Author: Thomas S. Fredericks,  Attorney & Business Counselor Web Site: http://tomfrederickslaw.com/

 

The Union Disadvantage: costs associated with unions.

 

Tangible Costs

 

Research indicates that the cost of running a unionized company is 30% to 40% greater than for a non-unionized one, and may not include subsequently negotiated changes in unionized employee wages or benefits.

 The administrative budgets of unionized companies are higher due to the need for larger human resources staffs to deal with grievances, job descriptions, rate negotiations, time and motion measurements.

• Plant grievance administrators, Supervisors of Industrial Relations, Corporate Directors of Labor Relations, and legal counsel who will offer labor law advice for $ 250 per hour or more.

 

• Unfair labor practice charges brought by unions harm the employer’s reputation and diminish the corporation’s good will. Once a charge is filed, an NLRB filed agent will visit the employer and conduct an investigation. At this stage, the entire workforce will know that something happened. Next, if the charge is not settled, the NLRB will schedule the matter for hearing. Preparing for and conducting a hearing will cost the employer more than $ 10,000 in legal fees, plus the non-productive time associated with witnesses, management preparation/testimony, and more.    

  

• Over-compliance with government regulations.  “Union Bird Dogs” monitoring workplace statute compliance are prevalent in union facilities. Unions sometimes call OSHA safety inspectors to identify safety issues for their own uses at the bargaining table.

 

• Increased involvement with regulatory agencies, especially Wage and Hour claims, OSHA/MIOSHA, the NLRB, EPA, and the EEOC.

 

• Indirect costs of outside services, such as the frequent need for an employment/labor attorney to deal with contract negotiations, handle grievances, arbitration cases, and review compliance with a collective bargaining agreement. Unions demand that negotiations take place away from the employer’s offices, which adds travel, meeting rooms, food, and related hotel costs. While management is away, who is running the business?

   

• Added accounting staff for calculating, deducting and documenting employee union dues. Unions, the Teamsters, for one example, demand that employers participate in union health and welfare and pension funds. These benefits are super costly and come with regular audits that penalize employers for not covering part time employees and sometimes those who are already covered under a spouse’s insurance.   

 

• Additional wages and benefits for employees who are called in to cover for other employees in chief steward or representative positions when they are attending to union business during working hours. It is unlawful to counsel or discipline one of your union employees without having union representation present. 

 

• Contracting with consultants, storage facilities, and offsite manufacturing teams to develop an action plan for a possible work stoppage or strike. Prior to labor negotiations, it is common for employers to create a “strike bank” of parts (often produced with overtime costs) in anticipation of a possible strike.

 

• Wages for short-term replacements if a strike occurs, which can be significantly higher than striking employees wages, especially if replacements are required for highly trained positions.

            

Employees also incur costs when a union wins a NLRB election.

• Union initiation fees vary between $ 500 and $ 1,000.

 

• Average annual union dues are $400, or about two hours of pay per month.

 

• Unions negotiate agreements that limit employers’ use of temporary, part time, or seasonal workers, because unions want more full-time dues paying members. Unions generally don’t care about opportunities to save operating costs. As a practical matter, employers are forced to outsource temporary work- rather than pay the added labor costs associated with hiring full time employees.

 

• The employee puts it all on the line during a labor dispute. It is the union employee who is not receiving a full paycheck or benefits during a strike. Further, if a union member crosses a picket line during a strike, that employee can be fined under union by-laws for those earnings.

  

Intangible Costs

 

In addition to obvious increased costs, having a union affects morale, creativity and resiliency. Ultimately, an organization’s profit margin can decline. Productivity appears to be lower in unionized environments, possibly due to:

• Employee anger or frustration when the collective bargaining process for an initial contract lasts more than a year or does not result in the changes promised by a union during the organizing campaign. About 75% of initial contracts are still negotiated a year after the NLRB representation election according to the Federal Mediation and Conciliation Service, and 50% of initial contract negotiations never achieve an executed agreement.

 

• Union strategies and rules impairing the employee-employer relationship by playing on employee emotion and interfering with direct employee-supervisor communication, which cast the employer in the role of “enemy” and result in employee mistrust of management.

 

• Poor communication and diminished employee participation in workplace decision making via power sharing programs when these programs had been in place prior to an election. In fact, unions will file unfair labor practice charges against employers who choose to speak directly to employees and not deal direct with union officials.

 

• Employees coping with divisiveness, name-calling and, terrorizing behavior of union co-workers.

 

• Less flexibility, both internally and externally, to move quickly or creatively in response to change due to union rules and related contract language that results in rigid operating guidelines. Quality and productivity enhancements demanded by customers are good examples.

 

• Increased difficulty recruiting and retaining the most creative and effective employees. Union-imposed contract provisions often limit the employer’s desire to reward an employee based on performance or productivity. Union grievance procedures tend to protect low-performing, negligent- and negative employees.

 

• Decreased client or vendor satisfaction if unionization affects service or product cost or quality.

 

• Interruption in service provision or production if a work stoppage or strike occurs. 

 

• Not all employment issues arise under the collective bargaining agreement, and then resolved in arbitration. Union employees are often provided with free legal services by union-affiliated law firms to pursue worker’s compensation, FMLA, ADA, and many other claims. Union attorneys pursue the thinnest, and sometimes frivolous lawsuits which would not otherwise be pursued if properly assessed in a “cost effective” manner.  An employee actually paying a private lawyer out of his own pocket would think twice about this sort of legal litigation. Therefore, the legal onslaught of multiple cases is a significant tactic used to intimidate employers.     

  

Conclusion

 

Union avoidance initiatives and counter union campaigns benefit both employees and management. These are cost-effective for all organizations that wish to retain their competitive edge.