Bargaining, How It Really Works

Unions bargain for their workers. One thing not really appreciated is the theory of how this is done. Normally the two sides sit down and reach a compromise. In today’s world it is a little different.

When a union sits down to the bargaining table, it is on this premise, “What’s mine is mine, and what’s yours, is up for negotiation. It’s a little like watching a foreigner haggle over the price for a basket of strawberries. Once they settle on price, the customer proceeds to cherry pick the strawberries that go in the basket they are buying—nothing but the biggest and the most colorful.

Many of the best union deals that could have been made are now coming apart. Retirement benefits seem to be a common denominator. In all of the bargaining in the past, the threat of a strike got concessions from management. Now, it looks like thing have changed somewhat. Hostess Brands decides to go into bankruptcy liquidation rather than deal with unions that had it all their way. It’s kind of humorous to watch unions balk at wage cuts. Their reasoning, “Why should the worker have to pay for the screw-ups of management?” Or, “We need a decent working wage.” The union got deal after deal and management was the frog in the pan of water on the stove, getting hotter and hotter. Management acquiesced too many times and all it took was a bad economy, to see how bad the deal was. Any way you look at it, the union leaders look like Ding Dongs and there will be no Ho Ho’s this Christmas. Of course, the Twinkie murder defense will be a thing of the past.

Illinois and California will be the poster children of the new state governments that claim, “We can have it all.” State governments haven’t figured out one simply principle. Raising tax rates does not in turn increase tax revenues. It only implies more revenue. It does however determine where and when people choose to spend their dollars. Can the consumer justify a new car every 5 years when the sales tax is 10 percent?-- Maybe now it will be every 8 years. A company car instead of a wage increase?-- The list goes on.

During the Great Depression many localities raised taxes and all they got were the taxpayer’s keys to their home. Increased taxes were the last straw. Of course it will be different this time. At times I wonder, are we smarter than those people back in the 1930’s or incredibly more stupid? The jury is still out on this one.

The real drain for the states will be retirement funds for state workers, and of course we aren’t even discussing the Federal programs of Social Security, and Medicare.

The California State retirement fund (CalPER's), among others, can only pay 65 cents on the dollar in benefits to everyone in the plan. The way the legislature looks at it is, everyone gets full benefits for the next 10 years and then we have a problem.

FDR even said that government employees should never be unionized, and they are now. Business profits determine if a pay raise is warranted. In a government job, the guiding hand of profits is not there to determine a realistic wage. What our state governments have contracted us to pay as benefits, border on the absurd in some cases. The unions took advantage of our political system, to get benefits that could never be realistically paid on a long term basis. Where does it go from here?

Hostess Brands had a slow death. They couldn’t make a profit and the company folded. In good times the unions asked for more and always got it. This time they asked for more, thinking it was a poker game they could bluff their way through. How many of those 18,000 employees will even find a job? Of those that do, what will be their starting wage?

It’s time for the taxpayers to realize that they have been ripped by these government unions on a more intense level than private industry. We need state employees that will be underpaid and with training, will find better jobs in the private sector. Government is inherently inefficient, let’s reward this inefficiency with lousy wages and low retirement plans.

Where I grew up as a kid, we had volunteer firemen with no 100k retirement plans at age 50. The argument isn’t over whether or not these firemen or police or teachers are worthy of these wages, the argument is over whether or not we can justifiably pay private sector rates for jobs that could be filled for one third of their present cost. There is no problem filling the jobs, it’s the turnover rate that has to be dealt with, that is the trade-off with higher wages. Government unions always want more, Ronald Regan once said no, and meant it.

Of course in California, who runs the government, the unions or the legislature? Do you get the feeling that the unions can run the state into the ground? Of course, maybe they already have, and are keeping quiet--no need to panic anyone.




Copyright 2012 by Jim Brubaker