Friday, March 27, 2009

Unions - A Mea Culpa and an Anecdote

I have been trying to get back to my unions posts but it has proved more difficult than I anticipated.  I have tried to find some general overview article of the JEL type or some relatively recent paper that presents some convincing and wide ranging evidence, to no avail (but have not had much time to look).  Instead there are a multitude of (mostly older) papers that are hard to generalize but about which I think I can make a few statements.  Call them what, stylized facts?  Unions tend to raise wages and this effect is more pronounced for lower skilled workers.  Unions can also lead to rigidity that cause more unemployment (though this is buy no means a general result at least in my investigation).  Unions have no clear implications for the profitability and success of firms - I have found research that have found both positive and negative effects.  I hope soon to be able to find some time to discuss this in more detail.   

In the meantime, thank you for your comments.  Many have shared personal anecdotes, so I'll share mine:

When I was a UPS delivery person and was still relatively new, around Christmas (Dec 23), I was given a rental truck with hastily lashed 'shelves' that was literally stuffed to the roof with packages in only a minor semblance of order.  I was out until 10pm delivering these packages and at about 6:30pm I finally unearthed a series of packages for a medical office that was now closed given the hour of the day.  This is a cardinal sin at UPS - you make an attempt on every package in your truck and never, ever miss a business delivery.  But I had no control over this.  Anyway, I finally return to the UPS facility exhausted, not having eaten anything for ten hours. I was the last one in and the supervisor (whom I had never met as he was the overnight super) gave me a dressing down for the unattempted packages in my truck.  I gently suggested that if he had seen my truck in the morning, he would understand that it was overloaded and that I had done a pretty good job delivering as many packages as I had.  

So that was bad enough, but when I got to the locker room the union rep came in to tear into me for staying out too late.  All I could do was laugh.  

Now, he was trying to do me a favor, as a new guy, he wanted me to know that I had the right to return earlier and not to let UPS take advantage of me. "No one stays out past 9, said he."  But at that moment I was not interested.

Anyway, are the Teamsters good for UPS and its workers?  Well, I knew that (then, at least) I got paid much more than drivers at FedEx and had fantastic benefits.  Though I also noticed that FedEx workers were always pretty casual and unsweaty - in stark contrast to my haste. UPS was a very successful company and was always on the list of great companies to work for.  They aggressively promoted from within and they tried to stop me from quitting by promising that I would not be in a truck for long with my degree in economics - so clearly they thought of their employees as a long-term investment and wanted to keep them, which is a good thing.  There is also a 3 month probation period during which UPS aggressively weeds out those who cannot cut it which is a part of the union contract.  So in general, I think it is a pretty good model for a successful union shop.  But that is from a pretty small observation period.  As an economist I am trained to be suspicious of such rigidities, but the information asymmetries and job-specific investments present in the UPS example seem to provide a pretty good justification for unionization.  

Just a thought...hopefully more data to follow.

1 comment:

Doug said...

I have always been taught not to base important policy decisions on anecdotal evidence. If we looked at the full suite of data I think we would probably conclude that unions are imperfect but they are not as bad as not having unions.