Thomas Geoghegan, a labor lawyer, writes in today’s WSJ:
Conservatives are in an uproar that the general counsel of the National Labor Relations Board has filed an unfair labor charge against Boeing. It seems the president of Boeing was unwise enough to blurt out that his company would move a production line to South Carolina as payback for past strikes by machinists in Seattle. It’s a dead bang violation of the National Labor Relations Act, even if it comes as a surprise to Republicans and many other Americans.
Section 7 of the Wagner Act, passed in 1935, states that all workers can engage in concerted activities without reprisal. The president of Boeing said, in effect: You exercise those rights and we’re moving. Companies have long done such things, of course, but CEOs aren’t usually so gaffe-prone as to say so.
The Boeing case may show that labor is so out of mind that CEOs have forgotten what they can or cannot say. It would have been easy enough for Boeing to move the production line to South Carolina and let the workers in Seattle draw the conclusion. There is little bar to a runaway shop if the CEO is careful with his public statements.
Yet the Boeing case has a scarier aspect missed by conservatives: Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country.
We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force. This country is in a debt crisis because we buy abroad much more than we sell. Alas, because of this trade deficit, foreign creditors have the country in their clutches. That’s not because of our labor costs—in that respect, we can undersell most of our high-wage, unionized rivals like Germany. It’s because we have too many poorly educated and low-skilled workers that are simply unable to compete.
We depend on Boeing to out-compete Airbus, its European rival. But when major firms move South, it is usually a harbinger of quality decline. Over and over as a labor lawyer in the 1980s and ’90s, I saw companies move away from Chicago, where the pay was $28 an hour, to some place in South Carolina or Louisiana where the pay was about half that. While these moves aggrieved me as a union lawyer, it might have consoled me as an American if those companies went on to thrive globally.
But too often, alas, it was the beginning of the end, as it was for Outboard Marine Corporation, where I once represented workers. In the 1990s the company went from the high wage union North to the low wage South and was bankrupt by 2000. There are reasons workers in the North get $28 an hour while down in the South they get $14 or even $10. Adam Smith could explain it: “productivity,” “skill level,” “quality.”
The rest of his nonsense here.
I’d like to hear more examples of failing companies that have moved south, however. His example of Outboard Marine is poor, at best, and quite likely the company’s moving of some of its production to a lower-wage state was not a cause of its bankruptcy. More importantly, foreign auto makers like Toyota and Nissan don’t seem to have any issues churning out quality products with non-union southerners on the assembly line.
Here’s some recent data on the South’s gain in terms of manufacturing jobs:
The South’s manufacturing sector has awakened in a big way.
A new study by On Numbers shows that durable-goods manufacturing was the fastest-growing industry in eight Southern states last year. No other sector set the pace in more than two states.
Durable-goods manufacturing added 0.59 percentage points to the gross state product (GSP) of the typical Southern state in 2010. Retail trade was a distant second with an increase of 0.36 points.
GSP, which is measured by the U.S. Bureau of Economic Analysis, equals the total output of goods and services within a given state. It’s a small-scale version of the better-known gross domestic product (GDP), which tracks economic activity on a national scale.
Hopefully the WSJ runs a rebuttal op-ed of some sort tomorrow, because this piece is nothing more than pro-union puffery.