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Megan McArdle

Megan McArdle - Megan McArdle is a senior editor for The Atlantic who writes about business and economics. She has worked at three start-ups, a consulting firm, an investment bank, a disaster recovery firm at Ground Zero, and The Economist. More

Megan was born and raised on the Upper West Side of Manhattan, and yes, she does enjoy her lattes, as well as the occasional extra-dry skim-milk cappuccino. Her checkered work history includes three start-ups, four years as a technology project manager for a boutique consulting firm, a summer as an associate at an investment bank, and a year spent as sort of an executive copy girl for one of the disaster-recovery firms at Ground Zero … all before the age of 30.

While working at Ground Zero, Megan started Live From the WTC, a blog focused on economics, business, and cooking. She may or may not have been the first major economics blogger, depending on whether we are allowed to throw outlying variables such as Brad Delong out of the set. From there it was but a few steps down the slippery slope to freelance journalism. She has worked in various capacities for The Economist, where she wrote about economics and oversaw the founding of Free Exchange, the magazine's economics blog. She has also maintained her own blog, Asymmetrical Information, which moved to The Atlantic, along with its owner, in August 2007.

Megan holds a bachelor's degree in English literature from the University of Pennsylvania and an M.B.A. from the University of Chicago. After a lifetime as a New Yorker, she now resides in northwest Washington, D.C., where she is still trying to figure out what one does with an apartment larger than 400 square feet.

The principal/agent is everyone's problem

By Megan McArdle
May 15 2008, 1:13 PM ET Comment

A couple of days ago a commenter asked me why we couldn't just cut a deal with the teachers unions: higher pay in exchange for surrendering control over work rules. As it happens, I think that would be a very good deal; I don't see how we can get top notch teachers by turning them into underpaid civil servants. I also don't think we can cut that deal.

The problem is, the union sits in the middle of that transaction. And for the union, this is an unambiguously bad deal. They don't get a commission on the higher salary they win for their members. And dismantling all the dispute-resolution and work rule apparatus would substantially slash their power. Problems like this are the reason that the West Coast ports couldn't cut a deal with the longshoremen to pension off the current workers at full pay in exchange for the elimination of their jobs, even though my understanding is that this is one of the options they explored. Full pay for no work would have been a great deal for the membership, but a death blow for the union.

That's what's at the core of the recently uncovered secret agreements SEIU seems to have made with employers:

Two of the nation's largest labor unions have struck confidential agreements with large employers that give the companies the right to designate which of their locations, and how many workers, the unions can seek to organize.

The agreements are raising questions about union transparency and workers' rights. A summary document put together by the unions says it is critical to the success of the partnership "that we honor the confidentiality and not publicly disclose the existence of these agreements." That includes not disclosing them to union members.

The agreements involve workers who provide food, laundry and housekeeping services on an outsourced basis. The employers are Sodexho Inc. and the Compass Group USA unit of London-based Compass Group PLC. The unions are the 1.7 million-member Service Employees International Union, or SEIU, and Unite Here. The unions say they negotiated a similar agreement with Aramark Corp. but that Aramark broke the deal last year, and they're trying to reach a new one. An Aramark spokesman declined to comment on that.

The unions defend the agreements and their secrecy, saying they've helped workers join unions in growing industries at a time of declining union membership in many sectors. Last year, 7.5% of private-sector workers belonged to unions, compared with 17% 25 years ago. The agreements have "resulted in tens of thousands of workers getting unions" and been a major advance for the labor movement, said the president of Unite Here, Bruce Raynor.


This undoubtedly helped SEIU, but the benefit for the workers is more ambiguous. Like a corporation or any other organization, SEIU wants to do good things for its membership--but its first priority is the health of the SEIU. That's why charities find new missions when the old one disappears, rather than dissolve themselves and give the money to an existing group.

SEIU is undoubtedly the most successful union out there right now, in terms of growing its organization. But it seems to be doing this in part by compromising the purpose of the union.

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