Boeing Machinist Strike

Unions and strikes are difficult issues for me to resolve because The Abstracted Engineer's father is in a union, however for the most part I am against them.

A little background: Boeing's machinist union, which represents over 27,000 workers in Seattle, Wa, Portland, OR and Wichita, KS is striking because they want a better deal for themselves. Boeing has attempted to negotiate a settlement with the union reps, but the union has overwhelmingly voted to reject any offer and set up picket lines.

The strike could cost Boeing as much as $100 million dollars a day, assuming the strike lasts more than a few days. Boeing offered the machinists a $5,000 dollar bonus, 11% raise plus 3% adjustment for cost of living increase, and benefits increases, so that each employee's total package would be upwards of 34,000 dollars annually. The average machinist at Boeing makes $27/hr, or $56,160 annually. Apparently the union workers want all that, plus more vacation and 401k benefits. So basically the union workers are saying "we want you to pay us more, but we also want to not have to work as many days to earn it, and we want to be able to retire sooner."

Now I'm going to try to remove my bias here because it's hard to feel sympathetic to people who are complaining that they aren't getting paid enough when I get paid a similar amount to them and I have 7 years of college more than they do.

The problem with this strike is that it's stupid. I'm not a heartless money-grubber, and I'm not anti-American, but if I were on the Board at Boeing I would give the machinists the finger and move my factories overseas. In 12 months Boeing could be building their planes in Asia where labor is 1/4th the cost it is here. They would reduce their expenses, increase their profits, and please their shareholders.

"But," you might ask me, "are you advocating abandoning American workers?"

Well I'm not, really. But I do advocate fair wages based on labor quality and difficulty of training, and I find it hard to believe what the machinists are doing is worth what they are making...and even harder to believe it is worth what Boeing offered as a settlement. But greed is a dangerous and awful thing, and with Boeing's back orders totaling over $430 billion, the machinists believe they have a right to some (more) of that money. More than 27 bucks an hour, anyway.

Capitalism works (and works well) because a fair price can be paid for a service or commodity. Labor, it can be argued, becomes a commodity when it's price is negotiated and regulated by a group such as a union. Capitalism also works because you are not forced to pay an unfair price for a commodity. If something is too expensive, people don't buy it. Then the price will inevitably come down.

Milton Friedman argues that increased wages (via union negotiation) actually increases unemployment by decreasing the amount of workers an economy can support.
Simply put: If bananas are 12 cents a piece, and I have a dollar, I can afford 8 bananas. If the bananas go up to 13 cents a piece, I can now only afford 7 bananas, and one banana rots.
On outsourcing: If a banana is worth 12 cents that is one thing. But if I can find a banana seller somewhere else that will sell me 8 bananas at 7 cents a piece, not only am I getting all the bananas I want, but I have 44 cents left over to return to my shareholders. This is how labor unions increase unemployment, and how I believe they are pushing the industrial sector of this country increasingly overseas.

It's not un-American to move your company overseas. CEOs often have no choice, as their longevity at a company is intimately linked to their ability to return a profit to the shareholders. I am sure any God-loving American would prefer to see businesses invest in, and stay in America, but when you are a business administrator, not a political one, your job is to run a successful business.

So if I were a higher-up at Boeing, here's what I would do (I decide this without any intimate knowledge of the legal ramifications):
I'd tell the machinists they're all fired. I would then try to hire new machinists here in the states. If the machinists sued me, I'd counter-sue, claiming that they forfeited their jobs when they stopped coming to work.
If the government stepped in and tried to force me to negotiate with the machinists, I'd sue the government, and claim that government intervention into private enterprise is not warranted when there is no threat to the national GDP, no threat to national security, and no significant decrease in taxable wages. Then I'd have my lobbyists (who believe me, at Boeing the lobbyists know their stuff) tell the members of Congress that if they didn't back off, I'm taking my entire business to Asia. Probably Russia, actually, since Boeing has already promised to spend $27 billion there building up their titanium industry.

A small, kind word for unions before I go. America's economy 100 years ago was such that unions were an awesome idea, when price fixing was not well regulated, workers had no rights, or job security, or retirement plans.

But today isn't 1908, its 2008, and the average blue-collar worker is living better than ever. Modern economics has shown that a labor-union wage increase generally increases inflation and comes at the price of lost jobs...for non-union workers. Boy that's fair.