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Those Darn Market Conditions Again

Unions are just about everyone’s whipping boys today.  Public sector unions have been under assault in Wisconsin and Ohio in particular, and now Indiana has passed legislation designed to weaken the ability of unions to organize and represent workers.  Republicans in Congress have tried to undermine the ability of the National Labor Relations Board to do its work by refusing to confirm nominees to the Board.  Mayors, wielding the leverage of fiscal woes brought on both by the recession and by years of irresponsible budgeting by their predecessors, are using bare knuckle tactics to threaten unions into concession after concession.  Public school teachers’ unions may be the biggest target of all, blamed for everything from busted budgets to incompetence in the classroom.

Many employers, both public and private, don’t like unions.  While they often cite union abuses as reasons for their anti-union bias – and, yes, abuses do exist in unions as in every other part of our economic system – the real reason is that unions help ensure that workers share fairly in corporate profits, are protected from on the job abuse and, in the case of public employee unions, are shielded from the shifting winds of electoral politics.  Corporate boards can’t siphon off as much of the profits for themselves and their shareholders (often the same people), and mayors can’t be quite as dictatorial as they’d like to be.  Unions provide some counter balance in an inherently imbalanced system.  Is anyone really surprised by the fact that the recent decades that have seen dramatic erosion in union membership have also been decades of wage stagnation and growing income inequality?

Even unions can’t always protect workers from profit driven decisions.  A little piece in Saturday’s business section of The New York Times is a case in point.  Just a month after locking out its unionized employees, the corporate behemoth Caterpillar announced that it was closing a plant in Canada that makes locomotives, and that it was transferring the work to a recently opened plant in Indiana and to a projected plant in Brazil.  When Caterpillar purchased the company that operated this plant in 2010 it opened negotiations with the union demanding wage cuts of nearly 50%, and steep reductions in benefits and pensions.  Observers in Canada noted at the time that these concessions were well outside the norm for Canadian contract negotiations.  When negotiations failed, as Caterpillar likely intended, the workers were locked out, and within a month the plant shuttered.  Six hundred and seventy people have lost their jobs.

The minister of labor for the province of Ontario made repeated efforts to mediate the dispute, but noted in the end that “Caterpillar made very little effort to work out a fair and balanced deal for the workers.”  While the union had been told repeatedly by Caterpillar that it had no intention of shutting down the plant, events suggest that this was the plan all along.  Caterpillar, of course, expressed regret and suggested that the union’s unwillingness to make concessions was the reason for the plant’s demise – “market conditions dictate that the company take this step.”  Clearly the Canadian plant, described by the Caterpillar subsidiary as a “state of the art plant,” was too costly when compared to the labor environment in Indiana and Brazil.

But let’s be clear.  Market conditions didn’t make this decision.  Corporate leadership made this decision.  Any hand wringing they might display over the plight of 670 unemployed workers is put in serious doubt by Caterpillar’s reported fourth quarter profits in 2011 which rose by 60% to $1.55 billion. “Sorry dear folk in London, Canada, your plant may have been state of the art, and we may be seeing our earnings go up dramatically, but we’re sharing too much of those profits with you.  Either dramatically scale back your blue collar standard of living, or your jobs are headed to Indiana and Brazil.”

Most employers like to think of themselves as benevolent folk who care about their employees, and there are many places where that’s true.  In today’s global economy, however, few in the corporate suites have a clue about what the life of a fifty year old woman on the assembly line is really all about.  Corporate executives answer to their boards, not to their workers, and it’s the height of naiveté to think that workers don’t need the protection of collective bargaining and work rules to ensure that they are decently paid and not abused.  I recently saw a bumper sticker that read, “Unions – the people who brought you weekends.”  Weekends weren’t the result of a corporation’s reading of market conditions.  They were the result of the power of organized labor to push corporations to do the right thing.

Almost 100 years after it was issued, The Program of Social Reconstruction issued in 1919 by Catholic bishops in the United States remains remarkably relevant:

“The capitalist must likewise get a new viewpoint.  He needs to learn the long-forgotten truth that wealth is stewardship, that profit-making is not the basic justification of business enterprise, and that there are such things as fair profits, fair interest, and fair prices.  Above all, he must cultivate and strengthen within his mind the truth. . . that the laborer is a human being, not merely an instrument of production; and that the laborer’s right to a decent livelihood is the first moral charge upon industry.”

It would be nice to think that corporate leaders would get this all on their own.  Nearly a century later there is good evidence to suggest that this is not the case.  It certainly doesn’t seem to be the case in London, Ontario or in LaGrange, Illinois where the Caterpillar subsidiary that owns the soon to be defunct plant is headquartered.  Workers need bishops appealing to the good conscience of their employers.  But they also need unions who can remind them of consequences when a good conscience fails in the face of those proverbial “market conditions.”

John H. Thomas

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