They say older generations should teach their kids how to die, but it appears labor unions didn’t get the memo. They are dying, for the record, but they’re doing it with all the histrionics of a Disney villain doused in water.
Despite membership being at record lows in the private sector, unions are becoming even more aggressive in both practice and policy. Politically, they’re working to buy off Democrats, which seems to be working in the Biden Administration, to push through things like the PRO Act (which would outlaw many independent contracts) and to overturn Right to Work laws (which say workers can’t be forced to join a union). And in practice, they’re mounting strikes across a multitude of industries at the moment, working to hold business owners hostage and forcing countless people to go without work in the process.
As we speak, labor unions have shut down Hollywood, the writers and actors unions have both been striking all summer. The Teamsters just finished shaking down UPS under threat of a strike. Los Angeles just got out of a hotel strike. And now, the United Auto Workers are threatening to strike against America’s major car manufacturers, Ford, GM, and Stellantis, the parent company of Chrysler. If it occurs, over 150,000 workers will be directly impacted—and to be clear, when a strike happens, it doesn’t just harm the workers and their respective companies, it also harms all of the people who make a living providing other services to that company.
Ultimately, unions can only secure higher wages for their members by blocking competition and making other workers unemployed. Money doesn’t grow on trees, and demanding wages for workers that far outstrip the market value means companies must cut costs elsewhere.
But a historical look at America’s car manufacturers reveal another hidden cost labor unions impose on the companies they keep under their fist: innovation.
Here’s how labor unions actually made American car manufacturers inferior to their foreign competitors.
The auto industry still remains a big piece of the US economy. While many other sectors have sent their factories overseas for cheaper labor costs and friendlier business climates (less regulations, lower taxes—you know—stuff actual capitalists do), the auto industry has hung on tight. And the thanks they get for that is, naturally, a labor strike—which could cost the companies billions and create a serious ripple effect in the US economy.
Again, strikes don’t just hurt the companies. They hurt the people who work for car dealerships selling the cars. The mechanics who work on cars. The specialty designers who add interiors, speakers, rims, and other customizations to cars. The insurance salespeople who provide protection for the cars. And most importantly, they hurt the average American consumer, because when supply dries up, costs go through the roof.
This kind of shakedown is par for the course when it comes to Big Labor’s relationship with the auto industry, though. Back in the 1960s, the Big Three car manufacturers made 9 out of every 10 cars that were sold in the United States. The unions took advantage of that and went on strike against GM for 67 days in the 1970s, taking $8 million out of the economy and costing the company an additional 1.5 billion.
According to the New York Times, “what happened was the auto workers were able to live a very comfortable, middle class life. They could send their kids to college, have a cottage on the lake and a boat.” Nice work if you can get it, huh?
But then, times began to change. Toyota entered the US car market, and by the 80s they and companies like Honda had plants in the US. And as any smart business would do, they placed those plants in states that were friendlier to businesses and friendlier to capitalism, namely states that didn’t force people to join labor unions.
What happens next is a tale as old as time: the companies with greater economic freedom begin to outpace those with less of it. The foreign companies begin building higher quality products at a lower cost (because they weren’t being forced to pay their workers more than the actual value they create), and they begin to box out the American-made car market.
But while the Big Three are losing market share hand over fist, their union workers are still sitting pretty thanks to their ability to hold these companies hostage. Eventually the issue comes to a head where the companies must downsize to stay afloat. But again, when there are labor unions involved, companies can’t just make common sense business decisions. Instead, they had to negotiate with the unions and agree to keep paying those whose plants shut down the majority of their wages while placing them in something called a ‘jobs bank.
Make it make sense.
Again, according to the Times, “They had to report for work and more or less sit in a room. And they could read books, and play board games, and hang out. And the automakers thought it would just be a temporary thing. They would only do this for a few years. They’d restructure. They’d come back better than ever. They’d regain market share. And they would reopen these plants. And they would need these workers. But in the end, that didn’t happen. They never really regained their competitive edge. And there were thousands of these workers on the payroll who were not producing cars. And so that put another big cost on their books.”
To cover the costs of this dystopia, the Big Three are consistently having to cut costs elsewhere, and so the quality of their product really begins to suffer. That meant cheaper materials, less attractive designs that were easier to make—essentially, really crappy cars.
And all of this culminated in the crash of 2008. Chrysler and GM both filed for bankruptcy and got bailed out by the American people. That’s right. When all is said and done, the labor unions drove the American manufacturers into bankruptcy (along with piss poor decisions by our Fed and banking sector) and then you, the individual, had to pick up the tab.
Thanks to that shakeup, the auto union had to back down and give the companies some breathing room. And it was during this time period we saw American manufacturing begin to pick up the pace. The unions slashed the prices they were demanding for workers almost in half, began paying their retirement healthcare costs, and shuttered the Jobs Bank, and it turns out these companies could produce some truly killer products when not being man-handled by union thugs.
By 2015-2016, the companies are making record products, their cars are a quality product, and American manufacturing has re-earned its reputation in the market.
As the Times reported, “Once unshackled from uncompetitive labor costs and labor contracts that provide for things like a jobs bank that are deeply inefficient, the Big Three can plow money into their actual products, the cars they make. And they make them beautifully, and high performing, and it sounds like reliable. And people want to buy them. And the companies thrive.”
So did everybody learn their lesson and go home? Hardly. As with any truly great story, there are real bad guys and good guys here, and the labor unions have merely been waiting in the corner to collect once the companies turned their plight around. Hence the current threat of a strike against all three companies, something that has never happened in history.
The union is demanding a 40% increase in hourly pay for its workers as well as that the companies resume paying for the retirement healthcare costs of their workers. On top of that, the union’s leader, Shawn Fain, is demanding the jobs bank be reopened and he wants to get rid of a wage structure that was put in place where entry level workers get paid significantly less than veteran workers. Oh, and he also thinks workers should get paid for five days but only have to work four of them.
If he doesn’t get this absurd laundry list of demands, the union is poised to go on strike September 14th.
So there you have it. Thanks to states like Michigan, which recently overturned its Right to Work law at the behest of the unions, the American auto industry and economy are about to suffer no matter how you roll the dice. They’ve ruined American auto manufacturing once, and they’re going to do it again come hell or high water.
Normal people don’t operate like this. They work hard, welcome competition, and use that competition as a motivator to improve. Nothing about the service these workers are providing has improved, but they’re going to demand crazy pay and benefits—preventing the manufacturers from investing their resources where they need to be: on innovation that would speed up the EV transition and autonomous cars.
Thanks to them, our foreign competitors will likely outpace our own companies. And major technical revolutions that make people safer and the economy cleaner will be stalled. Unions are the real welfare cheats in our society and it’s time they are met with the derision they deserve.
The only solution, ultimately though, is to give workers a choice in the matter. We’ve already seen that when they aren’t forced to join, most people want no part in this gang. That means Right to Work laws must be shielded and expanded, and the Biden Administration must be checked in its war on work with agenda items like the PRO Act.
They’ve got the American auto industry by the balls, don’t let them get their creepy hands on anyone else.
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