1) There isn’t a real causal opposition between unionization and higher productivity in terms of pay increases. When labor is cheap, firms invest less in productivity-enhancing technology; when it’s expensive, they invest in it more, and that form of productivity goes up. Simple. If you want to jack up productivity for the long run, enforce increasing wage rates.

2) It seems that the best option is combining characteristics of service and production industries, making tailor-made products for general consumers through networks smaller, team-based firms. Then you get the higher margins available in production sales over service sales.

And Buzzcut, you’re right about tuition inflation too, and that’s a HUGE problem if we want to have a decently sized creative class that’s competitive globally when other countries make it quite affordable for their citizens to go to colleges.

“Cut and cut and cut” the budget doesn’t jibe with tuition inflation across the industry.

Like I asked with wages vs. productivity, I ask where is the money going? If tuition is inflating so quickly, but the schools are paying “starvation wages”, where is the money going?

I was pretty surprised myself. The legislature added a few million to the University’s budget for faculty salaries, but didn’t spell out how it would be spent. To the extent they could keep salaries low, the administration could put the money in their general fund. I sat in on the bargaining session out of curiosity and because the union rep is an old friend who wanted some bodies in the room — it was a real eye opener.

From my point of view, the legislature’s (taxpayer) contribution is minor. Graduate tuition for my class is $840. I regularly have 20 to 30 students, so the class earns roughly $20,000 a term. They pay me roughly $3,000 a term. They obviously have administrative costs and building expenses, but it’s still a pretty profitable class — especially since the fixed costs are there anyway. When I do a private training I get paid at least twice the amount for the same time.

Part of our difference is you see the union as banding together “against” the administration and I see it as “for” the employees. In my case, I teach one section a term and have turned down additional sections. It’s not a major source of income and not worth putting in extra time. But some people pull together classes in a couple of colleges to jerry-rig a full time job paying maybe $25-30,000 a year. Increasingly, Universities use adjuncts to keep from paying high-priced full professors.

BTW, I’m pretty agnostic on private sector unions, but I think the public sector unions like yours should be banned. You can make an argument that need to ban together to have a similar level of power as business, but who are public sector employees banning together against?

Taxpayers, that’s who.

It is very unusual for public sector “management” (which is what your administration is) to fight very hard against the demands of their employees. And public employee unions throw their money and manpower behind their preferred candidates to such an extent to make a mockery of representative democracy. They have so much more at stake than the average citizen that it just isn’t fair.

Good comments.

I wasn’t arguing the pros and cons of unions, many of them have certainly got their problems. I was just floored by Buzzcut’s statement that “unionism had nothing to do with rising wages. Simple productivity did.” And I wouldn’t argue that there aren’t other factors. Although in the last few decades there’s a correlation between declining union influence and stagnate wages for the lower 50%.

Interesting sidelight, three companies have broken ranks with big business on the employee free choice act and they’re the service leaders mentioned above: Starbucks, Whole Foods and Costco. So the best service industry employers aren’t as afraid of unions. Probably a message there.

I think that I can figure out the data we’d need to do some correlations: unionization rates, wage rates (somehow have to get benefits spending in there as well), prices of the industries’ products (perhaps a lot of productivity is now going towards lower pricing), and corporate profitability.

Is there a correlation between wage rates and unionization rates, controling for those other things? Maybe take it on a company by company or industry by industry basis.

Those of you who have college library access would be in a better position than me to see if this kind of analysis has been done. Seems to me like it would have been done in some labor economics graduate program somewhere.

aren’t you agreeing that these wage levels come from union bargaining?

No, because I’m non-union, being a professional, and I’m pretty darn well compensated (I don’t work quite the hours some of these guys work, so I don’t make THAT much money).

They’re compensated at those levels because of the industries that they’re in (energy and steel).

Look, the US Steel mill in Gary used to have 100k employees, and now they’re down to less than 10k. Yet they make 7 or 8 times as much steel as they used to. It’s the productivity that allows these guys to be so well compensated. It is simple math. If they were not so productive, they simply could not be as well compensated as they are.

If the money isn’t going to employees, where is it going? CEO pay? I don’t think so, they’re not overpaid to that extent. Is there any evidence that corporations are an order of magnitude more profitable than they were in the past? Has inflation been slayed on the backs of workers? If productivity is growing twice as fast as wages (which is the graph that Swordsman liked to), where is the money going?