Unions: an up close perspective

Worker Pay. The Conversation continues.

      

     "In my Guest Post yesterday I was talking about the false notion that the best way to help people move from poverty or near-poverty into the middle class was by college-going. I argued that education level was not the primary determinant of worker rewards, but rather worker power was."

          Herbert Rothschild, author of yesterday's Guest Post

I am the indirect beneficiary of unions. My father was an elementary school principal, and school principals in southern Oregon were not part of a union themselves, but were paid an income set by the school district geared to be slightly more than the salaries of teachers they supervised. Teachers had a union, which raised their salaries, and therefore those of principals. I was brought up in a middle-class home through that chain of events. 

Click: Would customers support a worker strike?

The people who most need unions are not in a good position to organize them. Retail clerks, health aides, and people in food service--essential workers, in the COVID world--are too easily replaced by others eager for those jobs, and too few customers will refuse to cross a picket line. Employees don't have leverage. As Rothschild observed yesterday, Walmart employees qualify for public benefits: Food stamps for food, expanded Medicaid under the ACA for health, rental assistance for housing. Taxpayers fill in the gap that allows employees to survive on Walmart's pay scale.  

John Coster read yesterday's Guest Post about worker power and unions. He has direct, up close experience with unions. I received this comment in response to my observation to him about the pricing power of trades people. When a bathroom sink starts a rapid leak a customer cannot stop, or the power goes off in the house--two experiences I had recently--the customer is less concerned about price than about availability and competence. The tradesman has pricing power, based on specialized knowledge, licensing, and equipment. I was surprised by how expensive the electrician was, but I needed someone to show up, and that was the cost.

John Coster manages large construction projects for Microsoft, Toyota, CenturyLink and other companies that require complex electrical infrastructure.  He is based in Seattle. 

Guest Post by John Coster

I think collective bargaining is just one part of one solution to income inequality. In 1975 I graduated from a vocational high school in Massachusetts where I trained to be a commercial and industrial electrician. At that time, school shop time and cooperative work counted towards hours required in order to qualify for the State license exam. When I was 19 I passed both Journeyman and Master Electrician license exams which allowed me to either start my own contracting business or work as a qualified foreman or lead for an electrical contractor. 

John Coster

Union membership was not an option because the International Brotherhood of Electrical Workers (IBEW) operated like a nepotistic private club that worked to control the qualified labor pool by limiting membership. Vocational schools subverted that model by producing qualified electricians, which enabled non-union contractors to staff their crews for 70-80% of union rates. Most of us were hired on a project-by-project basis so we never were able to organize, and moreover the union seemed uninterested in recruiting us “scabs” into their ranks and upset the equilibrium. 

 

The nature of the work meant we might work on one or two projects before being laid off, at least for a time, and we would lose our health benefits and any “profit sharing” that might be paid out once a year (if you were still there).  We knew our union “brethren” had IBEW healthcare, vacation and retirement benefits that were portable – I.e. they traveled with the worker regardless of who they worked for as long as the contractor was signatory to the IBEW. So I personally felt the exposure of being a second class worker, and I was always prospecting for my next gig knowing that my income was only as certain as the next paycheck.

 

I eventually moved to the business side and managed large projects with union crews. But construction unions are not just about fair pay, portable benefits and safe working conditions. It was a distinct culture that was tribal in its outlook. I once had over 300 union electricians working for me on a project, many of whom had travelled from other regions of the country because of the abundant work. I had to pay independent inspectors to double check work because so much had been secretly sabotaged. It was like I had the Mob working on the project. 

The attempted sabotage was always the crazy part. It wasn’t like we provoked them. Sometimes we’d find metal bars, or even chains inside transformers that would cause it to blow up when we turned it on, or they made the connections loosely so that over time it might (and did) cause a fire. It was clear that it was done systematically and deliberately. The “travelers” as they are called were always suspect.

That kind of thinking and their efforts to control labor supply eventually backfired and it has ultimately harmed their cause. Except in large, complex public projects or specialty industries, there are few union electrical shops except in major urban areas. What was once an effective monopoly is now a minor player with less than 10% of the workforce.

 

Leadership got greedy and power-hungry and were not sensitive to the realities of the marketplace, and everyone has suffered. Wages for even non-union electricians are between 60-70% of what they were in 1980, accounting for inflation. 

Here's something interesting about the tradespeople who come to your house. Do you know what the typical profit margin works out to be for members of the National Electrical Contractors Association, i.e. electrical contractors?  About 1.5%.

The current W2 wage for a non-union licensed electrician in the Seattle area is about $45.00/hour. Add to that about 25% un-billable time for travel, picking up supplies etc.  Add 40% burden for FICA, state and federal unemployment taxes, and health insurance. So that's $80 before you add home-office overhead (estimators, accounting, sales, rent, IT, depreciation, insurance, licenses, etc.).  

A hustling self-employed electrician with a truck, a website, a dispatch service and a Square payment device has lower overhead, can be more competitive, pocket the difference and do pretty well. That was me when I just started out, with my licenses and no money. A friend and I had business cards and a company name: "Two Guys and a Truck." But falling off a ladder just once can create an unrecoverable loss of revenue event for the self-employed, so that's the trade-off.