Labor Day 2014

What country in Europe has the most robust economy on the continent? If you said Germany you are correct. But what does Germany have that makes it so successful?

Germany has high wages, universal healthcare, long vacations and good opportunities in education. So far so good. And it has unions. Unions you say? Do you mean those job killing, blood suckers that Americans routinely disparage? Here is another mind-boggling fact for my fellow Americans. Union representatives in Germany often hold board seats on the corporations that they negotiate with.  Keep these facts in mind and let’s look at what has been happening in America.

Through decades of union crushing measures corporate America has made unionism into an evil entity. With the help of public officials, that they buy off by the dozens, they have been able to create legislation that usurps the power of the laboring class to negotiate fair wages and benefits. As a result unions are a mere shadow of what they once were. The only really strong unions are those that represent government employees, and that’s because they have the power to vote their bosses out of power.

Studs Terkel, an author, actor and radio personality, was standing on a corner in Chicago one day waiting for a bus. There was a well dressed, young couple about 30 years old on the same bus stop. Terkel overheard the conversation they were having about unions. The two people were in agreement that unions were a scourge on the nation.  Mr. Terkel interrupted their conversation and asked if they ever belonged to a union. They hadn’t.

Studs asked, do you work a 40 hour week?

“Yes.”

“Do you know how the 40 hour week came about?”

“No”

“Do you have healthcare?”

“Yes.”

“Do you know where that came from?”

“Legislation, I guess.”

“No it was union negotiations. Do you get vacations?”

“Yes.

“That came as a result of union negotiations too. Now it appears to me that both of you went to college. Is that true? So, you both came from families that were well off?”

No, the man said, “my father was a carpenter.”

“A union carpenter? Terkel inquired, and he was able to afford college for you?”

‘Yes”, the man said, as he looked at Terkel thoughtfully

At that point the bus came and the conversation was over. Studs Terkel told that story on the radio later and mused that these union haters never knew where they came from.

There has been a systematic demise of the labor union movement caused by legislation and propaganda from the people with the power and money to get those results. The impact that those tactics have had on the working class have been devastating.  

What is equally as bad is the damage to the social fabric of America. In the days when people my age were growing up top executives of the largest companies in America were earning about 30 times the average worker in that company. Today that disparity is more like 300 times the average and sometimes as high as 500 times. Occasionally the disparity is even worse.

There is a line from the story of Pygmalion (My Fair Lady) when Professor Higgins berates the ne’er do well Alfie Doolittle on his total lack of morals. Doolittle looked at Higgins and replied, “Morals? I never could afford them.” That was a laugh line in the play but the point is, that when we lose the usual trajectory to success crime increases.

What is happening in America is that we are recreating an underclass that cannot compete. One of the ways that my generation was able to compete was the accessibility to education. Today that route is hampered by the high cost. We need to support labor’s need to negotiate a fair living wage. That is true regardless of the work that they do. 

The results of a fairer society is higher productivity, more innovation stirred by having more educated people in the mix, a stronger economy, and ironically more wealth for even the already wealthy.

The ultra wealthy are becoming more and more isolated  and I can’t imagine that being interesting and rewarding. Many years ago when I was in the richest part of Mexico City I observed that the walls surrounding the homes of the rich were 15 feet high and were topped off with concertina wire. I said to my wife these folks live in a prison. When we returned to New York I was being honored by my company at the Plaza Hotel and observed that the richest people in New York walk about the city virtually unprotected. Yes, I want the working people to have rewarding lives. I also want the rich to feel safe.

Enjoy your Labor Day celebrations

Ernie Fazio