Dragging Out the Pain
The union model worked well when firms and workers were more similar. Higher productive workers throw their lot in with the less talented, and everyone received a similar wage in exchange for stability and a seat at the table.
21 December 2021 · Issue #998 · View online
The baseball lockout may not be occupying much of your attention. We have the holidays and Omicron – and it is not even baseball season.
But it is important because it demonstrates a changing labor market, which unions are ill-equipped to address.
Baseball in a changing world
Allison Schrager | Known Unknowns:
The labor market has issues, though some may be overblown. But income and probably wealth inequality have increased, and profits and gains from productivity are not flowing to middle-income workers the way they used to.
The answer from the current administration to these issues is more unions. The hope is that they’ll restore power to the worker and redistribute wealth. But the baseball lockout demonstrates their limitations.
Baseball, like all industries, operates in a new economy where it is
1. Easier to identify more productive, talented workers using data and analytics;
2. The economy offers outsized rewards to highly talented and skilled labor; and
3. A superstar effect, not only with individual workers, but also on a few firms who get all the talent and are more productive and profitable than the rest.
The union model worked well when firms and workers were more similar.
Higher productive workers throw their lot in with the less talented, and everyone received a similar wage in exchange for stability and a seat at the table.
But in a superstar world, there is less solidarity among workers because higher productive workers need to give up their large upside.
The baseball union realizes that the problem is that a few players get $100s of millions.
However, the rest have a few good years in their 20s when they are under their initial contract and don’t have much negotiating power. They’d like everyone to be paid more and their full value when they are at their best.
Owners argue, however, that you can’t have it both ways – and even if the money was there, only a few teams could pay that much and would get all the talent and the games wouldn’t be competitive.
Unions may just not be the answer, as we live in a tech-driven, analytic global world. The premium on talent undermines how unions work.
So what would be better?
It could be gig work. More people are turning to self-employment, and that may explain some of the Great Resignation.
But gig work appears to be riskier, and it means even less power for workers since they have fewer protections.
That is true, but only because the institutions in our economy are as of date as unions are. They are built for salaried employment, which makes lots of gig work second-tier.
But it needn’t be that way: We can reform our institutions in order to make gig work better, including options for insurance.
It feels like, instead, the administration (Republicans ,too) is trying to turn back the clock, make gig work harder, and pushing everyone to unionize. But you can’t fight change, you can only drag out the pain.