The One Good Point Modern Unions Make

The damage done to our economy and education system by American labor unions has been extensively documented, both by Scragged and elsewhere.  It's well known that outrageous union costs and featherbedding led to the financial collapse of our Big 3 auto manufacturers and to the impending bankruptcy of such states as California, New York, and New Jersey.

How do we know that union costs are excessive?  In the case of the car companies, it's simple: Toyota and other foreign companies can build cars in non-unionized Southern factories for about half of the labor rates (including benefits and pensions) as the UAW exacts in Detroit and the Midwest.

The same is true of public-sector unions.  Forests have been felled describing how unionized teachers accomplish half the teaching at three times the cost of non-unionized private schools, to say nothing of home-schooling; failed public schools are almost a redundant statement, certainly by international standards.  The more money dumped into them the worse they get, yet the only suggestion by unions is still more good taxpayer dollars thrown after bad.

In fighting for better pay for the working man, however, labor unions do make a point worth taking note of and which all too many modern corporations have forgotten:

If you pay peanuts, you get monkeys.

The Price of Incompetence

There are many reasons not to eat fast food.  For your humble correspondent, though, there is one overriding aggravation involved that dwarfs all others, and that is: virtually without exception, they get my order wrong.  Drive-through orders are worse than ones placed inside, of course, but I can't remember the last time I placed an order and wound up with everything I wanted, correctly charged, right the first time.

Why is this?  Things may be different out in rural areas where I don't live, but in all the fast-food joints anywhere near me, an American behind the counter is a rare sight to behold.  Where once McDonald's was staffed largely by American high-school students, now they seem more to tend towards older immigrants for whom it's a steady long-term job, not just a somewhat greasy stepping-stone on the way to a better future.

There may be good reasons for this - American high-school students are not noted for their reliability and sober-mindedness in employment anymore - but unlike adult immigrants, most American high-school students can speak the language.  Communicating via a drive-through speaker setup would challenge William F. Buckley; for Jose or Sasha, there's no hope.

The result?  I simply don't eat fast food anymore.  Abstinence is good for my heart, not just from the cholesterol avoided, but the stress and conflict of a botched order as well.

For McDonald's, there has got to be an opportunity cost here; surely I am not alone in my boycott?  Yes, the immigrants are probably cheaper than reliable, competent, and fully literate Americans would be, but by that much?  Unlike farmers, McDonald's is too visible a target to rely on illegal labor paid less than minimum wage; most likely their employees have every legal right to be present and working.

Raising wages would certainly benefit the product provided: suddenly, a better class of more-qualified workers might take interest in the job.  A more reliably product would, in turn, increase sales to previously-vexed ex-customers.

This isn't to say that higher wages are a cure-all.  Hondas from union-free Southern factories are equal if not better in quality than UAW vehicles; for its excessive charges, the UAW provides nothing of any value.  For every example where the extra pay is wasted, however, there is another example where more pay might actually make a positive difference.

But surely, the difference is only at the margins?  Not necessarily.

In March 2007, retailer Circuit City abruptly fired 3,400 salesmen because they were "making too much."  Since salesmen are paid on commission, "making too much" would seem to imply that they were selling a lot; isn't that a good thing?  Management evidently thought they could find replacements who'd do the same work for less.

Not so.  By May, analysts noted a disastrous drop in profits:

Analysts said Circuit City had cast off some of its most experienced and successful people and was losing business to competitors who have better-trained employees.

"I think even though sales were soft in March, this is clearly why April sales were worse. They were replaced with less knowledgeable associates," said Tim Allen, an analyst with Jefferies & Co.

In particular, the televisions showing disappointing results are "intensive sales" requiring more informed employees, Allen said. "It's a big-ticket purchase for somebody. And if they feel like they're not getting the right advice or are being misled by someone who doesn't know, it would be definitely frustrating. They will take their business elsewhere." [emphasis added]

Which they did in droves, with predictable results: A year later, the company went bankrupt, surviving only as an online website operated by another company that bought the brand in liquidation.

The Back-End Matters Too

Getting rid of all your experienced and successful salesmen is visibly moronic, but a happy customer experience can be fouled just as badly by incompetence in the invisible but essential back room.  Here, too, your humble correspondent had an insightful recent experience.

My family found itself in need of several new mattresses of varying types.  A bit of research discovered a superb clearance sale at a major national department store.  The beds were of top quality; the price rock-bottom; the financing terms ideal; and the salesman superb.  In fact, I don't believe I have ever encountered a more thorough, helpful, diligent, and effective salesman so absolutely dedicated to making me 100% satisfied.

Alas, he had to work very, very, very hard to reach that goal.

The first set of delivery guys were as loutish as the salesman was professional.  My mattress was physically folded entirely in half and clamped that way to fit into their truck, which a) destroys the springs and b) voids the warranty.  I was stuck with it, however, because my old mattress had been unceremoniously dumped in the mud in front of my house by the surly crew who were supposed to haul it away neatly.  Oh, and all the pictures were knocked off the walls during the delivery.

Several phone calls and a teleconference with the mattress manufacturer later, a new one was on the way via a different delivery service; well and good.  Meanwhile, another mattress had been delivered but was the wrong one.  When the second credit card bill arrived, someone had neglected to tell the computer that this was a no-interest financing; the finance charges were breath-taking.  The whole affair took several months and many hours on the phone before all the correct beds were in their proper places, intact, and financed correctly on the previously agreed terms.

Thanks to the sterling efforts of the salesman, all was eventually resolved, but consider the opportunity cost of the salesman arguing with minions on the phone when he could have been selling stuff!  What's more, despite the great price and quality, I'll think long and hard before buying from that store again in the future.

Who is at fault?  Not the salesman, as the original receipts confirmed that everything had been entered correctly at the beginning of the sales cycle, but nearly everyone else involved got it wrong.

The warehouses put the wrong items on the trucks and handled them improperly; the accountants entered the wrong data on the charge account.  Any giant company will have a loser here and there, but such multifarious and widespread failings can only be caused by negligent and ineffective management.

Which, of course, is where unions blame every failing of their employers.  It's all too easy simply to dismiss labor unions as greedy, lazy dinosaurs from a bygone era, and most of the time you'd be right.

But they're not always alone in being lazy dinosaurs - sometimes management is right in there with them.  As trite and dated as it may sound, "our employees are our greatest asset", and woe betide the company that forgets it.