COMMENTARY: Boeing Wins, We All Lose

(The Orange County Register/MCT) -

It wasn’t just the union movement that suffered a blow over the past weekend. It was the wallets of many American worker bees.

Boeing aerospace factory workers in and around Seattle voted to accept significant compensation cuts to keep production of the next-generation 777X jet in the Pacific Northwest.

Now, if this was a typical labor-negotiation tale, one might conclude that the union’s vote was a savvy tactic for both worker bee and boss. Saving jobs that reportedly pay, on average, $30 an hour, isn’t a shabby deal. But this isn’t your typical labor story.

Two months ago, the same members of Boeing’s Seattle International Association of Machinists and Aerospace Workers voted roughly 2-to-1 against concessions that Boeing demanded if it was to keep the 777X manufacturing near its Seattle base. Boeing – while highly profitable – says it needs the cuts to fight its long-running sales battle with European archrival Airbus.

Boeing surely knew that its “take it or we’re leaving it” stance would have a two-pronged impact. Obviously, some workers would fear the company’s threat to move jobs was serious. And government offers from other states trying to woo the plane maker would follow.

Perhaps Boeing couldn’t see how well its ploy would work: Promises of tax dollars, free land and more came from as many as 22 states. That included a push from usually worker-friendly California, a bid to move the jobs and production work to Boeing’s longtime aerospace hub around Long Beach.

National leaders of the same Machinists union then got a queasy feeling – essentially knowing that moving jobs out of Seattle would 1) likely cut union jobs and 2) fuel fears that unions don’t always have a community’s best interest at heart.

So the Machinists’ national leadership essentially forced a revote, over Seattle objections. This time, the concessions passed, by only the slimmest of margins.

What Boeing management won is essentially a decade of labor peace plus freezing the workers’ traditional pension and a cap on many pay increases. The contract also makes it far harder for new workers to reach the top of the pay scale. Oh, yeah – there’s also $8.7 billion in incentives for Boeing and its local suppliers from the state of Washington to stay put.

Whatever meager clout private-industry unions had remaining was battered by the Boeing reversal. Organized labor has always faced a hostile front from management. But now, government power – economic development in the form of recruiting out-of-town industry – will serve as another battering ram aimed at workers’ negotiating power.

Boeing isn’t the first company, nor the last, to show how corporate stinginess seems to have no boundaries. U.S. corporations collectively operate at near-record profitability while sitting on gobs of idle cash. One reason the U.S. stock market has soared – as the economy modestly recovers – is that corporations have become uber-efficient. That thriftiness is based on squeezing every last penny from every cost center.

One big corporate cost-slashing win has been making unions a dying breed in the private sector.

In 2012, the latest data available from the Bureau of Labor Statistics, 6.6 percent of private-sector workers were union members – down from 17 percent three decades earlier. That’s a cut of 5 million unionized workers.

Labor disputes – one sign of union muscle – have become a near-rarity. In the 1980s, there were seven major work stoppages per month, on average – worker strikes or employer lockouts involving 1,000 or more employees nationwide. In the past 10 years, such big labor blowups occurred at a pace equal to seven stoppages every five months.

Certainly, the private sector requires extra efficiencies in this new, globally competitive world. It’s a factor that’s changed everybody’s careers – and overall lives, for good and bad.

And union workers at U.S. private firms still get better wages – 21 percent higher, on average, vs. non-union employees in 2012, by government stats. But that pay advantage has thinned from 24 percent in 2000.

Meanwhile, U.S. weekly wages for all workers grew at a 1.7 percent annual rate since 2000 – barely ahead of the inflation rate. That’s just salary. Ponder benefits, such as the traditional pension benefits that Boeing workers will no long accrue. It’s been cut-cut-cut.

In 1979, 38 percent of all U.S. private-sector workers participated in a traditional pension plan, according to the Employee Benefit Research Institute. By 2011, that share was crushed to 14 percent.

Stubbornly high unemployment, stagnant wages and shrinking benefits nationwide are due in part to an ever-more-global marketplace for most goods and services.

Boeing’s deal shows us, however, that your pay package – union-negotiated or not – is likely also competing today with the cost of your boss doing business in other parts of the nation itching to grab fresh jobs and new businesses. If that competition – spiked by the generosity of job-hungry taxpayers elsewhere – is too much clout for the power of collective bargaining, how will you fare on your own?

The founders of the nation envisioned a great “federalist” experiment in which each state could chart its own course. Did they think that freedom would be used to trim the incomes of “We the People”?