NYC Subway Strike

It looks like the NYC Subway Strike may be over. I don't really take either side on the issue as I think both the city and the workers are wrong. Here's why.

I don't like unions but I also beleive they have a right to exist so long as it is a voluntary association. If a group of workers wants to strike to gain concessions in wages and benefits, I have no problem with that. My only beef with them is there fairly unrealistic expectation. An operator can expect to make on average in $63,000. Even in NYC that's a lot of money for relatively low-skilled work (Yes you can live in the city on that. I did with much less). They then want to insure that they can retire, with full benefits, at 55. Compare this with Private-sector employees and the gap is just huge.

However, I think Bloomberg's comment that the workers are being "selfish" is dead on; I just don't think that's a bad thing. People have to do what people have to do. If you believe you are not getting paid enough for your job, you need to be able to leave the job. The $1 million fine is pretty ridiculous. Forcing these workers to work because of some "public need" is just outrageous. Is it making it harder to live in the city? Yes. Is it hurting the city economically? Yes. But tough. If you are going to live in a city that depends so much on its public transportation, and then allow the operator of said system to unionize, then you run the risk of this exact thing happening. Nobody should be allowed to compel someone else to work just because they "need" them to. Slavery ended a long time ago.

I guess my big problem is (big surprise) the Federal government. The federal government mandates that workers are allowed to strike, and that employers can hire temporary workers to replace them. The problem is that the employer MUST take back the striking workers after the strike has ended. This is just stupid. If you want to strike you forefit your job. Why on earth should I take you back?

Of course labor loves this law but it is now backfiring in their face. Again, just another perfect example of what happens when government makes up illogical laws to try and "protect" a class of citizens. How did it backfire? Simple. NYC just made it illegal for public employees to strike. That is why they are now being fined $1 Million a day. That is why union leaders are facing criminal charges. They have made it illegal for someone to leave their job. Doesn't that scare anybody else?

You give government an inch, they will not only take a mile, they will take serveral miles.

Death of the Union?

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.