I haven't had time to read the full details of the GM restructuring plan, but, much to my surprise, I find myself generally agreeing with Michael Moore on the subject. Batteries, I think we will find, are not a good large-scale means of energy storage for transportation, but the Volt's serial hybrid model is about the most efficient system possible for a car. And seriously, who asks for $34billion of government money to lay people off as unemployment is hitting numbers that haven't been seen since the 1970s? Okay, I said this wasn't a post about why we shouldn't hand GM and Chrysler money outside of a Chapter 11 restructuring, so I'll stop now.
This post is about two issues that are central to the Lumbering 3 bailout, and will be even more central when the new Congress gets started next year. The first topic is health care, the cost of which has been skyrocketing and is among, if not the top, issues in labor disputes in the last few years. The other is the horribly named Employee Free Choice Act, designed to force 70's style union-management relations on small manufacturers.
The problem with both is that they fundamentally misunderstand what a "job" is in the modern context, much like a 30 year mortgage is probably the wrong standard housing contract for a population that moves every seven years or so. When manufacturing made up 35% of the economy, it was very likely a person would graduate (or not) from high school, get trained to use a particular machine in a particular factory, and expect to use that machine or derivatives of it for the next thirty years, followed by retirement with a decent, employer-funded pension. At the same time, a legacy of the wage control policies of WWII, the employer would provide for the health care of the worker's family. In this environment, the worker is almost completely powerless without a strong union, because after a few years his only skill is the use of one particular machine, and it is unlikely any of his company's competitors will hire him when there's a steady stream of young workers coming out of the high schools. Nationally, politicians have the choice of dealing with strong unions or face massive unrest. It's no accident that the industrial world split between heavily unionized and communist economies in the first half of the previous century.
The downside of this high school-to-grave, rigid relationship between employer and union member is that it requires a world that doesn't change substantially for roughly 30yrs, plus another 10-30yrs of continued business success to handle pensions. This assumes that the company makes a product that will be popular enough to collect its current market share and profit margin for roughly 60yrs, in clear violation of the basic principle of zero long-term economic profit (basically: if an industry is making more profits than others, competitors will enter it until it doesn't). So, taking steps to keep UAW workers safely cocooned in their factories is ultimately a serious disservice to them and the labor movement at large.
Instead, Congress and the AFL-CIO should have a listen to the Planet Money podcast from last week entitled Cousin Knows Best. It discusses how a young man's flexibility and an environment with multiple competing employers has done more to put him on a path to PMCIN>=1 prosperity than a college degree in a non-technical field would have. Thus, we should not think of unions primarily in terms of getting contracts that guarantee people shackled to one company get decent pay and benefits, they should instead position themselves to be the preferred source of highly qualified labor.
As a model, I would take something like the Sheet Metal Worker's Local #20 in South Bend, IN, where I trained as a welder in a previous life. The members there do very good work installing ducting and making making parts on contract for various companies, and run (or at least ran) a well-equipped training facility that also provided their members a venue to demonstrate their skills to potential alternative employers. For them, prosperity depends not on a single company, factory or even business model, but on a steady supply of innovative companies that need to move air or build things out of metal. The point is that long term prosperity requires not contracts with vertically integrated oligarchs, but smart, capable and flexible people who can choose between employers, rather than between working and striking.
To facilitate this, we need some form of national health care that follows workers between jobs. Towards that end, I like what I understand of the Obama plan, and tapping Daschle for HHS is a step in the right direction. Most of the big expenses discussed in the Lumbering 3 bailout hearings, the Boeing strike and other recent "industrial actions" involve rapidly rising health care costs that companies can no longer afford. Instead, the best thing for labor would be a situation in which workers are not bound to their jobs by the fear of someone in their families getting sick, and where employers can hire more cheaply (thus giving employment options).
For much the same reason that a desire for peace requires preparations for war, the desire for sustainability requires flexibility. Unions that provide high quality, reasonably flexible workers with a specific skill set (like framing rooms in buildings, regardless of the material) will serve their members better than ones that demand rigid contracts that ignore the actual forces markets will bring to bear. The best thing a Democratic administration and Congress can do to facilitate this is come up with a health care system that controls costs and provides coverage that is not necessarily tied to employers.
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