advised the UAW about Canton took them for a ride. Bernie Sanders? In the South? I could have told them they were going to lose before they started, and saved them a lot of money. On the other hand, that’s money they can’t donate to Democrats.
On an episode of Firing Line Bill Buckley Jr. remarked that workers may prefer union membership to protect themselves from “arbitrary treatment.” As a retired, after over thirty five years service, railway worker I can attest to that. Union representation brings in the concept of due process for an employee accused of any impropriety that may result in discipline from reprimand, demerits, suspension or dismissal.
It has been my experience that managers will try to cover up their own mistakes or incompetence by scapegoating an underling. For example as railway clerk I was accused of making a mistake that publicly embarrassed the corporation. I demonstrated that I had followed the policy and procedures mandated by senior management to the letter and if this caused embarrassment the fault was due to those in the executive suites at H.Q. Having a union that would pursue a grievance to the Office of Railway Arbitration, making it a matter of public record, dissuaded management from pursuing the matter further but to amending the policy.
As a melanin, estrogen and conjugal challenged person union representation was particularly useful to me when due to a reduction in the volume of business, technological or organizational changes created staff redundancies. Collective agreements mandate that senior qualified employees will be retained to fill remaining positions, not by racial, gender or ethnic quotas. Anyone familiar with the railway business will know that fewer and fewer employees are needed despite increased voulume of business.
Paying union dues, in my opinion, is an invaluable investment for a working person just as for doctors, lawyers, engineers who pay dues to professional organizations. As for the Nissan employees in Canton MS who rejected joining the UAW that is fine too and good luck with that.
Well, I don’t have a union shop, thankfully, the tech industry here is fairly immune to it. But the unions have a chokehold on state governments, police departments, and all heavy industry.
I got my first job in 1976, and not one time in my entire career, so far, did anything like that happen to me. Did you ever stop to think that it was because you were in Unions that all those things kept happening?
I’ve been in construction, in various capacities, my entire working life, which is approaching 45 years now. I have never, ever, even once felt like I was being exploited by my employer. But then, I don’t think my employers ever felt like I was exploiting them, either.
I was gonna say, “Bernie Sanders, Tom Perez, and Hollywood celebrities? There’s your problem right there.”
Lol. I didn’t want to get bogged down.
I think it depends on a lot of factors. I’ve had a couple jobs that were unionized and the compensation tended to be better than I would’ve tried to get for myself. However at those times I was also more interested in finding/changing a new job. Now with more time to prepare I’d put more consideration into the decision of getting a new job.
I’m sorry if I giggle at that monstrous line.
I was plant engineer for a factory in South Gate, California back in the early 90’s that voted against unionizing. We had two local factories, a well-established and ILWU organized factory in Wilmington, California and this one in South Gate. We had to be very careful not to allow the employees to intermingle. The ILWU has quite a reputation for violence and the business agent for the union was a card carrying communist.
What really astounded me was how the unions were allowed to be violent and everyone knew that they were. The police didn’t care. Caltrops were tossed out to destroy tires, fires were set, and the same people we worked with day in and day out became very dangerous to life and limb when they went on their tri-annual strike.
Perhaps these good people of Mississippi just don’t like thugs.
I started out my life anti-union, but later became lukewarm pro-labor-union. One of the reasons I continue to be pro-labor-union is that if it’s OK for capital to unionize, it should be OK for labor to unionize, too. Epstein’s article is a good one that points to the limits of what legitimate unions can accomplish.
However, public employee “unions” are an abomination and should be outlawed.
But it would be nice if unions weren’t allowed to threaten and intimidate families.
All union members, especially public-employee unions, should be reminded monthly how much the high officers of their union get paid. If they are curious about where their dues money goes, point out to them that their “leaders” are paid millions of dollars a year. Then compare that to what they earn. Also point out to them that the union leaders hobnob with the very politicians who they “negotiate” with.
Personally, I believe that the ILWU needs to be broken, right now. They are a menace, and they alone hold back vast improvements to the logistics of most goods entering the US. I’d be willing to give up my holiday trinkets for the cause.
That’s your choice. Those who disagree should also have that choice. As long as the unions work to take that choice away, I shall remain anti-union.
Definitely. Both labor and capital unions.
At my last check, companies don’t send thugs to personal residences to threaten workers. Unions do.
He is also an unconvicted felon many times over, particular his activity with Carey Teamsters election. Trumka must be ancient Persian for Loathsome
Did you see what Google did to one of its employees this week? And the big mega-agricultural firms (the kind that would give us Jeb!) are known for being ruthless in going after critics. And back in the days before labor unions, companies would use the means of intimidation available to them.
What Google did was reprehensible, but Skyler was talking about violent intimidation.
Yeah, but according to Google (and SJWs) words are violence.
Seawriter
He said “threaten and intimidate.” That’s what I responded to. If he then wants to change the rules, that’s a different game.
I was talking about people who set fires, deploy caltrops, and threaten people in their homes (not with mean insults, but with violence). I’m not going to play silly debating rules with you. My meaning was clear.