Even though it appears the NFL regular season will happen, the lockout has shown why labor unions are bad for business.
It wasn’t supposed to be this way. Before the lockout began, liberal groups such as the Center for American Progress were actually touting the negotiations as an opportunity to show “not just to NFL fans but to all Americans ... that collective bargaining — the process where unionized workers and management negotiate wages, benefits and working conditions — can create significant benefits for workers and owners.”
NFL Commissioner Roger Goodell’s announcement last week canceling the first preseason game exposes CAP’s argument. “But no one cares about the preseason,” you might say. Not true. Preseason games generate $800 million in revenue for NFL teams.
That revenue pays the wages of food vendors, ticket takers and souvenir sellers.
Unions inflict these kinds of completely unnecessary losses on their employers, and fellow employees, all the time. Remember the 2007 Writers Guild of America strike?
More than 12,000 writers shut down most of Hollywood production for 14 weeks. The production disruptions cost the entertainment industry $500 million. But the economic damage was not limited to the studios.
Thousands of production support staff not represented by the WGA also lost their jobs, costing them hundreds of millions of dollars in lost wages. Estimates put the residual damage to Los Angeles’ larger economy at $1.5 billion.
And the television landscape hasn’t been the same since as networks have flooded the airwaves with reality programming to keep themselves less dependent on the writers union.
Or just look at Boeing. The International Association of Machinists and Aerospace Workers has inflicted six strikes on America’s largest airplane manufacturer in just more than 30 years (1977, 1985, 1989, 1995, 2005 and 2008). The 1995 and 2008 strikes each cost Boeing more than $2 billion. And now that Boeing is attempting to open a new factory in South Carolina that is safe from union-caused disruptions, the National Labor Relation Board is suing to stop it.
Sixty years ago, unions might have made sense. When the economy is dominated by a few large firms with near monopolies, unions thrive. When big Hollywood studios had a virtual monopoly on our television sets, and didn’t have to compete with the hours of endless entertainment on the Internet, they could survive WGA strikes.
When Boeing didn’t have to compete with Airbus, IAMA strikes were not a big deal. In 1953, when big business had its firmest grip on the U.S. economy, private sector unionization reached its peak at 36 percent of all private U.S. workers.
But that is not the economic world we live in today. Companies that compete on a global stage cannot afford the uncertainty and reduced investment that unions cause.
Research shows unionized firms spend far less on capital investment and research and development than their nonunionized competitors. That is why less than 7 percent of private sector workers are unionized today.
Contrary to CAP’s beliefs, the NFL succeeds despite the NFLPA, not because of it. If the NFL did not have monopoly power, if it had to compete with overseas competitors like most U.S. firms do, the NFLPA would have driven it to bankruptcy years ago.
Conn Carroll is a senior editorial writer for The Washington Examiner.