Sep 5, 2011

Unions - Cataclysmic Entities

The New York Times has reported that the Postal Service is dangerously close to shutting down. While numerous excuses such as:

As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.
The causes of the crisis are well known and immensely difficult to overcome.

Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available. The system will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from five years ago.

What really stood out to me was the only paragraph that the Times wrote concerning one particular reason - unions.

At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

While some may poo-pah me for picking on unions, some interesting facts arise.  Fed Ex (which is comprised of only 32 percent union membership) has reported strong economic growth. According to Fed Ex's 2011 Annual Report, there has been a 13% increase in revenues year over year to nearly $40 billion.  In addition, Fed Ex reports 22% earnings per share increase year over year and 23% increase in net earnings year over year.

According to UPS's (with 53 percent union membership) Interm Income Statement, 10k revenue is moderately up. Their 2nd quarter reports at 13,191.0 - up from Q1 - 12,582.0.

Yet the Postal service (with 80 percent union membership) is in dire trouble.  There is a pattern here.  Fed Ex, with the least amount of union membership, shows the most growth.  UPS, with a larger union force, exhibits moderate growth, while the U.S. Postal service - with a large union force - showing major losses. It would be ignorant to blame this on the internet age alone.

Lets not stop at simply examining postal services.  We all recall the recent legislative fight in the state of Wisconsin. Labor unions bussed people in from all over the country, and teachers took "sick days" to protest Republican efforts at changing interaction with state unions.  The rallying cry was that the new laws would "break" the state's financial proverbial back and dis-empower the "workers."  Yet the reality is quite different. According to a report from Statehousenews, school districts are seeing savings instead of losses.

Overall, the state budget cut more than $800 million from education, but Walker’s law gave school districts a boost by requiring teachers to pay 12.6 percent of their health-care premiums and 5.8 percent of their pensions.  The legislation also contains a provision that limits teachers’ collective bargaining to wages only, and caps salary increases to the rate of inflation.

In addition, the Washington Examiner reported that:

The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it's all because of the very provisions that union leaders predicted would be disastrous.

Clearly, unions add a heavy economic weight to any business or organization they attach themselves to. So whats really going on here?  Unions fight tooth and nail for every entitlement they can get their grubby hands on to.  Its also a known fact that most companies pass costs associated with unions and higher taxes to their customers.  Those that don't do so suffer growth.  The mail services are a prime example of this.  To stay competitive, UPS could not reasonably pass on all the expenses to its consumers - thus slower economic growth.  The U.S. Postal service (which gets the majority of its funding from a yearly budget) does not have nearly the same leeway.  It charges postal fees, but even after a flurry of price increases in the past decade, it simply cannot keep up with the burden placed upon it from its union members. With clauses that prohibit layoffs and with benefit packages larger then what most other federal employees have, the union is eating up all of the postal service's resources!

Of course, the unions try to hide these facts from public eye and very recently, Teamsters president Jimmy Hoffa has declared war against Republicans by saying:

"We got to keep an eye on the battle that we face: The war on workers. And you see it everywhere, it is the Tea Party. And you know, there is only one way to beat and win that war. The one thing about working people is we like a good fight. And you know what? They've got a war, they got a war with us and there's only going to be one winner. It's going to be the workers of Michigan, and America. We're going to win that war," Jimmy Hoffa Jr. said to a heavily union crowd.

"President Obama, this is your army. We are ready to march. Let's take these son of bitches out and give America back to an America where we belong," Hoffa added.

According to him, the only people who qualify as "workers" are those who hold a union membership.

A few years ago, I started employment at a large telecommunications company.  During a point in our training session, the trainer informed us that representatives of the local union were going to come in to talk with us.  During that time, he was not allowed to be present. Also, none of us had a choice of whether we wanted to listen to the presentation or not.  During the "talk," two union reps lied about party affiliation and bragged that the company's (relative) high wages and benefits package were due to their efforts.  They painted those who were non-union in a very negative light and used promises of gifts as well as strong peer pressure to "encourage" the new employees to join.  Those of us who refused (only me, actually) were treated  as unworthy and literally frowned upon.  They failed to mention that the price increases that consumers were seeing were a direct result of their actions.

The truth of the matter is that unions are a now defunct requirement in today's business world.  There once was a time when they were needed, but that time has long ago passed them by.  Unions have transformed into proverbial leaches which drain a company's resources and threatens to put it out of business either through prices that consumers would prefer not to pay or by simply emptying the company's coffers.  There is no accountability applied to them for their actions, and they go out of their way to demonize anyone who opposes them. 

Unions - an entitlement group that America simply cannot afford.

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