Can Unions Help America Compete?


By Barry Bluestone and Irving Bluestone

BasicBooks -- 335pp -- $25

The prevailing view of organized labor during 12 years of Republican rule has been a harsh one: Unions are obstacles to U. S. competitiveness and should be swept away if they don't knuckle under. Anyone who hopes that Bill Clinton will endorse this perspective had better grab a copy of Negotiating the Future: A Labor Perspective on American Business.

The book, by Barry Bluestone, a respected liberal economist at the University of Massachusetts, and his father, Irving Bluestone, a retired top official of the United Auto Workers, will send shivers up the spines of most U. S. executives. The Bluestones go well beyond the growing consensus that companies must adopt employee involvement systems to become more competitive. They say workers must have input at every corporate level--right to the top. What's more, they say cooperative schemes work best in a unionized company. "Suggesting that unions might be the critical missing element in a national campaign for global competitiveness may seem farfetched even to those sympathetic to organized labor," the authors concede. But they find the logic too compelling to ignore.

Although it remains to be seen if Clinton will go as far as the Bluestones--after all, he was elected as a business-friendly Democrat, and some Arkansas union leaders had harsh words for his labor record--he agrees with the book's thrust. Endorsing it on the cover, he states that "the Bluestones offer a New Covenant for labor and management based on participation, cooperation, and teamwork" that "will have to be adopted, if America is to regain its competitive edge." The book also got the endorsement of Robert B. Reich, Clinton's nominee for Labor Secretary. Reich is a member of the Economic Policy Institute, a liberal Washington think tank, as are Barry Bluestone, his friend, and Laura D'Andrea Tyson, Clinton's pick to head the Council of Economic Advisers.

According to the Bluestones' analysis, Frederick W. Taylor's century-old theory of scientific management, under which managers and supervisors tell workers how to perform their jobs, keeps U. S. companies from achieving the productivity and quality levels needed to compete in a global economy. The authors point to the growing number of studies that conclude that participative systems are more efficient than authoritarian ones.

Negotiating the Future then goes further. Done properly, it says, employee involvement can help most companies, including nonunion ones. But, as the Bluestones rightly point out, any system set up unilaterally by management can just as easily be dismantled by it. "The underlying weakness of the nonunion work force lies in its total dependence on the goodwill and the personal philosophy of the managers," the Bluestones warn.

They also think companies must embrace more extensive employee involvement than most now do. While Corporate America has set up thousands of work teams, most companies permit employee input into only relatively low-level decisions. The typical team involves 5 to 10 employees who take greater responsibility for their own jobs. Once teams are set up, most executives quickly realize that supervisors and middle managers must relinquish some power. But few leaders have extended this realization to the decisions they make themselves.

Virtually none, in fact, has emulated the intense worker participation of General Motors Corp.'s Saturn Corp.--despite Saturn's success. There, the Bluestones note approvingly, "the entire structure, from the office of the president of the corporation to the employee on the shop floor, is predicated on joint decision making" from strategic policy making to day-to-day problem-solving. This degree of input requires a mechanism for expressing the organized voice of employees. A union is one vehicle, as is a German-style works council in which elected employee representatives sit on plant-level management committees.

The authors make another good point about the limits of participative systems. The goal of employee involvement is to boost quality and productivity and make companies competitive. But while labor and management can work together to make the pie bigger, they will inevitably clash over how to divide it up. Indeed, the Bluestones think the latter issue can't be addressed strictly through collaborative institutions. Because managers have an obligation to put shareholders' interests first, employees need people they can trust to do the same for them--especially since raising productivity often produces pressure to eliminate jobs. "In the absence of an independent union, workers always carry a residual apprehension of management," say the Bluestones.

Inexplicably, after arguing so persuasively for a transformation of the workplace, the Bluestones provide no prescriptions for achieving it. They explain why many union leaders distrust cooperative ideas, and they stress that the union leaders must change their views. They also recognize that management attitudes toward worker participation would have to change profoundly. But the Bluestones seem to hope that the logic of their views will prompt both sides to adopt them. Nowhere do they advocate passing laws to turn U. S. labor relations into a partnership, along the lines of Germany's 1952 Works Constitution Act, which institutionalized works councils.

Still, it seems clear that the Bluestones won't object if Washington takes the lead on this issue. Clinton has made general promises to do so. The question now is how forcefully he will act.

Before it's here, it's on the Bloomberg Terminal.