I often hear conservatives say that labor unions’ time has passed and that they were good once, but are not needed any longer. I personally think that labor unions are still needed and will make a comeback in the 21st century and here is why:
1). Corporate profit margins have reached an all time high. Companies are making more per dollar of sales than they ever have before.
2). Wages as a percent of the economy are at an all time low. One reason companies are so profitable is that they are paying workers less than they ever have before.
When presented with these facts, most conservatives invoke one of two arguments. First: technology is making workers irrelevant. Second: low- skill jobs command low pay. Both of these arguments miss key points: technology has been making some jobs obsolete for 200+ years, but it is only recently that corporate profit margins have gone through the roof. Just because employers can pay workers so little that they live in poverty doesn’t mean they should – especially when retention is often a problem and their profit margin is extraordinarily high.
More broadly, what’s wrong is an obsession with a narrow view of “shareholder value” which has led companies to put “maximizing current earnings growth” ahead of another critical priority in a healthy economy: investing in human and physical capital and future growth. If American companies were willing to trade off a small amount of their current earnings growth to make investments in wage increases and hiring, American workers would have more money to spend. And as American workers spent more, the economy would begin to grow quickly, and the growing economy would help the companies grow more quickly.
But, instead U.S. companies have become so obsessed with generating near-term profits that they’re paying workers less, cutting capital investments, and under investing in future growth. This may help their shareholders get richer, but it doesn’t make the economy healthier. Ultimately, as with any ecosystem that gets out of whack, it’s bad for the whole ecosystem.
Ideally, we would fix it by getting companies to voluntarily share more of their wealth with their employees. But the “shareholder value” religion has been so embraced that any suggestion of voluntary sharing is viewed as heresy.
I’ve heard all the responses: “the only duty of a company is to produce profit for it’s owners!” “If workers want more money, they should start their own company!” Etc. Beyond basic fairness and the team spirit of we’re all in this together, what these responses lack is any appreciation of the value of personal loyalty, retention, and pride in the workforce.
It would be great if companies would start sharing their wealth voluntarily. But that isn’t going to happen. So if companies can’t be persuaded to do this on their own, then many workers need to rethink their views of labor unions.
Healthy capitalism is not about “maximizing near term profits.” It is about balancing the interests of several critical constituencies: shareholders, customers, workers, and the environment.
Labor unions allow workers to have a say so in their workplace.
If American workers want a slice of the pie, we must organize the un-organized!