[Nifty3929]

"if unions actually rewarded blue collar employees worse, why would the corporate executives be rallying so hard with propaganda against organized labor?!"

Because the world isn't a war between workers and employers. It's not a zero-sum game. Businesses create value by turning less-valuable inputs from society (fundamentally, labor) into more-valuable outputs to society (cars, haircuts, etc). It's a positive-sum game. Unions add a lot of friction to this process, causing everybody to be worse off overall. Business leaders care about creating more outputs to society. Unions work against that goal.

Some of the best, highest-paying companies aren't unionized, even within a specific industry, unless legally required. Unions succeed by suppressing change, which works well enough in government and stodgy old industries which often amount to arms of the government anyway: education, healthcare, automotive, transportation, etc.

Businesses fight against unions because they don't want the light to go out.

[unclebucknasty]

>Because the world isn't a war between workers and employers. It's not a zero-sum game.

>Business leaders care about creating more outputs to society.

How do you square these ideas with record profits and record executive compensation, juxtaposed with decades of wage stagnation and the dramatically expanding wealth gap? That gap now has 1% of the population owning over 30.6% of the wealth.

In the context of this discussion, it doesn't matter if the game is positive-sum, if the overwhelming rewards from the created value accrue to a tiny percentage.

[orochimaaru]

Wasn’t that always the case? There may have been a small post world war 2 blip where the distribution was slightly flatter in the United States. But in the past that may have been worse (as in a few kings and nobles owning most of the wealth).

Executive compensation is an issue. And it is regularly brought up when unions are mentioned. But I doubt cutting executive compensation even by 75% would result in the amount of money to satisfy union demands on healthcare, job security and retirement.

Your problem is the stock market punishes companies that don’t have cash flow. Union demands ebb that cash flow and no amount of executive compensation reduction will make up for it. Keep in mind I’m specifically talking executives, not founders. Founders own shares in their companies and that cannot be considered compensation.

[unclebucknasty]

>Wasn’t that always the case?

It's a matter of degree.

CEO-to-worker comp was 20-to-1 in 1965. In 2021 it was 399-to-1. [0]

CEO comp rose 1,460% from 1978 to 2021. Worker comp rose 18.1% over that period. [0]

>Your problem is the stock market punishes companies that don’t have cash flow

The idea that the company's sole responsibility is to "maximize shareholder value" has become a bit of a meme in its elevation to the status of some codified fiduciary duty. In fact, it's derived from the musings of a single economist (albeit a pretty influential one). No surprise that was uttered in 1970, just prior to the sharp increases in compensation disparity. It could be credibly argued that this canard has been used as the "moral" pretext for measuring and rewarding CEOs and shareholders to the detriment of workers. "Yes, we're redirecting trillions from workers to executives and shareholders, but you see, that's our moral obligation as a company with a single overriding missive".

So, used here as ostensible justification for suppressing worker wages (i.e. to avoid being "punished" by the stock market), it's a bit circular.

But, ironically, your positing it as credible rationale for resisting unions underscores its pernicious effectiveness.

[0] https://www.epi.org/publication/ceo-pay-in-2021/

[orochimaaru]

I’m saying it’s probably the major driver of why unions are resisted. Shareholder value = value for hedge funds = value for 401k accounts. The perverse relationship is that union resistance and offshoring is a necessity for better security in retirement for those who can afford it. It’s not a healthy measure. We do need something better than that.

Cutting ceo pay isn’t going to do much. Irrespective of how much that is reduced you’re not going to be able to cover cost increases of all that unions demand - unless you decide to reduce shareholder value. Now, this means funds may no longer invest in your company which in turn causes a whole downward spiral in stock.

We need to cut the link between retirement funds and the stock market. If you see ironically the 401k of union employees are most likely invested in companies that bust unions.

[unclebucknasty]

>I’m saying it’s probably the major driver of why unions are resisted.

Yes, I understood your meaning. I was countering that, while the concerns about shareholder value and stock prices are often used as justification for suppressing wages or resisting unions, it's really just a circular argument. They essentially do it, reward themselves as shareholders and leadership, then justify it by claiming they had to do it because they demanded they do it.

But, there is no moral or legal obligation to put shareholder value above equitable treatment of workers, as they claim. In fact, I'd argue it's the other way around.

>Shareholder value = value for hedge funds = value for 401k accounts.

Bringing 401Ks into the equation is another bit of obfuscation which implies that their actions are lifting all boats and workers also benefit. But, in reality, it's just another form of compensation that is wildly inequtiable.

>unless you decide to reduce shareholder value...this means funds may no longer invest in your company

This is the crux of it. I don't think it's a foregone conclusion that it would lead to divestiture, but that shouldn't be avoided at the expense of workers.

Why should the leadership get such outsized executive comp and massively disproportionate upside on the stock? Worse, why should they actually be incentivized to be hostile to their workers (e,g. suppress wages and implement layoffs to boost quarterly profits)?

In short, why do we accept that workers should come last? Part of the issue here is that we've accepted corporate personhood as a real thing, wherein we are somehow morally obligated to protect corporations at the expense of actual people.

>We need to cut the link between retirement funds and the stock market.

That's not the problem. Equity is. See above. ;)

[icandoit]

No, productivity and wages climbed in lock step until the 70s. After that productivity kept climbing and wages went flat.

[orochimaaru]

Globalization. There’s people on the planet who get paid a lot less to do a lot more. Not necessarily bad for them. But definitely bad for US workers.

[unclebucknasty]

Globalization is a contributor and so is technology.

But, at the end of the day, it's down to how companies choose to distrubute the gains created from lower costs and higher productivity. One easy way to see the inequity here is to eliminate workers from the equation and look at the meteoric rise in CEO comp alone. That metric is 1,460% from 1978 to 2021. [0]

Bringing workers back into it (for context), their increase over the same period was just 18.1%. [0]

Another offset to the globalization argument is that unemployment has hit lower levels than during periods of much more equitable compensation priorities, yet wages still remained stagnant. You might say, "well, yeah, but the jobs that were replaced were higher paying", which would be true for some sectors like manufacturing. But, again, these are company decisions, and many other sectors that remained healthy have still seen nothing near the rise in executive comp. Keep in mind that increases in worker skill have also contributed greatly to productivity.

And, this doesn't even get into stock buybacks and other "financial engineering" that redistribute what might've otherwise been used to more fairly compensate workers to investors and other stakeholders instead.

Organized labor was a proven way to ensure gains were distributed more equitably to workers. It's no coincidence that decades of breaking unions coincided with the detachment of their wages from productivity.

[0] https://www.epi.org/publication/ceo-pay-in-2021/

[MrJohz]

You've got a couple of statements here that belie assumptions that aren't very accurate.

> Business leaders care about creating more outputs to society.

This is untrue. The reason markets work at all is arguably that it's untrue. Business leaders care about generating rewards for themselves. Markets are a mechanism that ensure that it is profitable to create more outputs to society.

This is a really important concept. Amazon doesn't exist because Jeff Bezos is a selfless individual who cares deeply about making sure every American has free next-day shipping. It exists because Jeff Bezos wants to make money, and the market demonstrates that selling products with free next-day shipping is a desire that other people have, and therefore it will be profitable for him to fulfil that need. Markets are about assigning value to desires, and using that value to ensure that goods and services are traded efficiently and flexibly across the whole market without someone needing to coordinate things from the top.

This is (mostly) a good thing - efficient distribution of services across a market is why we like markets and tend to use them a lot across our economy. But we need to be honest about how and why they with, and it's not because business leaders are trying to be selfless to society.

On the other hand,

> Unions work against that goal.

This is also untrue. From a market perspective, unions are a collective bargaining tool used by workers selling their work. In the same way that it's easier for a handful of truck drivers to collect together and form a business, rather than each independently set their own price for their labour, so is it often easier and more efficient for a group of workers to collect together to form a union.

But like with any market, while people can haggle over the best price, the item must be sold at some point in order for all parties to get their rewards. If you've got a melon that you want to sell for $100, but no-one will buy it at that price, then all you'll have at the end of the day is a mouldy melon. Similarly, workers in a union want to sell their labour, because if they don't and the business collapses, they're all out of a job.

In that regard, a union is a tool used by people selling their labour in the market in order to achieve the best price for them (in this regard, they are just like the business owners from before, where the market uses their personal desires to generate value across the whole market).

In fairness, this is a very simple model, and so it doesn't tell the whole story. Markets have failure modes such as monopolies where the simple analysis of market efficiency tends to break down. On the other hand, if a worker cannot sell their labour, then they cannot eat and cannot access housing, which in practice puts a lot more power in the hands of the person buying labour then the person selling it. It's important to remember that the market model is just one tool that we have for managing resources, and in practice most successful countries use a mix of markets and government intervention to provide efficient access to goods and services across the economy while also preventing common failure modes. Rules to protect workers and unions are part of that mix.

But, despite its simplicity, the market model still helps explain the interactions between businesses and workers better than the naive approach that says that unions are bad and want businesses to die, and business owners are good and want to freely distribute value to the economy. I hope this comment demonstrates that a bit.