The Death of Organized Labor

To paraphrase uncle Friedrich: though its shadow will be shown for some time to come, organized labor is dead. In a hilarious fit of irony, it was killed by that most Marxist of reasons: evolving material conditions that affect the technology of production. That, specifically, is cheap transport of goods and even cheaper transport of capital. The whole thing was bound to unravel from the start anyway:

The implicit labor bargain for a good piece of the Twentieth Century was, as Robert Reich put it in The Work of Nations (way back in 1991 – how prescient is this guy?) “

First, the core American corporation would plan and implement the production of
a large volume of goods. The large volume would create significant
economies of scale, thus reducing the cost of producing each unit. By
coordinating with other core corporations, prices could be set high enough to
ensure substantial revenues. A large portion of the revenues would be
reinvested in new factories and machinery, but a significant share would go to
middle managers and production workers. Organized labor, in return, would
eschew strikes and work stoppages that would interfere with high volume
production. Both sides would refrain from setting prices and wages so high
as to spur inflation.” [p.67]

The problem with the bargain? It only works in a closed system. With the advent of containerized shipping, global capital transfer, and efficient air travel, the cost imperative to locate manufacturing anywhere in particular goes largely away. With a labor market spread worldwide, unskilled and semi-skilled labor in high cost-of living areas becomes totally untenable. For the owners of the means of production, it becomes a choice of reduce your labor costs to the new standard (actually an illegal wage in most of the first world) or be massacred by the firm that has. Levi Strauss has followed the first and (mostly) survived, while Delphi is heading swiftly toward the second.

Of course, the trick of the union movement was always to rig the market: organize the entire industry so the cost of labor is artificially inflated because it’s sold by a monopoly. This only works if you are a monopoly. Organizing the Earth is a little tricky. (But it does put classical Communism in a whole new light.) They’re beginning to catch on. One of the fascinating things about the great AFL-CIO schism was that the rebel forces have realized that their only hope for the future is to organize the only market they can still monopolize: i.e. personal service workers that can’t be moved elsewhere.

Even that seems doomed to fail. One of the lessons of the NYC transit strike is that even in an insulated industry, if the cost of labor in the globally competing industries has been bid down around it, the labor pool competing for the jobs is large enough that there’s not a way to keep wages artificially high for long. (The resentment of people of the TWU is instructive.) I was struck going through Barbara Ehrenriech’s take on Wal-Mart and Naomi Klein’s on the Phillipines that their (quaint) solution was to unionize the workforce. I found myself asking if the one thought that Wal-Mart really couldn’t replace their entire workforce within a few days, or if the other thought sweatshop owners couldn’t just as easily close up shop and move to China. Would either of those benefit the worker? Something is better than nothing, after all.

I’m always a fan of a more rational, efficient market. Unfortunately, it’s still to early to tell what this will do to the idea of politics as we know it.