The Truth About “Union Scale” Wages
In Today’s Issue: The Truth About “Union Scale” Wages
When a union targets your firm, it can quickly penetrate your uninformed people. It’s easy for them, because most people don’t know much about unions, and most of what they “know” isn’t really helpful.
Once a union is in, the process of getting rid of one is almost impossible. Unions create corporate survival pitfalls, so it is really important for your employees (and your first level leaders) to understand exactly how a union can impact a business BEFORE they are asked to sign a union card.
One thing people think they “know” about unions is that once a union comes into a company that all employees automatically start getting “union scale” wages and benefits. Most people are surprised to learn that outside of a narrow range of construction-industry area-wide agreements (and even there you’ll find lots of “exceptions” to the rules) there is no such thing as “union scale”.
Unions and companies negotiate wages, benefits and other “hard” labor costs on a case-by-case basis. And while there are labor contracts (like the old-line UAW contracts in the auto industry – more on that in a minute) where wages and benefits are higher than average, most first time labor contracts entered today do not achieve large increases over the wages and benefits in place BEFORE the union came in. In fact the average wage increase in union contracts is actually LOWER than the average increase in non-union companies today.
When an employer is forced to negotiate with a union – even if you assume that “hard” labor costs like wage rates and benefit payments stay steady – their “soft” costs of doing business increase dramatically. These “soft” costs include things like costs to pay attorneys or other professionals to negotiate contracts or handle arbitration cases.
There are also the “monitoring” costs of administering a labor contract. A lot of time is wasted (on both sides) just making sure everyone is following the contract and arguing about it when someone feels like it’s not being followed.
There are work rule restrictions that can make a company less competitive. And finally there is just the “pain in the rear” factor of always having to negotiate over every major change before you can do it – a lot of companies just throw up their hands and say “what’s the point?” while their non-union competitors just fly on by.
All these things can increase costs. And those costs either displace other things (investments in new technology or product development, for example) or they are passed on to consumers. This of course can cost companies business, creating an even bigger challenge. Few companies can remain competitive.
As a double whammy, many union contracts leave employers unable to reward talent based on merit. Unions like to negotiate pay is based on seniority. It places a roadblock for companies to attract the necessary expertise to remain competitive.
Just look at unionized companies like Chrysler. After receiving a part of $17.4 billion federal loan, Chrysler declares it needs more money. Chrysler is just barely making it.
As a method to gain expertise and offset high costs, Chrysler is seeking a pact with Fiat S.p.A in which this Italian automaker provides the needed engineering for new models for a return 35% stake. This allows Chrysler to utilize engineering expertise from other countries. Plenty of talented engineers live in the US. But its financial situation makes it impossible for Chrysler to employ local experts.
Even under the heavy publicized coverage Chrysler is in deep financial trouble, the UAW refused to accept a modified contract to make the facility competitive during a lean time. Magna International Inc relieved its union pressure by closing Chrysler’s Syracuse plant. Instead of lower, more competitive wages…now, there are no jobs and no wages for the workers.
In this competitive market, it can be easier for a firm to close or move than it is to deal with union pressure.
An ounce of prevention, can save your firms viability, and resilience to compete. Develop your first level leaders as the unsung heroes of your workforce. Train your leadership to inform employees about the truth concerning the impact of unionization.
Unions claim to offer employees a short-term gain (even that claim is wrong) but long term a union can suffocate your company and eliminate your employees livelihood. They need to know the facts about unions before they are approached to sign a union card.
To get simple to use DVD tool available to train your management on how to inform your employees …click here < you need to add your links here>
Train your employee leadership to communicate and inform employees on how union representation creates pitfalls in long-term employment.
To your success,