Saturday, August 20, 2005

Labor, Strikes, and the death of Unions

It's all coming together now, and it's all thanks to Northwest Airlines.

I grew up in Minnesota--home to Northwest Airlines. Today marks the beginning of a strike by Northwest Union Mechanics and other ground-crew type positions. The airline (along with its competitors) has been having profitability problems for a while now--it has lost billions of dollars since 2000. Recognizing that something isn't working, it's been reducing costs through elimination of the vital in-flight peanuts and the less vital in-flight meals. Northwest has been in negotiations with it's pilots' union, flight attendents' union, and mechanics unions for a long time to reduce wages in order to keep the company out of bankruptcy.

It worked with the pilots and flight attendants. They've accepted significant pay-cuts in order to help maintain their jobs. This morning's news shows that the talks with the Mechanic's union were somewhat less productive.

I'm not unsympathetic to the position of most unions and their workers; they are in the business of getting the best deal they can for their members. OK. I'm generally unsympathetic to board-rooms of businesses that gouge both employees and customers to drive up executive bonuses.

I'm guessing Northwest has a typically over-large bonus/golden parachute system for it's executives. But that doesn't mean that I'm going to give the mechanic's union a skate on this one either. And there are a lot of reasons for this.

Mechanics at Northwest earn $36.39 an hour, according to the New York Times article. I'm not sure how many hours they work a year, but assuming 40 hours a week, 2 weeks vacation, and no overtime, that comes out to $72,780 a year. I've known a few Northwest Mechanics, and I know they tend to get their fare share of overtime.

Unions started to ensure that their workers weren't getting exploited by the "captains of industry." I can see that, agree with it, and support it. Unions have been really good at doing this. So good in fact, that the wages paid Northwest Mechanics is about twice the average income in the United States.

If this was a strike being taken on issues of exploitation I'd be behind it. If it was undertaken because of unfair labor or wage practices within the company or within the industry, I'd be supportive. But it seems to me that the mechanics union is striking out of spite. Out of a short-sighted assumption that what they are doing is good for them and good for those around them.

It's not.

This is why.

Northwest airlines is in a lot of trouble. Maybe it's because of a "post-September 11th-slump" in travel; maybe it's because of rising oil prices, or higher gate fees at airports. Maybe it's because of increased costs due to security practices. And just maybe it's because the airlines continue to hire and pay executives who may or may not be particularly good at what they're managing.

But paying a mechanic a minimum of $73,000 a year to fix and maintain plains certainly will go a long way to eroding profitability. I don't begrudge the mechanics their salary if the company is staying afloat. But Northwest (and the rest of the industry) isn't. So labor and management need to figure out a new way to run the company. Whether the union likes it or not, lower wages are an almost inevitable part of that.

What really gets me going on this, though, is how many other jobs in Minnesota (and I'm guessing Detroit and Memphis, though I have no knowledge of those regions) are tied in one way or another to Northwest. I'm not talking about the obvious jobs of people who work at the MSP airport (which is probably 70% NWA), but people who work at Cargill, 3M, General Mills, Medtronic, Honeywell, Boston Scientific, Best Buy, and Target. All corporations who employ a huge number of people, many of whom frequently travel for business. If Minneapolis lost easy air-connection to the rest of the country, I'm guessing many of those companies would consider moving many, if not all, of their positions to new locations.

Let's not forget the international angle. Minnesota has some of the best connections with China, Japan, and Korea of any state in the U.S. Not because we have a particularly large asian-american population, but because we have excellent transportation. As an example, I could leave my home in suburban St. Paul, and 17 hours later be checked into my hotel in Tokyo relaxing on a bed and watching CNN international. Tack on 4 hours and I could be sitting at a restaurant in Hong Kong trying to let my body sort out what time it is. It's even faster on the way back to the states--it takes as long to fly Beijing to Minneapolis as it does to drive Bozeman to Minneapolis.

This might sound like a long time, but I say from experience, not having to transfer airports, or having to do so as little as possible, makes international travel a great deal easier. It can reduce travel-time from 24-30 hours down to the 15-17 I'm talking about.

So, for NWA mechanics to strike over their unwillingness to take a pay-cut to preserve their jobs, albeit at a lower wage, is not only short-sighted, but it's also selfish. It's actions and attitudes like this that are eroding support for Unions throughout the country. These are not the same kind of issues as those that cuased the Pullman strikes in the 1890s.

If mechanics have a problem with their wages, or how their wages compare to exec's wages, find ways to bring it to public (and stockholder) attention. Find ways to show how the company is being mismanaged. I'll be 100% behind these efforts. But don't play Russian roullette with the economy of an entire state just because you're not willing to give up a little bit of what most Americans don't even have.

(This will probably be even more striking to my international readers, and trust me, the irony of "protecting" workers who make in 3 hours what the average Chinese makes in a month is not lost on me.)

1 comment:

Mingli said...

john,

brian showed me this and I like to read it. Maybe when I finish college i will understand more. Brian told me your greetings to my family. You are the teacher who came and left and gave us much to remember. Come back to China and you will always be our chinahand.

Huai Mingli