Most people know I'm not a big fan of unions. I think unions have their place in certain industries where there is a monopoly by the owners; the sports industry is one of the few examples I can really think of, education is another. But overall, I think unions just don't make a lot of economic sense.
Whenever you deal with a group, you are going to get a wide spectrum of talent. You are going to get high, average, and low performers. Unions ensure a set wage structure with little latitude for performance based differences. That means if you are capable of doing twice the work of someone else, you will still get paid exactly the same. This of course builds in an incentive to do as little as possible, why strain yourself if there is no incentive to? As a diligent and hard worker, I want the ability to negotiate my own wage.
Union membership has been on the decline. In 2004, 12.5% of Americans belonged to a union. An even smaller percentage, 7.9%, if you count those workers in the private sector. The latest strike by a large union is happening now. The mechanics of Northwest have refused to accept a 25% wage cut and have gone on strike. Northwest in turn has hired replacement workers to fill the void. They seem to be doing the job. This past weekend, Northwest flew 98% of its schedule. Many of the Northwest mechanics have expressed surprise that Northwest was able to fly as many flights as they have been able to.
This is the new age of labor economics where companies are playing hardball with their employees. Employees are quickly finding out just how replaceable they are. Look at some of the major strikes in the past few years. The NBA had its players, all millionaires, crawling back in 1999. More recently, the NHL absolutely crushed its union and got major concessions. If you don't care about the problems of millionaires there are the examples of the California Supermarket Strike or the Catepillar strike in 1995. In each case, the owners played hard and refused to back down and each time the "workers" caved in and gave back major concessions.
Almost all employees have an over inflated sense of how important they are to the company's bottom line. However, as several examples have shown (some personal to myself), companies are finding it easier and easier to replace their workers. Is this shift of power toward employers permanent? Given the fluidity of today's workforce, the erosion of loyalty (both by companies and their employees) and the decreasing expectation of lifetime employment, I think labor is in for a tough battle.