How Are Things Going With The Union Movement?

You have probably read about the recent unsuccessful efforts of the UAW to organize fewer than 2000 workers at a VW plant in Tennessee; or maybe you have read about the successful effort of the APA to organize about 2600 pilots at Jetblue.  Meanwhile the big stuff happens where you're not looking.

The U.S. Postal Service not so long ago had almost a million heavily unionized employees.  Here is a chart of how that has gone over the past decade:  from 707,485 "career employees" in 2004 to 489,727 in 2013, the most recent year for which data are given.  That's an average decline of about 22,500 per year, and no sign that it will stop any time soon.  The Postal Service reported a loss of over $15 billion in 2012, and another $5 billion in 2013.  Oh, and they have an obligation of $5+ billion annually to a retiree health care fund, but have defaulted on three recent payments to that fund.  Any business with those problems and without access to the infinite credit card of Uncle Sugar would have pulled the plug a long time ago, or at least have instituted a fundamental restructuring.

What is the response of the postal union?  You would think that their goal would be to help the employer find a workable business model for the long term, but for some reason that's just not how the incentives of unions operate.  So April 24 was a "day of action" for the postal union to demonstrate against a modest pilot program to outsource some postal retail functions to certain Staples stores.  Here is a picture of one of the demonstrations:


The head of the postal workers' union, Mark Dimondstein, summarized the strategy:

The union says that the no-bid “sweetheart deal” will compromise the quality, security and reliability that consumers expect and deserve in the handling of their mail. Dimondstein says that an internal USPS document “makes clear that the goal of the program is to replace the good, living-wage jobs held by USPS employees with low-wage jobs in the private sector.”

No word how the strategy of opposing all efforts to reduce costs is going to help slow down the ongoing hemorrhage of revenue and jobs at the USPS.  But maybe the game can last long enough for Dimondstein to get to his own retirement before the Postal Service turns out the lights.

Meanwhile, in the world of state and local government unions, New York's MTA settled this week with its biggest union, the TWU, after going several years without a contract.  The MTA had been saying that it needed major work rule changes and a "net zero" increase in employee cost, but after an intervention by Governor Cuomo (running for re-election) the deal is reported to cost an additional $411 million over the life of the contract.  From whence comes the money?  No indication in the various press releases, but the enterprising Benjamin Kabak of Second Avenue Sagas comes up with the following disclosure in a Supplemental Statement released to bondholders:

MTA anticipates that the onetime payment for retroactive wages in 2014 will be funded from monies derived from released 2013 general reserves budgeted for voluntary deposits to the MTA Long Island Rail Road Plan for Additional Pensions that would have reduced the unfunded liability and future expenses. Increases in current year and annual ongoing costs are anticipated to be paid from funds budgeted for voluntary deposits to the MTA Long Island Rail Road Plan for Additional Pensions, and a portion of monies earmarked for voluntary deposit into the OPEB trust for future retiree healthcare costs.

In other words, they'll borrow it from the future, through the time tested method of underfunding pensions.  Meanwhile this union also continues its ongoing battle to prevent any and all cost reductions.  Retirement age remains an unsustainable 55.  Almost all trains have two people running them, while hundreds and hundreds of clerks do the easily-automatable job of selling fare cards.  The system isn't shrinking, but the problem is, it should be growing, and the ridiculous costs almost completely prevent that.