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Why VW Workers Have More to Lose Than Gain From Unionizing

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Unread 05.14.19, 06:39 PM
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Why VW Workers Have More to Lose Than Gain From Unionizing

On 05.13.19 12:26 PM posted by Rachel Greszler

History has an important lesson for autoworkers at the Volkswagen plant in
Chattanooga, Tennessee, where the United Auto Workers union plans to hold a vote soon to unionize workers.

When it comes toVW’s Chattanooga workers, unionizing is more likely to prevent expansion by thecompany and threaten jobs than it is to bring about higher wages and betterworking conditions.

Consider somehistory on U.S. auto manufacturing and the UAW’s role in its decline.

As labor economist James Sherk wrote in a July 2014 New York Times opinion column:
For decades, almost the only cars Americans could buy were those built by [UAW] members. And because the Detroit automakers could collectively raise prices, the union could negotiate above-market pay.

The result: Cars cost more, Detroit sold fewer of them, and the automakers employed fewer workers—and [UAW] members got six-figure compensation. …

Once foreign automakers entered the market, this system began to collapse. Consumers could (and did) take their money elsewhere, so Detroit eventually had to cut costs.

Domestic autoproduction is at less than half the level today as it was just twodecades ago in 1999, and the UAW is undoubtedly at least partly to blame fordriving labor costs to unsustainable levels.

A 2008 Heritage Foundation report found that the average hourly compensation cost for UAW workers at Ford, General Motors, and Fiat Chrysler was more than $73 per hour.

That’s more thantwice the current $36 per hour average cost of employeecompensation across the U.S.

And despite thefact that the UAW was partly to blame for the U.S. automakers’ near-bankruptcy,the UAW nevertheless effectively received the entirety of the $23 billiontaxpayer bailout of the automakers.

As Todd Zywicki and Sherk wrote in a 2012 Wall Street Journal opinion column, the “preferential treatment given to the United Auto Workers accounts for the American taxpayers’ entire losses from the bailout.”

If the VW workers unionize, and the UAW strong-arms the company into the same type of unsustainable wages and compensation, Volkswagen might decide to close up its U.S. operations altogether or to move its Chattanooga plant elsewhere—further south—where it can secure sustainable labor costs.

Labor costs havebeen a primary driver of the southern shift in manufacturing in the U.S. As economistDave Swenson of Iowa State University noted, “Initially, half of the propensity to move plants was toescape union contracts and to take advantage on non-union right-to-work states.”

So, if the UAWhas forced companies to close doors and workers to lose jobs, why would VW’sChattanooga employees want to unionize?

Historically, theoriginal impetus for unionization was to secure fair wages and compensation, achievesafer working conditions, and to gain a voice with management.

It appears,however, that VW’s Chattanooga employees already have that.

In January, the Top Employers Institute certified VW Chattanooga as one of just 23 U.S. employers to receive the Top Employer distinction. Among the company’s benefits: comprehensive medical, dental, and vision benefits; a 401(k) match; paid maternity and paternity leave; tuition reimbursement; and a vehicle lease program for employees and their family members.

Current starting pay for hourly workers is $15.50 and tops out at $23, but VW recently announced a 50-cent hourly increase effective July 1s, bringing the hourly range to between $16 and $23.50 for team members and up to $30.50 for maintenance workers. This raise was an effort to increase base wages and maintain an upward earnings trajectory.

Employees also receive quarterly bonuses through VW’s “JumpStart” program. In the first quarter of 2019, hourly employees received a bonus equal to 4% of their quarterly earnings “just for showing up to work” and up to 16% based on factors such as productivity, safety, and quality.

Pay isn’teverything, though. Employees want a fair and safe workplace, and they wanttheir voices to be heard. VW seems to be on top of that also.

According to one VW worker with whom I spoke on the phone, the company is quite supportive of its workers and has “very friendly” employee policies. That includes clear guidelines for the company’s “corrective-action program,” which involves a four-level process before an employee is terminated and a “peer review” process whereby terminated employees have the opportunity to appeal their termination among a randomly chosen panel of their peers.

Moreover, from employees’ perspective, Volkswagen has recently taken extra measures to listen to employees and make changes they desire. Last year, for example, the company changed to a fixed-shift schedule (as opposed to rotating day/night shifts), based on employee input and a vote by team members.

These favorableworking conditions are good news for the estimated 1,000 new employees that VWChattanooga will employ over the coming years, following thecompany’s announcementthat it will invest $800 million in the Tennessee plant to build electricvehicles.

Things seem to begoing pretty well both for workers and management at VW Chattanooga, so why theimpetus to unionize?

Well, things aren’t going quite as well for the UAW, which suffered a 9% decline in membership in 2018.

And the union hadto spend millions (of employees’ dues) on legal fees and damage control after acorruption scandal in which federal prosecutors said the UAW’s Fiat Chrysler Automobilesdepartment was “riddled with corruption” and “fatally compromised in itsability to represent the best interests of the UAW’s members and theirfamilies.”

But each of VW’s roughly 1,500 current hourly employees, and the estimated 1,000 forthcoming ones, would provide the UAW between about $480 and $950 in annual dues to the UAW. Assuming an average wage of $20 per hour, 2,500 new UAW members from the VW Chattanooga plant would inject $1.8 million in new revenues into the union each year.

Before VWChattanooga workers vote on whether or not to unionize and send part of theirpaychecks to the UAW, they should consider whether doing so is more likely togain them higher pay and better working conditions—or limit their opportunitiesto grow and potentially cost them their jobs.

The experience of other U.S. unionized autoworkers suggests the latter.

The post Why VW Workers Have More to Lose Than Gain From Unionizing appeared first on The Daily Signal.

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