I still lived in Ukraine when the union of coal miners in the Donbass region launched a strike demanding higher wages at a time of rapid inflation. This was in the early 1990s, the first years of Ukrainian independence. The timing couldn’t be worse for the barely surviving industries that depended on coal-generated power, as the rest of the country struggled to stay warm in the winter. The miners did get their pay hike. It affected the cost of heating, power, metals, and just about everything else in the country. As the prices went up, the overall gain for the miners was zero but everyone else’s lives became even more miserable.
The Donbass miners felt they were cheated and went on another strike. Well-positioned to hold the country by the throat, their union demanded one wage hike after another. The cycle repeated over and over, still leaving the miners with no gain but driving all others, especially the pensioners, into abject privation.
Before long, other unions demanded higher wages, supported by angry workers envious of the “privileged” status of the Donbass coal miners. In an overstretched economy, new pay hikes ended up driving consumer prices through the roof. The wage race was as irrational as cutting a hole in the back of a shirt to patch a tear in the front, but such is the nature of collectivist pressure groups that can’t help but fulfill their purpose of extracting privileges for themselves at the expense of everyone else — even in the face of an imminent economic catastrophe.
They got their wish. Soon everyone became a millionaire, walking around with bags full of money because their pockets could no longer fit the huge wads of cash required to buy a loaf of bread, whose cost was now in the thousands. And even that money they had to spend fast; by the end of the week it was worthless. My friend invested part of his rapidly dwindling savings into a pearl necklace for his wife, half-joking that someday they might be lucky to trade it for a warm meal.
We all learned a new word, “hyperinflation.” It equalized everyone, including the Donbass coal miners.
One by one, factories started to shut down. The ones that stayed open began to pay workers with their own products. A neighbor who worked at the knitting factory brought home boxes of socks and stockings instead of money. A mother of two, she spent weeks trying to barter the socks for food and other things her family needed, which made her apartment a “sock exchange” and her a “sock broker.” My other neighbor worked at a fertilizer plant; he wasn’t so lucky. His plant simply closed. Barter was now the law of the land; people and businesses mostly traded in goods, often in complicated multi-party combinations. But the preferred currency was, of course, the U.S. dollar, which was a sign of progress, given that only a few years earlier, owning “capitalist currencies” could result in a visit from the KGB.
The Donbass coal miners also lost their jobs as their customers either had to shut down or pay them with socks. The little good that came out of their strikes amounted to exposing the philosophical link between trade unionism and communism, and showing why communism doesn’t work. It also taught me four things everyone needs to know about inflated union wages, especially those extracted by holding a gasping nation by the throat:
1. Inflated union wages are a form of forced redistribution of wealth. They use government protection to suck other people’s money in, without giving anything back.
2. Inflated union wages are futile. They lead to inflated prices; the union members do not become richer but everyone else becomes poorer.
3. Inflated union wages produce an economic monster that ravages the country and eventually consumes its own creators. In richer nations it moves slower due to the abundance of nourishment; in poorer nations it quickly destroys economies, causing massive and unwarranted suffering.
4. Inflated union wages are immoral.
I now live in the United States, where inflated union wages have already priced the American steel industry out of existence, making the Pittsburgh Steelers an anachronistic reminder of the city’s industrial past. Next is the American auto industry, which has become a gigantic union-run welfare agency whose byproduct happens to be automobiles.
An article by Brent Littlefield in Pajamas Media describes the reasons: “An unbelievable $1,500 of the cost of each domestic vehicle pays for UAW (United Auto Workers) health insurance. That’s more than was spent on the steel. As a result, Americans shop elsewhere: U.S. automakers produce less than 50 percent of the vehicles Americans now buy.”
I have a friend who prices contracts for a construction company in Queens, New York. He uses a computer program that includes an option of cutting costs by decreasing the number of union workers. He applies this option when all the other factors have been computed and the bid needs to go down a notch. If that price wins him the contract, the next step is to bribe the union shop steward at the site. The “shoppie” pockets the money and turns a blind eye to the presence of a few lower-wage non-union workers.
On the construction site at Columbus Circle in Manhattan, an outside freight elevator was built to lift crews and materials. It was operated by an “elevator engineer” who pushed floor buttons at the rate of $37 per hour, competing for the title of world’s most expensive bellhop. Two union goons, armed with crowbars, sat at the foot of the elevator all day in lawn chairs, sipping coffee, reading newspapers, or listening to the Howard Stern Show on the radio. Their job was to tell the crews that the elevator was unavailable — at least that’s what they told my friend when he needed to lift his workers. But after his boss arrived from Queens with $500 in cash for the goons, the elevator became readily available to their crew for the duration of one week. Thus my college-educated friend learned a new rule of union mechanics: the wheels of a freight elevator needed to be greased for it to appear. This know-how wasn’t taught in school, but it appears to be common knowledge on construction sites in New York.
A New York businesswoman once hired me to design a display booth to be shipped to a conference in Chicago. I also designed her presentations, which we finished on Saturday in her office as she simultaneously did a million other things, impressing me with her ability for multitasking. Her plan was to fly to Chicago on Sunday, set up the booth on the conference floor, hook it up, test the lighting, and show up Monday morning to reap the rewards of meticulous preparation and precise planning. But Monday morning she called me in tears to say that our booth had been vandalized. At the start of the conference she discovered that all the electrical wiring had been ripped out of the panels. A union electrician on the floor half-admitted to his vandalism, proudly noting that this was a union site and she had no right to plug anything into the wall without hiring a union electrician and paying him the prevailing wage. He shrugged off her argument that she hadn’t seen him on Sunday; he didn’t work weekends. A union-compliant course of action for her would have been to arrive on a Friday. In other words, she had to waste two days of her busy schedule stranded in a strange city and pay extra hundreds of dollars in weekend hotel rates, so that a union guy could charge her $50 for inserting a plug into the wall on a Friday. That certainly made a dent in my prior confidence in the efficiency of the American workforce.
I myself was once threatened by a union agent when I worked for a small Brooklyn-based business involved in reconstruction of New York City public schools. The man called our office demanding $500 to cover the loss in wages for his union. It appeared that our workers had made an opening in the wall for an air duct, then patched it and cleaned up after themselves by collecting the debris into a bucket. Apparently, cleaning up after themselves was a crime; it was supposed to be a union job paid at a higher rate. Our workers broke a sacred rule: no work was allowed unless the unions could use it to squeeze the most out of the employer. I listened as he made his case, then told him to stop being ridiculous and hung up. That triggered a series of angry calls that lasted for several days.
Using expressions that I, a recent immigrant, hadn’t yet heard before, the man told me not to mess with the unions and that I didn’t know what I was getting into by taking it lightly. I answered that, on the contrary, I realized that anyone charging $500 for a bucket of trash had to be a very important man. But I didn’t understand why, instead of spending more time carrying buckets, he wasted his valuable minutes on the phone trashing me — a man so unimportant that he took out his own trash free of charge. Every three minutes of the conversation I kept reminding him that he had just lost another $500 in potential wages simply by talking to me. I must have convinced him because the calls eventually stopped.
It was true that I didn’t know what I might be getting into. It was later explained to me by an older friend, who was active in the unions back in the 1970s. He recalled how some of the business agents (union organizers) carried guns while visiting private contractors. “They wore suits and during negotiations would occasionally let their jackets open, just enough for a glimpse of the hardware they were carrying. I didn’t know of any actual murders, but I knew that uncooperative non-union contractors had their tires flattened, trucks vandalized, and storage buildings set on fire.”
“In every election cycle,” he further told me, “union members were instructed whom to vote for and called upon to volunteer for. I supervised crews that made election signs to be installed at the union’s direction. Harmless enough, but as a supervisor I learned about what they used to call “other activities.” That included members going through legal records and files of prison inmates to register felons. Others were checking real estate records, recording people who left the state to replenish the ranks of phantom voters, and using vacant houses as their addresses. Yet others were combing obituaries for the newly deceased. If the quotas remained unfilled, they searched older death records, sending scores of 120-year-old apparitions to vote. Guess whom they voted for? Sure enough, the candidates have always been pro-union Democrats with an agenda to pay back their benefactors with government pork at the expense of the taxpayers.
My friend assured me that the majority of union members were decent people, but the methods of the union higher-ups included intimidation, coercion, and stealth: “They tell you what kind of a job you can have and where that job can be. They set the rate of pay and dictate how much you will pay them for the privilege. They tell you whom to vote for and are extremely politically active. All in the name of the American worker.”
Eyewitness accounts are supported by mind-boggling official statistics: “In 2005, upwards of 12,000 UAW ‘workers’ were paid not to work. The Big Three and their suppliers paid billions to keep downsized UAW members on the payroll as part of a UAW contract. One UAW member, Ken Pool, said he would show up to work and then do crossword puzzles. He earned more than $31 an hour, plus benefits. Higher costs and legacy costs for retirees were transferred to consumers.”
Having worked in various corporate offices in New York, I noticed a sizable wage gap between those working in the financial sector and all the rest. Contrary to the caricature portrayal in the media, it wasn’t just the CEOs giving themselves bonuses; people on even the lowest levels had higher wages. I understood it as the desire of the financial companies to attract the most capable employees, and as private companies they had every right to do so. What I couldn’t understand was a similar gap between the union and non-union workers, who received unequal pay for equal work regardless of their qualifications — a practice the government openly supported and even encouraged by preferential treatment of union contractors in the name of “economic justice.”
“Justice” in this case means that non-union employees often work longer and harder while union members enjoy better wages and benefits, as well as job security and other unearned perks. It’s even more grotesque once you realize that union perks can only exist on condition that the unprivileged workers of this country and the rest of the world continue to pick up the union tab by paying the artificially inflated consumer prices, as their much lower wages help maintain the cost of living at the union employees’ level of comfort. This was exactly what I thought when I observed the sleepy unionized employees at the New York City Housing Authority distributing project documentation to private contractors that was absolutely illegible; it never occurred to them that photocopies should be made from the original sheets and not from the spawn of a hundred generations of copies that were more suitable to conducting Rorschach tests on psychiatric patients.
To compensate for the rigid limitations imposed by the unions, American corporations found a way to retain flexibility by hiring an army of temporary employees through specialized “temp” agencies. I used to be a temp and am describing only what I saw. The “temps” didn’t have the perks of their unionized co-workers, they worked more, and they could be fired without warning. For all intents and purposes they were the official second-class citizens of the corporate realm, whose work paid for the privileges of others.
I don’t mean to complain; I was grateful for the opportunity to have those jobs, as were most other “temps,” and the pay was fair. I felt like a deck boy sailing on luxury cruise ships of socialism that navigated capitalist waters under the protection of the battleships of trade unions. Unfortunately, there could be no protection against the icebergs of recession and financial crises. And when trouble struck, deck boys got thrown overboard without a life jacket. But capitalism is no more to blame for this than the Atlantic Ocean was to blame for the class divisions among the passengers on the Titanic.
These two unequal classes of employees seem to be a relatively recent byproduct of the policies of “economic equality and justice” — a compromise to avoid the death by strangulation as life is trying to wiggle itself out from under the morbid weight of absurd policies. How can such an idealistic intention as forced economic equality create inequality? When the results are the opposite of what is intended, it usually means that the intentions are based on a faulty premise. And since the premise here is “economic equality,” it must be an erroneous concept.
In the same way, on all levels of the economy, unionized socialism has created privileged classes of workers that exist at the expense of the underclass. As such, it has become a parasitic formation that is connected to the capitalist economy the way a parasite is connected to a healthy host body. It would then seem to be in the unions’ best interests not to immobilize the host body lest they die along with it.
The paradox of the union movement is that it succeeds as long as it fails to grow. A unionization of the entire country would not only end current exclusive privileges, but would make the economy so stagnant that the ensuing economic crisis would force the government to manage labor relations, restrict union powers, and revise labor contracts. Such a prospect is not so far-fetched, given some stated government aspirations to regulate paid vacations and sick leaves. This may seem friendly to the unions, but history indicates that when an intrusive government assumes union functions, friendship ends and a competition for power begins, in which the government of course prevails. Having fulfilled their historical mission of advancing a state-run economy, the unions will outlive their usefulness and succumb to the fate of their Soviet brothers as voiceless puppets of tyranny.
And since forced economic equality tends to result in forced inequality of the authoritarian state, unionized workers will end up being an underclass ruled by the powerful and corrupt state oligarchs, who are the only beneficiaries of a system that redistributes unearned privileges. If one day union activists wake up under such new management, they will only have themselves to blame.
Coming soon: “American Unions: A Study in Collective Greed and Selfishness.”