The Outsourcing Expert

UNIONS: Destroying Businesses From The Inside Out

Have Unions Warn Out Their Welcome?

Reading Time: 6:45 minutes

Right off the bat, this topic is sure to get some heat from the Kool-aid drinking Pro-Union employees.  It is hard to argue with facts though, as I will try to keep my bias opinion in some order here.  No promises.

I live in Toronto, Canada. It is full of union workers, from teachers to auto-workers, transit to waste disposal.  I have been asking myself this question for quite some time now; Do unions serve a beneficial purpose, and if so, for who?

The concept is great… Or is it?

While the 40-hour work week, overtime, child labour laws and improved working conditions are now common place because of union’s work in decades past, unions have now outlived their usefulness.  Their longtime stranglehold on once great, powerful companies like Ford & GM show what kind of damage they can do to a business.

There has been a declining trend of union memberships in years past due to unions becoming more bureaucratic & assisting in reducing workplace efficiency and employee freedoms as it relates to joining unions.  Now I have not spent a whole lot of time and effort in researching every single aspect of a union, but I feel I have enough evidence that they are hurting our economy and are no longer there to help the people.

One piece of evidence is the USA new Employee Free Choice Act (EFCA),which would eliminate the private ballot that currently exists for employees to vote on whether or not they want to join union.

The EFCA advocates obviously want to use peer pressure and intimidation tactics to swell the union ranks. Of course, increased union membership means more dues automatically deducted from employee paychecks and into the union’s pockets.

Some of these tactics are trying to make their ways into Canada as you read this.

As proven by our North American automotive industry, having a union workforce greatly reduces the company’s ability to compete with non-unionized companies.  The days where businesses had to pay a factory worker $30+/hour plus benefits and a great pension or face a union brought on strike, while still staying relevant and competitive is long gone.

That is just basic economy! You pay your employee $30/hour, and sell your product for $25000 while your competitor pays $15-18/hour for labour and sells their just as good (arguably better) product for $17,000 price point, something has got to give.

Some argue that Unions provide a higher quality work force than that of a non-union workforce. Paul S. Adler  professor of management and organization at the Marshall School of Business, University of Southern California has a different point of view than mine: “unionized firms are able to exercise greater selectivity in hiring, so they end up with a higher-quality workforce. Higher wages translate into lower turnover, which means less waste in recruiting, selecting, and training people to replace departed workers. Lower turnover, in turn, makes it economically rational for a firm to invest in worker training, which makes the workforce more productive.”

My Response to Paul:  What laws give a unionized company “greater selectivity” in hiring?  Higher wages do not mean a higher quality workforce. If that were true, you would see a bigger difference between a Loblaws worker and a local independent grocery store worker. I don’t know about you, but I do not.  Also, paying someone a higher wage is in no relation to the higher quality work force, it would be nice, but is simply not true.  The reason; people do not view a higher wage as anything more than “fair” (particularly since typically 80% or more of workers consider themselves to be in the top quarter of productivity), in which case they will not reciprocate a higher wage with higher work effort.   While it is true, a higher wage will result in less employee turnover, from my experience that does not mean a higher level of job satisfaction or morale in the lunchroom.  The last part of Paul’s statement I fully agree with. I do feel it is important for a company to minimize good employee turnover as much as they can, so that it makes sense to invest in training the worker and making them more productive.  But do we need a union to do that?

The incentive of paying your worker a fair wage, train them well and provide a good work environment for them is too great for most smart business owners to ignore. Why do employees have to dip into their pockets to pay a union to assist them in achieving something that both the workforce and the employers already know and accept?

The only reason a Toronto Transit Commission (TTC) toll booth employee makes $37,440/year, plus 3+weeks of vacations instead of what true market value determines the job is worth: $24,960 and 2-3 weeks of vacation, is because of two things: TTC is unionized, & the Canadian Government keeps bailing them out with more and more funding every year!  Do you think that would happen to a non-essential service? Not unless you are GM at the right place at the right time for some “bail out money”.

While people around the country are taking pay cuts, or not receiving any bonuses to help maintain the health of the companies they work for, union employees are striking for a higher wage and “better than the last time of negotiations” working conditions, all while enjoying the same or better wages while the businesses that they work for struggles.

Isn’t it ironic that the biggest advocates against outsourcing (a proven method of increased productivity and job creation by many accounts of creditable business professionals and industry leaders worldwide) is also one of the biggest problems in the workforce today?

If the unions were actually focused on helping their members, they wouldn’t be so close minded to all the options available. They would embrace change for the good of many, because after all, if the company goes out of business, what will those union officials do then?

Unions need to realize that the companies & workers that employ them must stay competitive in order to save those union jobs for years to come. To do that, union officials must not discount the benefits of outsourcing to help them with their goals.  In some cases this may mean job loss for few, but the benefits outweigh the negatives too much in this case; a more stable business & easier workload for employees.  While in many cases, outsourcing non-core tasks could actually increase the union’s membership by creating new jobs caused from potential expansion.

People need to stop looking at companies as “owing them”, and vice versa. Instead both parties should start looking at each other as mutual beneficial partners, eliminate the middle man (unions), and let economics work out what fair wage is, just like it dictates what purchase price is. If it isn’t broke, don’t fix it… that is unless you can make it much better than before. As we can all see from the rise and fall of many former corporate institutions, unions are not working anymore. Laws are now in place for employees and employers alike.  All we need to do now is reverse the brainwashing that goes on at those union meetings, and we might have a fighting chance at fixing this problem