There are no shortage of headlines in the past week. Petraeus, John Allen, jealous mistress #1 and stupid mistress #2, or if you don’t like gossips, Fiscal Cliff negotiation, DOW fell more than 5% since Obama was re-elected, or some pure business news? Twinkies brand owner Hostess is liquidating its business. Yes,
NOT CHAPTER 11, but TOTAL LIQUIDATION.
Does that remind you some uncomfortable chapters in “Atlas Shrugged” yet?
The reason behind the liquidation is very simple, that even a lay person to business world can get the idea. Back then the company told their employees: Folks , we need to work a little harder in order to survive in this world, so I am asking you to work an hour more each day and taking 9% less in salary.
Immediately the protest started. This is still understandable. You work for many years at current compensation and doing some work. And suddenly you are asked to work a bit more, not for a promotion but a pay cut? I guess anyone will be upset. But what struck me as inconceivable is this: even when the company told the union that if you guys dont stop the strike and come back to work to keep everything floating, we have to liquidate the business and fire all of you.
The union did not budge. They want to call the owner bluffing.
Guess what? The owner has a flush, against the Union’s pair of Aces.
Lesson #1: Always remember who is paying you the money in exchange of your service
Lesson #2: Always evaluate your negotiation position fairly and accurately.
Now unfortunately, 18,000 workers there will be laid off and the company will stop their business.
Union is a weird thing. In certain historical moments, it made some sense. Back then the individual rights were not well respected and not protected. The evil business owner tried to squeeze every possible value from their workers and little human rights can be mentioned in workplace. That was the background of the birth of Union. i.e. unless you unite yourself together, you can’t fight for your rights.
Nowadays, Unions need to remember always: there is a fine line between what you think you deserve and what you really deserve, because human’s greed is unlimited and if without a limitation, it will go too far. It applies to both evil bankers and union workers.
I still remember 3 years ago, in the worst financial crisis, the news flash came across my screen that shocked me to the floor.
A piano moving worker earned about 400K a year in Carnegie Hall.
I believe some other works in the union makes at least 200K to 300K a year for doing some simple tasks and enjoy great benefits.
Question: are their service properly valued? or they are “protected” by the union so they have collective bargain and created a “labor” monopoly situation?
Another piece of news you may find interesting: In schools there are rooms called “rubber room”, which is for teachers who broke the rules and waiting for regulation decision on their tenure in school to sit in. Basically their job is to sit in the rubber room for several years since it is extremely complicated to fire them because of the teacher’s union “protection” and they are paid about 70K - 100K a year for doing nothing.
Inefficiencies in economy? Yes. Low Productivities as a result? Yes. Will it go away? Not likely. Good news is that in many places, Unions see their funding more and more shrinking because of the unemployment caused by the bad economy and more and more workers are in fact standing up against those “compulsory” unions dues from the already shrinking paycheck.
Unions are the monsters that were created in the past, and it can’t serve the current time and we need to get rid of it. We only need the government to observe and enforce the labor laws so that the 7/24 workweek will not come back. This is one of the important cause for having a government in the first place : to ensure basic level of human rights and safety net. We don’t need both Government and Unions to do such task. Otherwise we may have wonderful “work-life” balance with little working hours but huge pay check, and heading towards the hell that Greece is currently in.