Record deals for unions

Increased awareness among workers about record profits has translated to company concessions and improved deals, said Marcos Feldman, senior researcher at Jobs to Move America, a labor organizing nonprofit.

Fidelity.com

Many people, even politicians are shouting the victory of the UAW reaching what amounts to a compounded 33% raise over several years.

Memories are short. The auto industry was in deep trouble when there were no record profits, when labor and related costs – pension and retirement liabilities were dragging them down.

A 33% pay increase means higher payroll taxes, higher pension liabilities and funding and higher costs for any benefit related to pay.

It is a mistake to peg growing future costs on current revenue and profits. What if we fall into a recession, if consumers come to their senses and cut back spending? What if 2008 is repeated?

Yeah, workers deserve their share of the pie, but more of that share should be linked to the size of the pie. That is more profit sharing, more compensation in the form of shares in the company.

If workers and unions believe what they say about their contributions to the success of the employer, their reward should reflect that and should include a small portion of the risk as well.

Generous union contracts with fixed costs must be paid for with future non- fixed revenue.

Let’s hope not, but when – not really if – we get to the next economic crisis nationally or industry-wide, it will be the workers first to suffer.