9/12/08

Harvard unionist shocked by Jack Welch

More EFCA stories: here

Writer provides insight into Barack's anti-management views

I was privileged to be having lunch with Jack Welch a while back, and took the opportunity to ask him what he thought the most pressing issue facing American management today was. His answer really surprised me.

He was worried, he said, about proposed 'card check' legislation (more formally known as the Employee Free Choice Act or EFCA). In a nutshell, the legislation would allow workers to unionize if a simple majority sign authorization cards. In his view, it would be all too easy for union organizers to coerce workers into giving their signatures, and far easier than it is today to unionize operations. The consequences would be a far less flexible workforce, higher costs, lower productivity and a loss of management discretion over workplace decisions, all of which in the long run would be bad for the economy.

Since that conversation, the EFCA has gotten a tremendous amount of press, most recently in Business Week and in Wall Street Journal columns that express alarm at how few senior-level executives in the US are paying attention to and are aware of the implications of the legislation.

Regardless of the merits of the legislation, which Democrats on the whole support and Republicans are less enthused about, it's interesting to speculate on why pro-labor policies are becoming increasingly palatable.

In my view, it's one fairly predictable outcome of a change in the zeitgeist, resulting from the erosion of the implicit contract that many workers in America endorsed. Work hard, be productive, and you too could aspire to your own version of the American dream. Or so the story went when I was a young college grad in the early 80's.

When I took my first job in 1982, I was forced to pay union dues (although I never did officially join the union at the City of New York, my first employer). That allowed me to be covered by a collective bargaining agreement that had been negotiated by the union on behalf of all the workers in my title. Now that I look back on it, the deal was pretty good. Right off the bat, I got 4 weeks of vacation, some number of personal days, 13 public holidays, and although I didn't get overtime, I was entitled to 'comp time' which meant that when I worked more hours than my standard 35 per week, I could take that time off at a later date. I also got health benefits, of course, and contributions to a government pension fund, which would have materialized after some decades of dutiful service, had I remained in that job. In fact, when I did leave, I recall getting paid for something like six months due to the accumulated comp time I'd received.

But despite the attractive employment terms the union had negotiated, bright young things back then felt that being part of a union was sort of quaint, and even a little distasteful. We were, we thought, going to go out there and forge our own futures, grabbing our piece of the American dream through hard work and pluck. Our employers would recognize our merits - why let some fusty old union boss speak for us? Reagan was in the White House and America was going to shake off it's 70's era slump. The future looked bright. We didn't need unions -- or so we thought at the time.

Fast-forward 30 years, and what happened to that attitude? Well, it's still there among many (particularly the highly skilled and highly compensated who are doing better than ever, thank you very much).

Among others, however, there is a creeping feeling that no matter how hard you work, or how much of a contribution you make, the deck is stacked against you:

* Take CEO pay. The Institute for Policy studies note that in 2007, compensation for the CEOs of the S&P 500 averaged 344 times the average US worker's pay. Thirty years ago, the ratio was about 35 to 1. That money is coming from somewhere, workers realize, and one possible source is their own paychecks. Indeed, The Center on Budget Policy Priorities found that "the share of national income going to wages and salaries in 2006 was at its lowest level on record, with data going back to 1929. The share of national income captured by corporate profits, in contrast, was at its highest level on record."

* What about the bailouts of financial firms? Whatever the merits for the case that these companies needed government backing, the symbolism is of super-smart Ivy Leaguers being protected from the consequences of their own mistakes, while ordinary people deal with the fallout of the credit crunch. That's hard to overlook.

* Add in off-shoring, the willingness of employers to downsize at the first whiff of an earnings miss, and the erosion of benefits -- such as health care and pensions -- that were once taken for granted. It's not hard to understand why employees would find it increasingly attractive to have some more power on their side. Even if you're not a huge fan of unions, they offer the promise of security, known and agreed-upon workplace rules, and predictable outcomes. Not terribly exciting, maybe, but I suspect a lot of workers would come running at the chance to have such buffers from the vicissitudes of an increasingly volatile global economy.

To me, it's a powerful testament to the laws of unintended consequences and the idea that every action prompts an equal and opposite reaction. If the ways in which large corporations wield power over their people is increasingly seen as unfair or even illegitimate, we can expect a lot more momentum on the part of labor.

Is that good? Bad? Are there alternatives? What do you think?

- Rita McGrath

(discussionleader.hbsp.com)

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