General Motors, the largest automobile company on the planet, earned over $200 billion in revenue last year, but by December, had nearly $2 billion in net losses. Similarly, Ford Motor Company found itself in the red in 2006, bringing in roughly $160 billion while losing $12 billion overall. Why are such clearly profitable companies experiencing massive net losses? Labor unions.
There was a time when labor unions helped create an equal playing field for employees and their employers. Gross human rights violations and unfair labor practices required organized action on the part of employees to fight for life’s basic necessities. The days of thoughtless abuse inflicted by employers have long since passed, and today Americans enjoy better work conditions than ever before.
However, these archaic relics still linger and have transformed into an unrelenting plague upon American business, fighting tooth and nail to squeeze every dime they can from corporations. Labor unions, despite experiencing a decline in popularity, have shifted their focus from human rights issues to nitpicking details of wages and retirement plans, leaving many companies in the red.
After negotiations failed on Sept. 24, 73,000 members of the United Auto Workers union walked out of GM production plants and grabbed picket signs. Among other things, the union wanted GM to secure more jobs in America by reducing the amount of labor it outsourced, while also protecting wages and allowing thousands of part-time employees to be given full-time jobs. In addition, UAW negotiators aimed to increase funding for large retirement packages that have already been established. Meanwhile, GM continues to struggle with falling numbers and stiff competition. It only makes sense that if the UAW would like to have any jobs for its members, it would do everything in its power to guarantee the company stays afloat. Demanding higher wages, more positions and sustained pensions while GM continues to report negative earnings is detrimental to the success of the company, and shows just how outdated and greedy these unions have become.
Over a week later, on Oct. 10, a similar dispute was settled between the UAW and Chrysler. The company has also struggled to stay in the game, despite rising demands from unions. However, a contract similar to the one approved by GM was passed, ending the six-hour strike against Chrysler. The UAW also has its sights set on Ford, which has performed worse than any other American car manufacturer. The union remains confident it will get a third, nearly identical contract passed for Ford employees.
In comparison, Toyota, a Japanese car manufacturer, reported very similar revenue earnings as GM last year, but when the year ended, it had a net $15 billion in profit. The company turned a profit because it does not employ union workers, and thus is protected from the disruptions these unions impose on American manufacturers.
In addition to creating financial hardships for companies, labor unions also kill work ethic in their members. Because there is little incentive to work harder, employees slack off and do not perform to the best of their ability. These employees know their labor union will defend their job if they were fired, and will also pay the employee for a period of time until they find a new job. Clearly, unions create a lazier working class in America, while at the same time draining money out of would-be successful companies.
Employees need to stop depending on unions to negotiate defined benefit retirement plans and other monetary issues and begin planning for their own future. Retirement plans like 401(k)s and Individual Retirement Accounts offer private alternatives by allowing workers to choose how much they save for their future. Through direct investment, these plans eliminate the need for leechlike labor unions while protecting the profits of business. In addition, labor laws and regulations help safeguard workers from other kinds of abuse.
Unions are remnants of an important period in American history, but they have more than served their purpose. Unions greatly damage the profitability and jeopardize the survival of businesses. Workers need to take initiative, dump destructive unions and work to improve their own futures. If American industry hopes to compete with its Asian and European counterparts, huge changes need to be made to organized labor.
Can’t Blame the Unions
I think you’re ignoring a key issue: why the UAW would want to strike. This article was insensitive to the individual. Strikers in the UAW are middle-class workers trying to make a living, while their company is floundering and trying to cut off their benefits. All they wanted was job security. GM was trying to freeze the cost of living increases, among other measures to lower labor costs. If it weren’t for the union, some families might not be able to be sustained by the GM paycheck.
Unions Aren’t The ProblemThe Nexus printed one of the worst economic analyses I’ve read in years this week (“Bloated, Overdemaning [sic] UAW Suffocates American Auto Industry,” October 16). In this column, Jeff Dulgar suggests that the reason General Motors posted $2 billion in net losses last year was due to the fact that it pays employees a living wage. If only the workers would work for nothing, or accept substandard health care, Dulgar implies, then corporations could be as profitable as they are destined to be. Leaving aside the ridiculous notion that workers don’t deserve a fair share of the… Read more »