The principal/agent is everyone's problem

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.

This article available online at:

http://www.theatlantic.com/business/archive/2008/05/the-principal-agent-is-everyone-apos-s-problem/3450/