Labor unions need to understand business issues

by Dennis Martire
for Virginia Business
December 2006

What is the biggest challenge that American labor faces today? Outsourcing and foreign trade? Weak labor laws that don't protect workers who try to organize unions? A flood tide of workers from abroad placed in competition with domestic workers? All of these are vitally important, but I would add one often-forgotten challenge to organized labor in America: Our labor unions don't understand business.

Maybe because I worked the management side of the divide for a while - as an assistant director at Pittsburgh's Equitable Gas Distribution Division - I see some things that a lot of labor leaders miss. Union leaders have become fairly skillful at understanding and adopting the psychology of the workers they represent, but few have taken the time to understand the realities of the business world. And that leads to unrealistic expectations. There's a stereotypical union mindset that says no discipline is ever justified; that no cutbacks are ever necessary; that every worker is entitled to any accommodation he or she requests. Most of all that mindset imagines every employer as a cartoon Scrooge McDuck sitting on sacks of money: If he ever denies workers a fat raise and generous benefits, he's motivated by pure greed. Economic factors are just a subterfuge. End of story.

Now, in a time of growing economic inequality, this picture is not entirely the product of an overactive imagination. There are plenty of CEOs drawing obscene salaries, and plenty of corporations earning unjustified windfall profits. But in my main industry, construction, we also have plenty of workers employed by union firms with thin profit margins. Demanding that companies in highly competitive markets retain unreliable workers, honor antiquated jurisdiction and work rules, and pay wages and benefits fully twice what their nonunion competitors pay is a recipe for disaster, for union contractors and ultimately for our union and its members. When union contractors have no work, our members have no jobs. That's the cold fact.

If my union can't provide better wages, benefits and job security than workers can achieve independently, there would be no reason for us to exist. But we need to find a way to deliver on this responsibility that is compatible with a successful business model for the construction contractor, too. The founders of our construction unions knew this and organized their unions not just to unite workers for collective action through strikes but to answer a critical need of construction employers - training. Construction employment was by nature temporary with most workers hired for a specific project and laid off upon its completion. It was not economically feasible for contractors to invest a lot of money in training employees who would soon be working for someone else. By organizing the work force, training them and dispatching them through hiring halls, unions helped their employers solve a basic economic problem.

If unions are going to survive and prosper in the 21st century, we still need to meet the needs and expectations of workers, but we also need to find a way to serve important business needs. And we can. Often, today's business leaders wisely want to concentrate on creating value by focusing on their core competence - outsourcing peripheral business functions like labor recruitment and health insurance administration to others. And in a business like construction with a highly transient work force, portable benefits are essential to attracting and retaining the best employees. Enter the Laborers. Our recruitment efforts, well-funded apprenticeship and training schools, and multiemployer health and welfare funds can help address all these challenges. Offering critical functions like these on a cost-efficient basis will be a key to labor's success in the new millennium.

Organizing workers will always be central to unions and their purpose, but for our institutions to survive, fitting a critical business need is also part of the puzzle. Unions today represent less than 10 percent of our nation's private-sector workers. We can no longer simply demand that business adapt to our needs. We need to adapt to the needs of business.

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Dennis Martire is mid-Atlantic vice president and regional manager of the Laborers' International Union of North America (LIUNA), which represents some 40,000 construction laborers and other workers from Pennsylvania to North Carolina. He can be reached at dmartire@malaborers.org.