As a free-marketeer, I repeatedly encounter people who have some serious beef with unregulated industries. Invariably, their contention stems from an incident or incidents that really got their goat – dirty business practices like monopolizing markets and outsourcing labor to Chinese kids. Typically, the issue is simply misunderstood and often the role that the market regulators has played has eluded these people.
This video draws a clear picture of how the regulators can bring about unintended behavior in any market. Plus, the video is just plain cute.
[youtube]http://www.youtube.com/watch?v=QzZ0nz7XVFo[/youtube]
UPS like many other company’s got the bright idea of under funding their pension plan through the 1990′s. This “cute” little video oversimplifies the facts to the extend of being outright wrong.
Just like when people compare pay rates between unionized GM and non union Toyota manufacturing plants pay rates. On paper GM looks to cost twice as much, but GM under funded their pension obligations though the 1980′s and 1990′s. And Toyota does not yet have any significant number of pensioners that they have to pay to yet.
If you remove the added pension costs leaving just the costs of funding the pensions for current employee’s both GM and UPS are only slightly higher per employee cost then their non unionized counter parts.
That’s interesting. Not really the point, but I didn’t know that. Do you have sources? Just curious, not trying to call you out I promise.
Sure,
New York times article on UPS on their 2007 union agreement
NPR article on Toyota vs. GM costs
GM says pension fund underfunded
Notice that a GM worker makes on average $31.35 per hour and a Toyota employee makes $27.00 per hour for a difference of $4.35, Yet the Per hour Cost per employee at GM is $73.73 yet only $48.00 at Toyota for a difference of $35.73. Sure a few dollars of that difference is due to their better health benefits but the grand majority of the $35.73 difference is due to GM’s woefully underfunded pension fund.
Sorry if my original post was a bit unrelated to the point you where making, but blaming unions for the bad business practices of the companies(as this video does) isn’t right.
Thank you, this is great!
I don’t really like the idea of unions, but I am always in favor of better information and intellectual accuracy. I don’t know how, where, or why you have this info, but thanks!