Saturday, January 10, 2009

How to organize a labor union.

I believe labor unions have the right idea, but the wrong approach. Instead of a legal approach, they need a business approach. If you think about it, labor is purchased from millions of tiny entrepreneurs each of whom are running their own, tiny, human capital firm. Looking at it this way, worldwide, WalMart contracts with 2.1 million tiny firms--average annual revenue of each <$20,000. That's no way to run a business; there are no economies of scale.

On the other side, all of the companies are forced, for that reason, to have a sideline business devoted entirely to contract writing with all these tiny firms. Human resources, or how to do business on a microlevel. Even businesses that use temp agencies still have to have their HR department.

What they need is a business that focuses solely on the development and sale of human capital (a human capital firm, HCF for short). This organization would vet employees, provide training as needed, and cover all of the human resources problems. Rather than working for the company in question, you'd be working under contract for the HCF. Your benefits wouldn't depend on where, business wise, you worked, because that would be covered by the HCF. If one company laid you off, you'd just be back on the HCF roster of available workers. They'd retrain you and deliver you to their next client.

On the business side, you'd have only one organization to deal with. You wouldn't have to worry about benefits packages, training, or anything like that, and you'd have your employees pre-screened. On the personal side, there would be no job lock from benefits, losing a job would not be as traumatic, allowing much more labor mobility. Plus, with a HCF able to negotiate, you would have the same bargaining power as a union, but without the harmful effects on the business in question.

4 Comments:

Blogger Noumenon said...

On this topic your willingness to think of things from scratch is welcome because no one seems to be thinking of ways to make the labor union 21st century.

So my questions are, Why don't temp agencies do this themselves -- offer their own benefits and get a loyal stable of workers, and 2) would this negotiating body just be another nonmarket annoying force like the health insurance company?

5:30 AM  
Blogger Octavo Dia said...

Why don't temp agencies do this themselves -- offer their own benefits and get a loyal stable of workers,

I think their current funding arrangement works against that. It's in the temp agencies' best interest to find mediocre employees that won't be hired on by any particular company, but will instead go through the cycle over and over again, increasing temp fees.


would this negotiating body just be another nonmarket annoying force like the health insurance company

I would say probably. Health insurance is dealing with such an over-regulated field that they can't behave in a market manner. This would combine the difficulties of health care with the difficulties of labor contracts.

9:50 PM  
Anonymous Mankato said...

So walk me through an example. Let's say I work at XYZippers. Instead of joining the Seamster Local #409, I join Bob's HCF.

Do I get my paycheck and benefits from Bob's or XYZ? If I want a raise or feel my working conditions are sub-par, who do I talk to? If I'm not a good worker, how do I get fired?

4:21 PM  
Blogger Octavo Dia said...

Do I get my paycheck and benefits from Bob's or XYZ? If I want a raise or feel my working conditions are sub-par, who do I talk to? If I'm not a good worker, how do I get fired?

XYZ would pay Bob's, and Bob's would pay your benefits and salary. Bob's would also be the one to whom you would complain about poor working conditions--they are, after all, your (plural) representative.

I hadn't considered how raises would work. The easy way out would to have it work the way unions do, with standard promotion agreements and such, but that would be carrying over the inefficiency of a union into the new corporation.

What would be better, using me at my former employer as an example, is Bob's would point out, "Hey, we provided you with this guy, and he's given all these ideas worth $$$. Why are we contracting him to you for $XX.XX, when we could be contracting him to CDF corp for $XXX.XX?" They'd have an incentive to sell me for all I'm worth.

Getting fired would be easy from XYZ's perspective. They would inform Bob's that this person wasn't working out. Bob's would replace him with someone else, but the person getting fired would be the real beneficiary, as all the benefits wouldn't go too. If Bob's can't turn a profit on the guy because he's just no good, then he'd have a problem, but people who are uninsurable can't get insurance, so people who are unworkable will end up not working (which doesn't really change under either system).

10:43 PM  

Post a Comment

<< Home