Just to be different I will agree with you.  Unions have to be changed.  But, before we get to that, is their role to oppose wage cuts, or to work to get the best they can for the majority of the workers?  Unions are a business, and to stay competitive they have to grow, become larger, gain relative strength in order to both attract new members, spend money on convincing new plants and companies (more so their workers) and such of the benefits of membership.  But unions are also hamstrung in some ways by rules and laws that govern them.  For instance they have a duty to represent any member who asks for their help.  So, union member Johnny walks past Union member Suzie, and since they are alone, he grabs her boobs.  Now, that’s wrong, she complains, he is fired.  The union has to represent him, but in doing that they are opposing Suzie, and if somehow they win, then she has a case against not plant management, but the union.  It happens.

With the wage case, is it better to get something or nothing?  Chrysler is broke.  The US and Canadian govts told them to get wages in line with Toyota and Honda, the US govt also said, find a buyer, or shut it down.  Now, that could have been a bluff, since they gave them a bit more cash today, but if they couldn’t find a buyer, which Fiat was the only interested party anyone heard of they were going into chapter 7 bankruptcy, which is closing down and liquidating.  In chapter 7, all the workers would lose their jobs, and not get severance, as I understand it.  If someone bought the plants, they could negotiate a deal as they saw fit, or move the equipment.

Changes that would make a union more effective would be to make them smaller.  Have a separate union at every plant for instance.  After all shouldn’t workers at a more profitable plant, building more complex cars, in an area with a higher cost of living get paid more?  This has its drawbacks though, the strike threat is reduced, and the companies wouldn’t like constantly negotiating new wage rates and contracts at hundreds of plants.  That would also mean that each union would need an executive group, admin staff, negotiators, offices etc, which costs the workers more.  No win situation.

Average...  Your approaching this concept like it’s a zero sum.  If we say that current incomes are averaged in some form of a bell curve, (it’s not a perfect bell curve, but it is some form of it) and say the average is 50,000.  If you legislate that everyone earns the same, say the govt were to take in all the money, pool it and distribute it (which is too simplistic as you need a paycheck before year end to eat, but just say).  The average income would be nowhere near 50,000.  The more money is in circulation the more money there is to end up shared around.  As more money is spent, by the rich first, as the poor spend all they have out of necessity…. The more money the poor have, the more job options there are, the more jobs pay.  I don’t agree that the middle class is shrinking, it’s changing.  For a while the middle class lived way beyond their means, and I think the current economic situation is a result of that, at least in part.  Now the middle class is living (hopefully) within their means, they have less, but by less, they have a couple of PC’s, cable TV, a TV for every family member, a bedroom for each kid plus a spare.  In the 50’s, that didn’t happen, nor the 60’s 70’s or early 80’s. 

By limiting the number of people who are high earners, you limit the number of winners.  Nothing will ever be fair; the human condition does not permit it.  We are all (or almost all) selfish bastards at heart.