Updated: Thoughts about labor unions...

Two stories on annarbor.com recently caught my attention. Both centered around labor unions and the decision between job cuts or pay cuts. I am often surprised and dismayed by the decisions made by unions in this regard. An "all or nothing" mentality on both sides of the bargaining table is hurting our economy and endangering the jobs of many.

According to an article by Ryan Stanton,
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"Firefighters union president Matt Schroeder said the fire department would prefer - instead of layoffs - to go the route of buyouts, like those offered to the police department earlier this year. But he said that hasn't been on the table in negotiations.
Schroeder said the city hasn't been open to any of the union's other ideas for avoiding layoffs. For instance, he said, firefighters are licensed as emergency medical technicians and could generate revenue by billing for health transportation services.
"We've really done our homework and attempted to come up with some ways to solve the problem with the city, but they're not open to any of those ideas that we've proposed," Schroeder said. "We've been met with some real resistance."
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It's heartening to see that the firefighter's union brought some alternative ideas to the table, but it's doubtful that enough cost savings would be realized to avoid layoffs, even if all of these ideas were implemented. For example, buyouts result in long-term savings, not the immediate savings that are needed to keep the budget in line. And billing for health transportation services could not be considered a consistent form of income for the city. 

But all of this boils down to the two options that were on the table. Either take pay cuts, or lose jobs. Which would you choose?

I work for a small company; we currently have only 13 people at our US operations. Knowing that this year would be especially tough, our management was forced to make some difficult choices. Truthfully, I believe their leadership this year was exemplary. From top to bottom, everyone was required to take two unpaid furlough days per month. With supervisor approval, the days could be taken any time of the employees choosing. Let me tell you, having every Friday afternoon off certainly took the sting out of the pay loss.

As my uncle explained to me, unions are very sensitive to pay cuts because of their structure. For a simplistic example, imagine a $5000 paycut was instituted. Because pay is negotiated at the bargaining table, it could take years for employees to return to the pay-grade prior to the cut. (I can certainly understand this concern; which is probably why I would not want to be involved in a union. I want my pay to be reflective of my performance, not a result of third-party bargaining.)

I suspect this is part of the reason why unions often choose layoffs over paycuts. Think about the purpose of unionization: workers band together to protect the group as a whole. It seems counter-intuitive that workers would choose individual interests over the interests of the whole group. Thinking about the example above, you begin to see how this is distorted, where layoffs become a better option for group interests than paycuts. So how do we change those dynamics? And if we did change the dynamics, would unions vote to preserve jobs over reduced pay or benefits?

In Michigan, labor unions are prevalent in much of our economy. It's easy to say "Down with the unions!" but it's not a viable solution to our current woes. We won't see the end of unions in the near future; they are a reality and we need to find a way to work together.

Additional comments: I do not know the details of the fireman's contract or what was being negotiated. My comments are general thoughts, not intended to make a specific example of the firemen.