Are Labor Unions a Good Thing?
Overview/BackgroundLabor unions are binding agreements between workers where a selected group of representatives speak and negotiate with management on behalf of all employees. They usually require some periodic fee ("union dues"), with some professions or companies requiring membership in order to take a position. A "closed shop" requires union membership to obtain the job. An "open shop", which is more rare nowadays, gives an option of joining.
Labor unions exist all over the world. They became popular in the era of the Great Depression, when companies regularly abused workers with low pay, long hours, unsafe working conditions, few (if any) fringe benefits, and condescending treatment. The Knights of Labor, Railroad Brotherhood, and Teamsters are among the unions from our history. Despite efforts of many business owners such as Henry Ford to squash their creation, labor unions grew as a way for employees to collectively bargain for better pay, benefits, and working conditions. Unions have always been able to use the ultimate power play--a strike--which can effectively shut down all production.
Unions have largely been successful in their efforts to help workers. Nowadays a host of labor laws exist, such as a minimum wage, mandatory overtime pay, and minimum breaks. However, unions have had a host of negative impacts on society, as are discussed below. The issue of unions has become particularly important nowadays as governments all over the world try to rein in unsustainable spending by cutting back benefits of mostly unionized government employees. The governments of France and Greece are recent examples. In the U.S., the standoff between Scott Walker of Wisconsin and the state unions there touched off a controversy that dominated the national news.
- Unions protect workers from various company abuses such as unsafe/uncomfortable working conditions, long hours, arbitrary hiring & firing, and so on. In a rough economy, with workers needing their paychecks to pay for mortgages, food, car payments, etc., employers hold a lot of power in the employer-employee relationship. Consequently, management can pretty much set the rules on work environment. They can set impractical hours, create unrealistic work quotas, require work on holidays, fire & hire based on personalities, and so on. One individual often has very little bargaining power since they can easily be replaced. However, a group of abused employees can ban together to prevent management from carrying out such abuses. Unions became popular during the Great Depression, when a terrible economy allowed employers to essentially treat employees however they wanted. One of the most terrible work environments in American history was the result before unions came along.
- They give workers a chance to speak at the same negotiating & power levels of the managers and owners. One employee in a company of hundreds, if not thousands, of employees, usually has very little bargaining power. This is especially true when you consider the widespread unemployment around the world, along with the decline of wages. For most positions, one employment position is just an interchangeable part where another person can be brought in to fill the gap if a person quits. Thus, management doesn't always see the need to create a work environment that's favorable for employees. However, when workers ban together, they can wield the ultimate labor weapon--a strike. If one person walks off the job, it may be no big deal. If everyone walks off the job, it more or less shuts down production and incoming-generating ability of the company. Even if all the striking employees can be replaced, it's costly and time-consuming to do so. Thus, labor can talk at the same negotiating level as management. Both sides need each other equally, and both sides will be equally hurt by a dispute.
- They allow workers to collectively bargain for wages, benefits, an acceptable work environment, and more. Unions allow employees to appoint or elect representatives that go to management and negotiate for all workers at once. Union reps can meet regularly to talk about wage levels, fringe benefits, and so on. The union also allows management and labor to sign contracts which put their negotiations on paper, a step that may be impractical on an employee-by-employee basis.
- Unions prevent managers from having to address worker grievances one-by-one. Managers have their hands full trying to take care of marketing, production, competitor analysis, accounting, taxes, and so many other items. It's often unrealistic to take the time to address each employee grievance with wages, benefits, work atmosphere, etc.. A union allows management to address grievances of employees as a group, reducing time and stress on both sides.
- Unions give workers more job security and piece of mind, reducing the stress of possible layoffs & wage/benefit cuts. Members of unions are usually your every-day, middle-class individuals trying to make a living. Among other costs, they must pay mortgages & car payments, put food on the table, and pay to send their kids through college. It's difficult and stressful to plan for the future when you're not sure if you may lose your job in the near future, or if your wages, health care benefits, or whatever may be cut unexpectedly. A union allows contracts to be signed to give employees piece of mind that such things won't happen. Management can't just change employment on a whim when union power is protecting the workers.
- Unions create a stable, long-term employment relationship between company and employee, which is good for both. Union positions are usually stable and secure; thus, employees have more incentive to stay, to develop solid relationships with co-workers, and to do their best to make sure the company thrives. On the employer side, more stable employment means less time training new employees and less time recruiting replacements.
- Unions lead to higher prices for consumers since companies must pay more for wages & benefits, which are then passed on to customers. The cost of labor is like any other for a business. It must be added to the expenses part of the income statement, which leads to reduced profit margins or losses unless prices can be raised to pass the costs onto consumers. Thus, when we buy American cars, purchase plane tickets, or buy any other product that comes from a unionized business, we all pay more at the cash register.
- Unions make the country less competitive since non-unionized companies in India, China, Taiwan, etc. can pay workers far less and therefore charge less and/or assign more workers per unit of product. We're no longer in a national economy, we're in a global one. Products & services which could be developed in America are now being made more cheaply in foreign countries, most notably India and China, which have vast pools of cheap labor. Saddling an American company with an unrealistic and inflexible labor cost per hour effectively makes it impossible for some companies to compete. For example, American automakers now must pay two-three times that of automakers in Japan, mostly because of union-required wages and benefits. In fact, China is now predicted by the IMF to pass the U.S. in economic power within 10 years. It's no wonder, when the American versions of the companies cannot compete on cost control.
- Unions often prevent more qualified workers from getting the jobs. Less proficient workers are often protected from layoffs or firing; thus, new positions open less frequently. Union contracts and protections often tie managements hands when it comes to replacing workers. Many employees are simply inferior at their job, whether it's lack of motivation, education, or natural abilities. Given the huge unemployment & underemployment rate of today, there is always a pool of potentially more talented or motivated workers that may be able to do the job better. Consider one of the most obvious examples--teachers. Teaching unions and the "tenure" system keep many poorly performing professors on the job far too long. This is only one of the reasons, despite leading the world in educational investment dollars, the U.S. has fallen behind much of the world in academic achievement. Meanwhile, every year colleges graduate tens of thousands of bright, motivated, technologically savvy, and well-trained Education graduates who can't find jobs. It's not only affecting the teachers but the ultimate product in this equation--the students and future of the country! On a lesser scale, the inability to replace less proficient workers hurts the U.S. in global competition since it drives up costs and decreases quality of products and services.
- Society and companies are often held hostage to the essential services of certain unions (e.g. teachers, police, construction workers, air traffic controllers, etc.); thus, negotiation becomes less about fairness to workers than about companies meeting the demands of union extortion. Certain unions yield way more power than that of shutting down for-profit production. That is, they can hurt society as a whole if they stop working. Imagine major highways under construction being shut down by striking workers. Imagine the crime and rioting if police walked off the job. Imagine all air traffic coming to a halt if controllers held out for more pay. The bargaining then becomes less about giving employees' deserved wages & benefits and more about paying off extortion. Companies or government offices have little choice but to concede to the demands, or society as a whole suffers the consequences. And who do you think the media will portray as the "victim" and the "evil, greedy" sides? The police, teachers, and other essential workers on strike, or the deep-pocketed companies & government officials trying to balance budgets or sustain minimal profit levels? In other words, responsible government officials or managers trying to keep their businesses from collapsing are the ones blamed, regardless of the cause or outcome, adding even more fire to the extortion racket. This is one key reason of many why government spending all over the world is completely out of control and unsustainable.
- The State and Federal labor/discrimination laws, the threats of lawsuits, and the avoidance of poor publicity all make unions largely unnecessary nowadays. Unions were definitely a necessary & useful part of society back in the early part of the 20th century when companies routinely paid employees low wages and did little to curb brutal working conditions. However, in the 21st century, unions have become outdated, burdensome, and unnecessary. Labor & discrimination laws at both the state and federal level nowadays provide all the worker protections that are needed. Consider all the laws that protect workers: minimum wage; mandatory vacation, breaks, overtime pay; anti-discrimination & disability laws; mandatory family leave; COBRA health care for laid-off workers; unemployment insurance, and so on. Plus, where state & federal laws fail, each individual has yet another option--lawsuits. Ask any human resources professional of any business of significant size if they have controls in place to prevent possible lawsuits. It's a worry all corporations must deal with. Lastly, corporations must also worry about their reputation. If their company gets a reputation as a sweat shop, as discriminatory, as greedy profiteers, etc., it hurts their bottom line. Management is smart enough to know that happy workers lead to more productivity and better sales. They don't need the union waving a stick at them to get them in line.
- Unions lead to job losses to India, China, and other overseas companies. Non-union shops have a major cost advantage in hiring. Plus, in unionized companies, owners & managers may simply choose not to hire at all since the cost of maintaining or laying off a new employee is too great. Due to lower standards of living and higher unemployment, many overseas companies are starting to take jobs from America, Europe, and Japan. Average hourly wages in India and China are already 10-25 percent that of most Western Nations, and union-enforced wage floors only make matters worse. No wonder China and India are growing so quickly! The high costs of hiring and maintaining unionized employees often simply becomes a deterrent to hiring. Despite economic recovery in 2010 and 2011, hiring remains slow in America, in large part due to the high cost of bringing on new workers.
- Unions have become a source of political power and corruption. Since unions can offer a large block of voters, politicians will often curry favor from unions and screw over the taxpayers. Consequently, union representatives concentrate on helping their favorite politicians and political party rather than doing what's best for the members. It's no secret that unions are regular contributors to all levels of the Democratic, Communist, Labor, and Green political parties. Union leaders have the ability to convince their members to support certain candidates, as well as the organization structure to get groups of voters to booths on election day. Thus, certain politicians go out of their way to court unions. President Obama's connections to SEIU are well-known, and his governing reflects it. As an example, consider recent union exemptions in the health care bill. Countless books have been written about the political corruption of unions. Taxpayers, consumers, and often the union members themselves are the victims.
- It prevents the firing of clearly incompetent workers. Several poorly-performing teachers on tenure as well as most government workers are clear examples. Have you ever been waiting in line at a government office while three workers laugh & talk amongst themselves? Have you ever had a teacher who uses videos to do all their teaching, or does nothing more than read from the text for his or her "lectures"? These are only a couple of the examples of clearly incompetent employees with low motivation who remain on the job because union rules make them too difficult to fire. Is it any wonder why governments continue to waste endless sums of taxpayer money on programs that show little or no results? Is it any wonder why the U.S. is so far behind academically behind many Asian nations despite spending far more on education?
The Pros and Cons of Labor Unions in the Hospitality Industry
The recent news article published online by the Chicago Breaking News Center indicates that The International Home and Warehouse Show had been already in talks with other States for their relocation prospects. No straightforward reason was stated in the news; except that it hints that the “cost” of having to operate tradeshows maybe the factor to blame (Bergen n.p.). Still, it is possible that the role played by the Unions, or Labor Union organizing, may be partly to blame for the tradeshow’s decision to explore other sites for operation. The reason why Labor Unions can cause companies serious problems is diverse. But this could be primarily because the cost of operating a tradeshow is dependent on certain demands that are being made by employees or workers, especially when they become a significant force thru Labor Unions.
The case of The International Home and Warehouse Show is just one example of the growing impact of Labor Unions in the hospitality industry. According to UNITEHERE – a Labor Union for Hospitality Workers, and a major force in the organization of laborers of the Hospitality Industry – the “hotel industry remains fundamentally profitable” despite the recent economic slowdown. And the fact that these businesses are moving to systematically reduce their workforce makes a case for Labor Unions to get their act together against some hotel industries (UNITEHERE 2). Here, it would be good to assess the pros and cons of Labor Unions, when applied particularly to the case of hospitality industry.
The first advantage of joining Labor Union lies in its ability to protect workers. Mary Tanke (386) believes that historically, the United States has had a low union membership from among hospitality industry workers. But this does not mean that it remained low until recently. According to statistics, there has been a very high increase in the number of hospitality workers that opted to join a Labor Union. The reason for this lies in its very good benefits. Tanke writes:
For many of our employees…unions can provide job security, increases in compensation, extension in benefit offerings, protection from arbitrary management decisions, reasonable workloads, and a process to grieve what they perceive are unjust practices” (Tanke 388).
Secondly, many workers in the hospitality industry join Labor Unions since they are more likely to be victims of labor malpractice in their field of work. Unlike corporations that employ persons with high academic degrees, the hospitality industry does not generally require the caliber of those in the business or management fields. Most of the workers of the hospitality industry are manual laborers – e.g., they fix beds, they clean room, they maintain lobbies, they serve food, they log reservations, among others. These jobs do not require high degrees or long professional training. That is why these workers are more susceptible to injustice. UniteHere writes, for instance, that “hotels hotels have added more amenities and heavier linens to the rooms – increasing the workload, even as the number of workers doing it has fallen” (UNITEHERE p.2). Indeed, having a Labor Union to check these abuses can help workers perform their jobs in a just working environment.
However, there are disadvantages in having to deal with Labor Unions. One disadvantage lies in how companies can suffer financially – or even shut down – when they are unable to meet the demands of the organized workers. When Labor Unions become too strong, they can demand so many things from the company; i.e., pay increase, reinstatement of removed workers, working hours, workloads. And sometimes, these demands can be too much for the companies to handle, and they either have to suffer massive deficit or completely shut down.
Secondly, there is also a disadvantage to the very employees themselves. According to Tanke, some Labor Unions are demanding complete membership from employees before they can obtain the job of their interest (Tanke 388). This means that, in order for someone to obtain the job that he or she wants, that someone has to join the Labor Union first before being hired. This is especially true for many hospitality industry workers. Labor Union memberships have become compulsory in obtaining a job in the hospitality industry. Accordingly, these workers have to pay certain dues to the Labor Union before they can acquire full membership. In principle therefore, they have to shell out some amount first before being hired.
To sum, it would be good to acknowledge that there are both good and not-so-good factors that must be considered before joining a Labor Union. On the one hand, Labor Unions can work for workers’ protection. They can provide security of tenure for workers, inasmuch as they can negotiate salary increases and bonuses. On the other hand, it can be taxing to the overall health of the company as well.
Which is why, if I were to be offered a job in the hotel or restaurant outfit, I would first study the benefits of joining a Labor Union. I would study the conditions thoroughly. If I would see that, in paying for the corresponding amount to join the Labor Union, I would be compensated greatly by its service, then I might get the job being offered. But if, in studying the matter closely, I see that the company and the Labor Union have had serious disputes in the past, I would, most likely, turn down the job. This is especially true if I would discover that such disputes may have affected the conditions of both the company and the workers in a bad way.
Bergen, Kathy, “Another trade show may bolt McCormick Place, ”20 January 2010. Web. 05 June 2010 <http://www.chicagobreakingnews.com/2010/01/another-trade-show-may- bolt-mccormick-place.html>.
Tanke, Mary. Human Resources Management for the Hospitality Industry. Albany, NY: Delmar, 2001.
UNITEHERE. “Hotel Workers Rising”. Web. 05 June 2010 <http://www.hotelworkersrising.org/media/Hotel_Industry_Fact_Sheet.pdf>.
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