Items in the news: Three examples of labor unions behaving badly

By James H. Shott

Private sector labor unions have all-time low membership, which results from the fact that workers see a relatively low value in belonging to a union. Despite the lack of necessity for their continued efforts on the part of employees, unions nevertheless continue interceding to “improve” conditions that are already good enough for the vast majority of workers, a condition which threatens the continued existence of unions and thus threatens their leaders’ political influence and high pay levels.

The total compensation of some labor leaders places them firmly among President Barack Obama’s 1 percent of people making more than the $250,000 threshold that he believes should pay higher taxes, such as: AFL-CIO President Richard Trumka – $293,750; United Food and Commercial Workers President Joseph Hansen – $361,124; National Education Association President Dennis Van Roekel – $460,060; and American Federation of State, County & Municipal Employees President Gerald McEntee – $512,489.

In our still mostly-free country, if workers want to join a union they certainly may do so. But when you look closely, you see much union activity that does more harm than good, except for the relatively few workers that gain excessive benefits that hurt the businesses they work for and, of course, union leadership and the politicians with whom they are incestuously involved.

In one example from Thanksgiving week, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union was a party in a dispute that resulted in the closing of Hostess Brands, an 85 year-old company that made Wonder Bread, Twinkies, and 28 other products.

The company had 372 separate bargaining contracts for workers, 42 multiemployer pension plans, 5,500 separate delivery routes and a vast production system.

Hostess has had financial problems for several years and had previously gotten concessions from the 12 different unions that represent its workers, but in this last round the Bakery Workers, which represents about 5,000 employees, refused concessions, even after management said if concessions were not accepted, the company would shut down.

The union claims that vulture capitalists sucked out hundreds of millions of dollars by leveraging up the company, and that management had given itself millions in pay raises while demanding worker cuts.

Actually, Ripplewood Holdings injected $150 million in three rounds of investment as the company’s troubles grew, and lost every dollar. The raises were a tiny portion of the company’s losses of nearly $500,000,000 in two years, but Ripplewood rescinded the raises and made each executive work for a dollar per year.

Hostess paid out almost $100 million in health benefits for retirees last year, but over half of it covered workers who never had worked at Hostess. You see, the Teamsters’ “multi-employer pension plan” transfers the pension obligations of a bankrupt company to surviving rivals, speeding up the collapse of troubled companies.

Union rules designed to create more union jobs forced Hostess to run separate truck fleets for delivering bread and its sweet products. Instead of one driver delivering to each of Hostess’ thousands of customers, union rules required two, one for sweets and one for bread. Union restrictions on distribution routes made it unprofitable to serve tiny outlets, yet the union barred Hostess from using non-union distributors.

Workers were asked to take an 8 percent pay cut and pay 17 percent of their health-care costs, like most other workers do, instead of zero. In return, the union would have received 25 percent ownership of Hostess plus $100 million of debt to be paid back to the unions.

Instead, the union made a decision that closed the company, and nearly 18,500 workers will lose their jobs as the company shuts 33 bakeries and 565 distribution centers, and 570 outlet stores.

And then there is the Service Employees International Union (SEIU) that was voted out at Aviation Safeguards at Los Angeles International Airport by company workers who wanted out of the SEIU. In response the union brought in 1,000 members who weren’t employees of the company to block entrances to the airport, inconveniencing hundreds of innocent travelers.

“We petitioned to leave the SEIU almost a year ago, and the contract ended,” Frederick McNeil of Aviation Safeguards said. “And now they’re bringing in outsiders to block travelers who are just trying to get home for the holidays. It’s ridiculous.”

The United Food and Commercial Workers organized Black Friday protests against Wal-Mart, and the National Labor Relations Board refused to respond in a timely manner to a Nov. 17 Wal-Mart petition to prohibit the protest, saying the request would be dealt with the week after Thanksgiving.

Relatively few Wal-Mart employees participated, and one protester carried a sign that said: “I’m getting paid $5.50 an hour by the union to protest Wal-Mart paying $9.50 an hour.”

In the 1920s renowned union leader Samuel Gompers was asked what organized labor wanted, and reportedly answered, “More,” a philosophy that endures today. Unions raise employee costs beyond the competitive level, increasing prices to consumers and putting negative economic pressure on businesses. If unions are to survive, they must cease being enemies of business and become partners with them, working for the mutual success of companies and their workers.

Cross-posted from Observations

Will a unionized hospital provide better care for local patients?

Commentary by James H. Shott

A recent news article focused on a possible labor union drive at Bluefield Regional Medical Center, but furnished few details. That’s because neither the hospital nor the union(s) were talking.

It is difficult to imagine that unionizing any of BRMC’s departments will help its patients, and there is evidence that unionized hospitals not infrequently have serious problems. This cloak of secrecy does nothing to answer the public’s questions about what is going on.

Labor unions are not inherently bad. They were once the major factor in balancing the employee/employer relationship at a time when workers were often treated badly. However, since government stepped in and enacted laws regulating the workplace, there isn’t much for unions to do along those lines. Instead, they now negotiate benefits for workers, like higher wages, shorter hours, and worker-friendly work rules.

Union members know how to do their jobs, but the unions to which they belong know very little about running the businesses in which they organize workers, or just aren’t concerned about it. They could be valuable partners in those businesses, contributing to the success of the organization so that everyone benefits, but they seldom are. Most often they are adversaries of management, instead. Thus when unions negotiate perks for their members, businesses must make changes to accommodate these perks that inevitably increase the company’s costs and modes of operation, making the business less efficient and less competitive against non-unionized companies.

Some of the most damaging aspects of a union workforce are the work rules unions insist on, many of which defy common sense and good management practices. Some examples:

1) A repair crew that consisted of an electrician, a plumber/pipefitter, a carpenter and a crew leader were controlled by a work rule dictating that if the crew was sent on a job that had an electrical problem, for example, only the electrician could work on it. If he needed help, for even the most basic forms of assistance not requiring specialized knowledge or training, a second repair crew had to be called in, meaning that eight people were on a job that required only one electrician and someone to assist, and perhaps a crew leader.

2) A common problem is that when layoffs become necessary work rules that determine who gets laid off and who doesn’t favor seniority. It’s not about who does the best work, but who’s had the job the longest.

3) One work rule required all members of an 18-person crew to be present before the crew could work. If one person called in sick the crew couldn’t work, but still got paid. This rule allowed – even encouraged – abuse, and crew members set up a revolving schedule to call in sick.

Private sector union membership has fallen dramatically, from 24 percent in 1973 to less than 7 percent in 2011. However, union membership in hospitals has increased by nearly one-third in the last decade. Along with the increased membership is a huge increase in hospital strikes. The Federal Mediation and Conciliation Service reports that from 2009 to 2010 hospital strikes increased by 70 percent and from 2010 to 2011 that number rose by an additional 73 percent, producing an increase in the number of strike days from less than 800 days in 2009 to more than 1,000 days last year.

What does a hospital do when caregivers walk out? It hires temporary caregivers, and these people are unfamiliar not only with current patients, some of whom are critically ill, but also hospital procedures. In the case of a California strike 23,000 hospital workers walked out. Is it possible to hire 23,000 replacement workers on short notice without at the very least a high potential for mistakes? Did all of those replacements have the same or higher skill level as the strikers?

An article by Capital Research Center’s Matthew Vadum reports: “A major 30-year study found that strikes are, in fact, deadly. Jonathan Gruber of MIT and Samuel Kleiner of Carnegie Mellon University studied strikes by New York State nurses between 1984 and 2004. After controlling for factors like patient demographics and disease severity, they found that ‘nurse’s strikes increase in-hospital mortality by 19.4 percent and 30-day readmission by 6.5 percent for patients admitted during a strike.’”

“Strikes are extremely costly,” he went on to say. “Hospitals must pay replacement nurses and additional security, while losing business, as patients opt for other hospitals. Last year’s strike by 600 D.C. nurses, for example, cost the hospital $6 million.” Commenting on a strike by 12,000 Minnesota nurses, he said it cost “about $46 million for substitute nurses,” almost half of which was for a day of mandatory orientation.

Once ensconced, unions pursue their own narrow goals, while employers are often held hostage to demands that are one-sided and often excessive. In the case of a hospital, this scenario has little potential for a positive result.

At the very least we can expect a successful union drive at BRMC to increase costs, and therefore requests for rate increases.

And if the union drive is successful at BRMC, it is likely that unions will attempt to organize other regional facilities.

Cross-posted from Observations

What is Wal-Mart’s Responsibility in the Death of Jdimytai Damour?

Jdimytai Damour, a temporary worker, was trampled to death by crazed shoppers on Black Friday at the Wal-Mart in store on Long Island, N.Y. Should Wal-Mart have had better crowd control? Local police and a lawyer for the worker's family say “Yes!”

According to the Wall Street Journal, the personal-injury attorney hired by Mr. Damour’s sisters, Jordan Hecht, said that Wal-Mart did not have enough security guards and the staff was not property trained.

Although Wal-Mart is defending its policies, a lawsuit may be filed against Wal-Mart and “possibly other parties” after Mr. Hecht reviews the police reports.

The Wall Street Journal also reports that Wal-Mart’s liability may be limited.

Mr. Damour was hired through a temporary-employment agency; if he is deemed to be a Wal-Mart employee, the retailer's liability may be limited under New York state's worker-compensation laws, Mr. Hecht said.

Wal-Mart claims it took extra precautions in preparation for Black Friday by hiring third-party security guards, setting up barricades, and having extra staff on hand. However Lt. Kevin Smith, “head of the county’s public-information office,” admits that:

“We went above and beyond the call of duty," Lt. Smith said. "Our jobs are not to act as Wal-Mart's security guards. It did not appear that there were enough security guards visible."

The Wall Street Journal compared Wal-Mart’s insufficient preparation to that of Best Buy Co. which controls shoppers by roping off areas to place shoppers in single file lines. Additionally, Best Buy Co. has advanced employee drills and uses employees to defuse tension with the shoppers and to had out hot product tickets before the doors open.

The Oragonian Editorial Board called Damour’s death “A preventable death at Wal-Mart,” and placed the blame squarely on Wal-Mart’s shoulders.

The editorial states that the mob may have crushed Damour but “the retail giant that laid the man at the mob's feet.”

The Oragonian editorial claims that Wal-Mart “continues to cut corners in ways that hurt workers” and that Damour’s store had “the bare minimum of extra security on Black Friday.”

While commending Wal-Mart for going greener, for working closely with local communities, and for donating $275,000 to the Oregon Food Bank, the editorial slaps Wal-Mart for continuing to get it wrong with its workers.

This is hardly the first time Wal-Mart put workers last to save a few bucks. The company has faced numerous sanctions for worker-related violations, including prohibiting workers from taking breaks and compelling them to work off the clock.

An excellent opinion article by Paul Bright in Digital Journal offers an insight into the corporate mentality that brought about this horrible tragedy.

After the scene was over, Wal-Mart, obviously hurting for dollars, re-opened the store to continue pushing our capitalist society into the black. And we cry that our economy is slowing down? Who slowed down for Damour?

Originally published in Digital Journal by Barbara Sowell

Technorati Tags: Wal-Mart,Jdimytai Damour,shoppers,Black Friday,lawsuit,liability,workers,New York,worker-compensation laws

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