This is not an argument in favor of monopolies, however, because unions can extract more from a monopoly but so can capitalists, and it all comes at the expense of the consumer, which is also you. It's better to make $2 and spend $2 than to make $3 and then have to spend $4 just to get the same stuff.
Google and Apple are competing on selling phones, Google and Facebook are competing on selling ads, yet all sit on billions of dollars of cash. I don't see their workers being able to "extract" more from their companies?
Only "close enough" is required, not perfection. Sure, a union could negotiate a 1% raise without destroying most companies, but then they'd eat that amount in union dues and time value of doing paperwork etc. Meanwhile if they demand a 30% raise, that's more than the companies in a lot of industries could absorb.
> Google and Apple are competing on selling phones, Google and Facebook are competing on selling ads, yet all sit on billions of dollars of cash. I don't see their workers being able to "extract" more from their companies?
Are you not familiar with the level of compensation paid by these employers?
They are also hardly exemplars of competitive markets. Think restaurants or farmers.
Yet in 2013 they found the necessity in colluding in no-poach wage suppression.
> but then they'd eat that amount in union dues and time value of doing paperwork etc
Finland has several software engineer unions. They still seem to be rather competitive both nationally and internationally.
You find it unusual that companies in less competitive markets would collude? They're the only ones who can, because otherwise there are too many entities to coordinate. Yet another disadvantage of uncompetitive markets.
> Finland has several software engineer unions. They still seem to be rather competitive both nationally and internationally.
Finland has unions all over. They also have a different culture and different labor regulations. They're also not the first country that comes to mind as a place to hire software engineers.
I agree that it was simply easier to coordinate as a function of low number of agents in the game. But I doubt the convenience of it was the motivating factor.
> They're also not the first country that comes to mind as a place to hire software engineers.
They don’t come to mind for anything, because they are a very small country. Yet they have the ICT giant Nokia (which is not just the phones). Still with high unionization. In fact, after Nokia sold its mobile division to Microsoft, there has been an influx of ICT companies to Finland to capture the newly unemployed talent.
I take your point regarding culture and other contextual variables, but there is hardly an macroeconomic reality that makes unions unworkable as you generalized.
Well of course the motivation was to suppress wages so they could make more money. All companies have that incentive. Which is why that's illegal independent of unions -- it's an antitrust violation.
> I take your point regarding culture and other contextual variables, but there is hardly an macroeconomic reality that makes unions unworkable as you generalized.
Let's put it a different way though: Do union software engineers in Finland get paid more or less than non-union software engineers in San Francisco?
Because it's possible for a union to make its workers globally competitive by accepting lower wages to offset the cost of dealing with the union, but that's obviously not what we're after, right?
Meanwhile, again, introducing a monopoly increases the money that can be extracted from customers by labor but also by capital. So if you introduce a monopoly and it raises prices by $0.01 or $100 or whatever amount, and you're very lucky and labor gets 90% of the increase and capital only 10%, then on average workers have lost 10% of that amount. Because you still pay 100% of the price increase and then get less than 100% of it back.
There are also taxes, which make it even worse -- you get paid $1 more, the government takes 25%, you go to buy the thing that costs $1 more (so capital is getting 0% of the money) but then you owe 8% of the $1 in sales tax, and you've now lost a third of the money you used to have to Uncle Sam so they can give it to Bank of America and Halliburton.
What happens when you don't increase labor rates, but keep increasing prices anyways? Maybe this is less about increasing prices and more about capital needing to decrease their share.
Sounds like a good argument for universal basic income
Every so often someone suggests that software engineers should unionize. Maybe I'm too pessimistic, but I think that it would be the best thing that ever happened to Bangalore. I worry about all our jobs ending up in Bangalore eventually, I'm just hoping I can make it to retirement before that happens.
Look at actors, screenwriters, and musicians. These fine folk have been gig workers since before the term "gig workers" was coined. They belong to guilds, not unions, but the difference is semantic. There's no monopoly, and the industry is ticking along just fine.
There are tons of unions you've probably never heard of. TAs at your local university -- is your local university a monopoly? No. Costco isn't falling apart -- is it a monopoly? No, they compete with walmart, amazon, etc and show no signs of slowing down. Boeing -- awkward; bad management, not the union, is to blame for that downfall. Longshoremen -- no monopoly there, and no signs of business drying up. I could keep listing examples, but do you have data or just a hunch?
And if you go and unionize workers in an industry where the workers can't command that kind of premium, the next thing that happens is the company goes out of business or moves its operations to Mexico or similar, and then how are the unionized workers doing on the unemployment line?
The disparity between unionized and non-unionized workers in that industry is pretty high. You've got unionized workers starting at $35/h and upwards beyond $50/hour, with included benefits. I've seen non-unionized jobs advertised for as low as $14/h to start with the cap being $25-maybe $30 if you're lucky, without the benefits. The unionized job will also typically be limited to 40h/week.
There was no limit on the amount of hours I would have to work. I would regularly be expected to work 50-60 hour weeks, if I got sick, I kept working, if I hurt myself, I kept working, the level of work would always be beyond what the number of staff employed were physically capable of doing.
The way I see it, a lot of people fought over the decades so workers could have a reasonable standard of living while not having to endure ridiculous conditions. Unions were at the fore in the fight for this.
Businesses have shown time and time again that they're willing to pay as little for as much labour as possible. When it comes down to it, while workers are replaceable to an extent, they are what brings a business profit and to most businesses, they're valued among the least worthwhile of its assets. Unions force businesses to care about employees and though, I know this isn't really a crowd who can relate, but if you don't own a business and you are employed by someone, then unions have your best interests in mind.
They're probably some of the very few entities in this world that do.
That can in theory benefit the union workers, but it comes at the expense of the company's customers, which at scale are ultimately the workers again.
It's also generally not a stable equilibrium, because monopolies are bad and everybody hates them. At some point the government gets around to smacking them with the righteous hammer of antitrust, or the Japanese start making decent cars and disrupt the US auto conglomerates, the internet comes around and destroys your broadcast radio payola system, and then it all turns to rust.
> Businesses have shown time and time again that they're willing to pay as little for as much labour as possible.
Well yes of course. That's what they're supposed to do, so they can charge lower prices and get more customers.
And then what you're supposed to do as an employee is to take the job you like the most based on working conditions and compensation etc. So a company can offer you $25,000/year for 60 hour weeks and no benefits, but if some other company is offering $35,000/year for 60 hour weeks and no benefits then you take that, until the first company starts offering 40 hour weeks and paid sick leave.
A company's ability to underpay people is limited by the willingness of somebody to work for that amount of money. No is a powerful word.
This is also why you get rid of the need for so much of this with a UBI. Because it allows people say no, which requires employers to make better offers.
As long as the company pays its owners more than their lowest-paid employees, it can afford to pay their employees more, without going out of business.
There's plenty of profitable firms that can't just pack up and move to Mexico.
If the CEO makes a million dollars a year in a company with 100,000 empoyees, wiping out that entire salary would add less than $0.01/hour to each of the employees' wages. Also, then you would not have a CEO, which you might actually need sometimes.
The shareholders can't just hire a random janitor at a janitor's salary to be the CEO and expect to not lose more money to unqualified decisionmaking than they would've had to pay a real CEO.
Likewise, they can't just make zero profits forever, because otherwise they couldn't raise capital. If they're a new company they need that investment in order to buy land and build the factory etc. If they're an existing company then they still need that, or the shareholders would sell their shares and the only buyer would be a corporate raider who wants to tear down the factory for scrap and sell the land to a condo developer.
Salaries and profits are relative to the market average. Unless the company is paying its executives more than the average company, or making more profits than the average company, they don't really have a surplus they can give to the workers without becoming uncompetitive.
Plenty of profitable businesses can afford to pay employees more. The fact that they are profitable is testament to it. They choose not to, because their employees don't have enough leverage in the employee-employer relationship. Unions change that.
The fact that not unionizing was how they got the work to begin with. If they tried to do the same thing there, the company wouldn't have any reason not to move back, which the workers in the new place obviously don't want.
You would also run the risk in that case not that they outsource to Bangladesh but that they outsource to Europe, if the union started demanding things they didn't want to give. Or just let the union walk out and hire different workers.
That's the other reason unions don't really work outside of monopolies. If the company needs 100,000 workers and only 200,000 workers with that skillset exist in the world and the other 100,000 work for a competitor, you need the workers you already have. If the company needs 10,000 workers and a million workers with that skillset exist in the world, they can let you walk and hire other people. And in this case it's a real monopoly, not the soft stuff like Google and Facebook have -- Google doesn't have a lot of competition for search, but a random engineer from Facebook or Apple or Microsoft could still do most of the work they need to do, and vice versa.
That assumes everything that is of consideration is already priced into compensation, which is not. Wasn’t it several years ago one of them had its workers a walkout against sexual harassment, forced arbitration, manager retaliation etc?
> You would also run the risk in that case not that they outsource to Bangladesh but that they outsource to Europe
They would be in for a nasty surprise as Europe is more unionized that US.
> Or just let the union walk out and hire different workers
That assumes software engineers are fungible, which is not as much as it appears (at least there is a high cost to “funge” them en masse). Going to your manager with a competitor’s job offer is not an uncommon way to get a raise or promotion.
That doesn't mean it's not priced in. Companies with conditions like that still need to attract employees somehow. When they get a reputation like that they either have to fix it or provide more of something else to compensate for it. Markets don't require unions to function.
> They would be in for a nasty surprise as Europe is more unionized that US.
That's why they don't do it now. If there were more unions in the US, that's no longer a relative disadvantage for the company, which then is a problem for the US workers who just lost their advantage and thereby their jobs.
> That assumes software engineers are fungible, which is not as much as it appears (at least there is a high cost to “funge” them en masse). Going to your manager with a competitor’s job offer is not an uncommon way to get a raise or promotion.
Replacing software engineers isn't free. There is a transition cost. But the transition cost isn't infinite, and it acts as a hard cap on what the union could get out of the company. And from it you immediately have to extract all the overhead costs the company has to incur in dealing with the union to begin with. Which are often difficult to predict ahead of time, so companies may choose to cut their losses immediately rather than risk even higher costs later.
In case you are curious about my actual assumption; I think there are a lot of externalities that are not priced-in in the contract, which will naturally favor the more organized side, which happens to be capital than labor most of the time. I don't know if exploitation is necessarily the right adjective for every case, but I believe there is a large potential for asymmetry in untracked disutility an individual can get out a transaction with their employer.
"Then it could also mean that there hasn't been any working combination of capital and labor that didn't depend on labor being exploited."
Is it not your assumption because of the so-called weasel words "could mean"??
Maybe I’m being stupid but I don’t see how else this works out. Can you expand to help me understand what I’m missing?