March to Madness

It’s underway – determining the best college basketball team is the lively NCAA tournament that has become known as March Madness.  My alma matter (Syracuse) sends out near daily email updates and keeps their Facebook page current with the latest information as I’m sure the rest of the schools do.  TV viewership is high and betting takes places in offices around the country. 

The condensed schedule is part of the allure:  we can watch teams “go all the way” in a few short weeks.  The fact that the competitors are amateurs – college kids – is a huge part of the appeal.  Big dollars are at stake for school programs, television networks --- but the players are just college kids playing the game.  Well, that’s the illusion anyway.  Not like the NFL.

Last week the NFL Players Union (NFLPA) disbanded themselves. The union was in negotiations with the owners about the next contract…a process known as Collective Bargaining where the workers (players) have authorized the union to represent them to multiple owners (teams).  By decertifying themselves the workers can negotiate individually or in small groups which is usually considered less effective.  In the case of the NFL several high profile players have filed lawsuits and anti-trust actions against the owners trying to get leverage in negotiating for more money.

The NFL economy is not performance based.  All the money that comes in (from the TV licensing deal, ticket sales, etc.)  goes into a pot and is split evenly between the clubs and then split nearly evenly between the owners and players.  It doesn’t matter if a team gets lousy ratings.  It doesn’t matter if a team loses every single game.  Each team still get their equal split.

The team owners want to change the split so that their pool is bigger than the players.    I don’t know enough to say whether that’s fair or not since I come from a more market-based philosophy.  The fundamentals of the NFL economy guarantee more leverage to team owners who all benefit equally.  If each team earned its own income and paid its own expenses and stood on its merits I imagine that the relations with the players would be substantially different as it would be in the teams interest to keep their players happy.  For the players, walking away from the negotiation table and dissolving the union seems to be a drastic action – one that nearly guarantees the loss of the 2011-12 season.  Should that the public sector unions do the same?

Wisconsin Gov. Scott Walker last week officially eliminated some of the collective bargaining rights from most of the state's public employees.  There is a lot of emotion and excitement around this action.  It was dramatic and exciting to watch…though we’ll see whether the action stands the test of time and whether the shenanigans used to pass the measure survive the judiciary.  Since the union had agreed to the financial give-backs it would have made more sense to have that voted on and separate out the other issues…but that would have been good policy and not good politics. 

Saying that collective bargaining has been eliminated in Wisconsin is a misnomer.  The unions that represent state workers still exist in Wisconsin.  They can even negotiate with lawmakers – though there is now a statutory limit that wage increases max out at the rate of inflation.   Many lawmakers receive donations from unions.  This may influence the negotiation.  There is also little incentive to negotiate hard as there are few options available to lawmakers – it’s not like they can relocate or trim services or walk-out like the NFL Players.  Because of these concerns, 30 states, Washington DC, Puerto Rico and the Federal Government do not permit collective bargaining. 

Unions have played a vital role in protecting workers throughout history.  From medieval times guilds existed to protect and enhance their members' livelihoods by controlling the progression of members from apprentice to craftsman, journeyman, and eventually to master and grandmaster of their craft. 

In 2010 there were 14.7 million workers – or 11.9% represented by unions.  In 1945 American unions reached their apex with 36% of workers represented.  Many reasons have been attributed to the decline.  The fact that unions achieved the bulk of their initial goals is one of the lasting impacts.  NFL players now get clean socks (one of the early achievements of the NFLPA).  More substantive health and safety issues have benefited all other industries.  Wages rose allowing for the establishment of the middle class in America and standards for fair work and bargaining became the norm.

By the 1970’s Union actions had set a baseline for American workers.  All that was left was for wages and benefits to continue to increase, regardless of the need.  These increases, along with excessive regulation and global competition, contributed to the demise of the manufacturing base in the United States.  The demands became unsustainable.  The result is that it is no longer affordable to produce products in the USA.

The 2007-08 financial crisis afforded Unions a new opportunity:  relevance.  For businesses (and even the public sector) to survive all of the stakeholders must be at the same table – employers and employees – finding common ground in an affordable realizable way.  Unions are not inherently bad and people must be free to choose whether to negotiate individually or as a group with their bosses.  Unions can actually be the force for change on issues of efficiency, goals and results.  It would take a different philosophy on the part of everybody….starting with workers being cheerleaders.  Which reminds me…Go Orange!!!