Unions killed Michigan
The Once Great State of Michigan
When I was a boy growing up in Benton Harbor, Michigan, there was gainful employment for anybody who wanted to work. Whirlpool Corporation, founded in 1900 in Benton Harbor, was the largest employer in the area, employing thousands of people, manufacturing kitchen and laundry appliances. Today, the world headquarters of Whirlpool remains (in fact my daughter works there), but nothing is manufactured there. An area that I remember teeming with factories of all sorts, and the thriving commercial hub of Southwest Michigan, is now largely boarded up, run down, with little work for anyone. This is the story of how this tragedy came to be.
Three First Hand Accounts
First, I will recount three stories, with which I am intimately familiar.
Malleable Industries was a manufacturing company in my hometown, which went into Chapter 11 bankruptcy in the late 1960s. I knew some of the 900 men who worked there. Through a series of strikes, the men were making wages usually attained only by professionals, such as doctors or lawyers, in spite of lacking not only an education, but many were barely literate—and I do not mean that to disparage them as human beings. Unfortunately, paying these wages had caused the company to lose millions of dollars several years in a row and they were bankrupt. The reason I mention this case is, what happened in court.
A federal judge issued a plan to keep the company alive. He told the union if they would accept a 20% pay cut—back to the wages they earned less than ten years prior—he would vanquish the creditors and give the company a fresh start. Otherwise, he would liquidate the company's assets and close it forever. It came down to vote of the rank-and-file union members.
Their leaders told them to reject the judge, because a union should never give up what they called hard fought gains. The workers voted 895-5 to close their own factory, putting them all out of work; and a factory capitalized with millions of dollars in land, buildings and equipment became extinct.
In a fascinating sidebar, Malleable Industries sued the union, seeking to recover damages resulting from three strikes conducted by the labor unions in violation of a collective bargaining agreement containing a no-strike clause. The jury returned a verdict in the amount of $115,000 against the Local Union and $1,210,000 against the International Union—one of the few verdicts in the history of the United States in favor of a corporation against a union.
In 1978 I went to work as a non-union inspector at the Cook Nuclear Power Plant. Most of the workers there were union technicians. It was hard not to notice that while I put in a full day of non-stop work, the unionized technicians would quit working after about four hours; and go to the basement to sleep, read or play cards the rest of the day.
I began an inquiry as to how this can be, knowing this plant cost millions of dollars to construct. What I found disturbed me. Union rules were that they could only be required to perform a certain amount of work each eight-hour-work-day. They could do this amount of work in about four hours—but they were paid for eight!
A couple of years later, I moved to Detroit, with my rock band, White Summer. We hired a new singer, Joe Smith, who worked as an electrician at the Ford Motor Company River Rouge plant.
Joe was the only one of us with a day job, and I asked him how he could play music all night and work all day. He laughed and said, "I only work about one hour a day. They don't have much for me to do. I sleep most of the day there. If a secretary in an office wants to move her typewriter across the room, she is not allowed by union rules to do it herself. A union laborer must be called in [perhaps from a mile away; that's how huge this plant was] to move it physically [while the office personnel stood around waiting—on the clock] and they must call me in, to unplug it before it is moved; and plug it back in after it moves [maybe 20 feet]. Then I go back to sleep."
He was making $20 per hour in 1979 dollars. I wondered to myself how Ford could afford this.
Henry Ford and the Auto Industry
Henry Ford was the father of the modern assembly line used in the mass production of large numbers of inexpensive automobiles. This was an idea that changed the world. Before Henry Ford there were some automobiles. But they were built by hand, by master craftsmen who, rightly so, commanded very high wages, as the only men possessing the talent to assemble such a complicated machine. Nothing wrong with that except for one thing—only the rich could afford to buy them.
Ford had the epiphany that if he could put people to work who were uneducated (even illiterate) and unskilled, with few prospects other than farm labor, on an assembly line, where they would only have to perform one simple task (that any older child of a typical family could do) he could provide America with automobiles that most everybody could afford. It worked, and his ideas soon spread to most other manufactured goods, making countless machines we today take for granted, available to the masses for the first time in history.
Anti-American, anti-capitalist, historical revisionists today paint Henry Ford and his awesome ideas as a bad thing for workers, but this is a false history they create out of thin air. True, Ford, and others like him, became rich from his ideas, but ideas are what advances the human race—not manual labor. And Henry Ford did not exploit his laborers.
Ford astonished the world in 1914 by offering a $5 per day wage, which more than doubled the rate of most of his workers. (Using the Consumer Price Index, this was equivalent to $106 per day in 2008 dollars.) Henry Ford created the 40-hour work week and a minimum wage (both of which we take for granted today; but it was common for some of our ancestors to work 80 hours per week). He was roundly criticized by other industrialists and by Wall Street for these ideas, which he had decided to implement on his notion that workers would be more productive during the 40 hours if they also had time off for recreation, and time with their families.
He proved, moreover, that paying people more would enable Ford workers to afford the cars they were producing and be good for the economy. Ford was adamantly against labor unions because their leaders were Marxists that he thought would harm—not benefit—the workers, in the long run, partly because they advocated violence and work disruptions, in his view, to maintain their own power. It was well known that one of the maxims of Karl Marx was, "Unionism will lead to Communism."
Unions Come to Absolute Power
28 million southerners moved north from the 1920s to the 1970s, leaving farm work, most from picking cotton, which is brutal work that tears up your hands in the scorching sun all day, to work in factories. To all of these people, factory work presented easily the best jobs they had any hope of, with their lack of skills, education and knowledge.
Unions were illegal for many years in most countries (and Adam Smith, the father of modern economics, argued that schemes to fix wages or prices, by employees or employers, should be illegal). There were severe penalties for attempting to organize unions, up to and including execution.
The first national union in the United States was created in 1866. By the 1930s, unions, that had gained enormous power through a collaboration of Marxists and the Mafia, conducted hundreds of strikes. During these strikes, business owners were unable to bring in new workers to replace the ones who were on strike because the strikers occupied the factory; and they physically assaulted with bricks and baseball bats, and sometimes killed, replacement workers, whom they called "scabs."
This was unlike strikes in the past. Before this time, workers on strike would simply refuse to work until their demands were met. Essentially, this meant that production of manufactured goods in America was halted at will by the unions. Then it got worse.
By the 1940s, unions were successful in creating "closed shops" in Michigan, with the help of the state legislature, which included many politicians who shrewdly recognized the voting power of millions of union workers, who tended to vote at the ballot box as instructed by union leaders.
A closed shop is a factory in which union membership is a precondition to employment. In an astounding turn of events in labor history, this meant that if you wanted a job in a factory, you did not apply to the company for employment. You applied to the union for employment and the factory had to hire whomever the union decided they should hire, without the traditional job interview to assess an applicant's qualifications.
From here on, the great state of Michigan suffered labor strike after labor strike. I remember when one of the Big Three Automakers, in a rotation they had secretly planned, struck, or threatened to strike, every single year for higher and higher wages and benefits and retirement plans. Eventually concessions were made to pay any laid-off autoworker 95% of his wages, while he sat at home. Many them then hoped to sit at home!
Imagine if the Horse and Buggy Industry had had this kind of power when the automobile was invented—The United States would never had led the world in automobile manufacturing. I can assure you of that.
Whereas before, in all human history—to give a simple example—if a man refused to sweep the floor for $9 an hour and another man, without work and equally desirous of feeding his family, was glad to do it for that wage; you—as the owners of the company, who by now have invested millions of dollars and vastly more importantly: have created, designed and engineered, the product that people need or want; have marketed it and sold it successfully; have set up an enormous, smoothly running plant to build it; implemented the means to ship and distribute it; in the extremely importantly timely manner according to supply the demand—had the freedom to hire man number two.
Now, you had to hire any man the union said; pay him whatever they said; let him do whatever work they said and none other; and you could not fire him for poor performance, nor promote him for excellent performance. This sort of "Central Planning" has been tried and found wanting in the old Soviet Union. How many cars did they export? What manufactured goods of any kind have you ever purchased that were stamped, "Made in the USSR."
Now ask yourselves, my readers (who have hung in here thus far) about human nature. How many people—if told they will working for the next 25 years on an assembly line; and told that no matter how little or how hard they work, no matter the quality of their workmanship, no matter how many times they are tardy or absent, no matter how many times they are caught (or allowed to be) sleeping on the job; it will make absolutely no difference in their pay, benefits or pensions—will work as productively and efficiently as they are able? One out of a hundred? (Who have an inordinate amount of personal pride, or virtue.)
The 1940s through the 1970s were indeed the golden age for unions but that golden age killed the goose who laid the golden egg.
By the 1970s factory workers in the "Rust Belt" were doing shoddy work; vastly overpaid for menial labor; with unsustainable lifetime benefits; with sinecures like ones we can see on The Sopranos where a guy collects a paycheck for sitting in a chair all day; and as a result drove American manufacturing out of business—or the production part of manufacturing goods out of the country—while they continued to go on strike every other year against the companies that had provided their families with the best jobs in generations; while Nero played his fiddle and the unions were controlled by mobsters.
They fought automation that would have kept us competitive with the Japanese and other countries. It was state laws in the Rust Belt, particularly in Michigan that did them in, not Federal Law. Manufacturers had no choice to go bankrupt or move their manufacturing to "Right To Work" states, mostly in the southern United States, and eventually out of the country altogether to Mexico, Brazil or China, as the pressures of the shrinking world—globalization—came to bear.
Right to Work
The only area of our country that still today has a thriving manufacturing industry is these "Right to Work" states. Consider that term carefully: Right to Work. What does it mean? Simply, it means, that any work that needs to be done—from janitor to rocket scientist—any person has a Right to Work at this occupation; providing he and his employer agree what the work is worth to both of them; which naturally includes the skills, talents, education, aptitude, attitude, hustle and reliability the worker can bring to bear for the benefit of the enterprise.
Right to Work laws guarantee our Constitutional right to freedom of association. Workers are still free to unionize, but with a huge difference from Michigan state law: If the unionized workers decide the work they are performing is not worth what they are being paid—in their eyes—they are free to walk off the job and strike but: The company is free also. The company has the freedom to decide to hire a whole new team of workers to replace the striking workers.
Now, pro-unionists will proclaim companies will automatically choose this route—but that is not true. If you owned a company, that was running smoothly, meeting customer's demands on time, making a profit, highly productive and efficient—which contrary to Marxists, is the sole reason for the existence of a company; not to provide jobs, but to provide jobs AND pay a dividend for its investors—would you want to simply get rid of the people whose productivity had made this possible? And have to train a whole new labor force? Of course not. But what if the demands of the striking workers would make it impossible to sell your product at a profit against your competition in the United States and the World?
In our times, another major issue is that Unions force their members to pay dues which are then used to support political causes that the individual worker is staunchly opposed to. And the fact is, manufacturers today, in "right to work states" are profitable, while manufacturers in Michigan are not; and more importantly, these manufacturers produce higher economic growth and new job creation, as well as lower unemployment rates. In March 2009, Michigan's unemployment rate rose to 12.6%, the highest in the nation.
A March 3, 2008 editorial in The Wall Street Journal compared Ohio to Texas and examined why "Texas is prospering while Ohio lags." According to the editorial, during the previous decade, while Ohio lost 10,400 jobs, Texas created 1,615,000 new jobs. The article cites several reasons for the economic expansion in Texas, including right-to-work laws.
Ohio's most crippling handicap may be that its politicians — and thus its employers — are still in the grip of such industrial unions as the United Auto Workers. Ohio is a "closed shop" state, which means workers can be forced to join a union whether they wish to or not. Many companies — especially foreign-owned — say they will not even consider such locations for new sites. States with "right-to-work" laws that make union organizing more difficult had twice the job growth of Ohio and other forced union states from 1995–2005, according to the National Institute for Labor Relations.
Japanese Car Makers
When Nissan constructed its plant in Smyrna, Tennessee in the 1980s, it was the biggest investment ever in America by a Japanese company. The Japanese, frankly, had a low opinion of American workmanship based on what it saw—and we all saw, if we care to admit it—coming out of Detroit. The Nissan facility quickly became the most productive, and only profitable, automobile manufacturing plant in the United States.
Today, because of the damage done by unions, General Motors loses $2331 on every vehicle they produce, while Toyota makes a profit of $1488 per unit. The plants in Detroit take 20% more man-hours to produce each car for two reasons: the unions protect inept workers; and the unions fight automation. GM has a cost factor of $74 per hour for its workers versus $48 per hour for the Japanese plants in America (all in right-to-work-states).
What is often overlooked is that it is dangerous for a huge world power such as the United States to give up on manufacturing. We never could have won the two World Wars if not for our standing factories that were quickly converted to arms production. If a new worldwide crisis comes and we unable to manufacture anything, we shall be at a terrible disadvantage.
The same goes for our loss of capacity for food production. Southwestern Michigan was once known as the "Fruit Belt." But that is another story. Suffice it to say for now, if, God forbid, another World War comes, where will we get food?