My support for unions ends where their anti-competitive activities begin.
I often claim to champion the rights of the individual against leviathan aggregations of power. So a friend of mine was taken aback when I expressed an ambivalence, if not an aversion, to labor unions. Our first conversation on the matter ended abruptly, but we have recently revisited the issue. Here are my thoughts.
For this blog’s purpose, I won’t challenge the workers’ claimed right to keep their jobs while forming unions, even though I do consider that technically to be a violation of free association. Technically, employment at will should mean that either the manager or the worker can break off the work arrangement at any time for any reason. Technically, contracts containing anti-union “yellow dog” provisions ought to be enforced when signed by informed, consenting adults. However, I do recognize, and I’m sympathetic to, the disparity in bargaining power between workers and managers. Therefore, I’ll tolerate this minor deviation from principle and avoid balancing the fate of the great masses of working people on mere moral-philosophical technicalities. After all, the existence of unions is not what concerns me most. I’m more concerned with what unions do after they’ve formed.
My misgivngs about union activities rest on three alleged facts. The first two of these facts seem to me lend themselves to ready acceptance without much further elaboration. The third fact might be counter-intuitive, so I will briefly make the case:
- For every employed person, there likely exists another person somewhere in the labor pool who would offer to do the former’s job for less money.
- There exist people in the labor pool who have not joined unions and who do not want to join unions. They each have their own reasons for avoiding unionization. They may not want to pay union dues. They may not want to rouse rabble. They may have calculated that sucking up to the boss (i.e., outcompeteing their coworkers) is a better way to get ahead. Unionization may not even be on their radar, depending on their needs. Whatever their reasons, these people exist. They often call themselves merit shop workers or open shop workers to advertise their competitive advantage.
- Union wage-raising activities are at least partially superfluous in free labor markets because, absent exceptional circumstances, wages tend to rise along with worker productivity when employers outbid one another to secure labor contracts.
Since I’ve come to accept these as facts, union activities have taken on a different flavor for me. I no longer consider unions and management to be direct adversaries. Theirs is a love/hate relationship. Although the managers may keep short leashes and harsh conditions, they also sign paychecks, and the union workers need the paychecks. Union workers ultimately wish to remain close to the management. Union workers want to stay under management’s employ.
The union worker’s true adversaries are not management, but rather the non-union workers who outcompete union workers in the labor market and divert their paychecks. In this light, I have come to recognize much union activity as anti-competitive activity directed against non-union workers and employers. Sometimes this anti-competitive activity is explicit, such as when picketing union members either intimidate strikebreakers or sabotage the businesses of those who hire non-union labor. Sometimes unions inhibit competition by negotiating closed shop agreements, thereby raising non-union workers’ costs by requiring them to pay some portion of dues to the union. Normally I would not ideologically oppose any well-negotiated contract, but I find closed-shop agreements to be nettlesome in light of other privileges that unions enjoy, such as management’s legal duty to negotiate with them “in good faith“. Some have observed that closed-shop agreements read more like anti-trust violations than the exercise of civil liberties. Indeed, unions enjoy a special exemption from anti-trust legislation.
Restraint of trade may potentially motivate other union activities that, while perhaps not explicitly anti-competitive, tend to have an anti-competitive effect. These include interfering with business permits and campaigning for various labor and wage regulations. The minimum wage, for example, may sound superficially like an enlightened public policy, but it works by shutting young, poor, and migrant workers, whose labor isn’t worth the minimum wage, out of the labor market. Walter Williams explains in the first three minutes of this video:
Labor unions regularly campaign to increase minimum wages, to the detriment of young, poor, and migrant workers, and despite widespread apprehension and opposition among economists. The video continues to explain other union-won regulations, past and present, that have legally excluded non-union workers from labor markets.
I support unions to the extent that they provide for and look after their own. Unionized workers are in a better position to defend themselves against real acts of aggression and property rights violations on the part of management, such as beatings, threats, false imprisonment, fraud, and breach of contract. Once unions cross the line of imposing on the others’ right freely to compete in the labor market, however, my support for them dwindles, and once that imposition becomes that bulk of a union’s activity, my support evaporates. I have a hard time believing, for example, that Chicago teachers are on strike because they have been beaten, threatened and locked in their classrooms for 24-hour shifts, as the workers at CJ’s seafood plant in Beaux Bridge, Louisiana, allege has happened to them. Not all union activity is created equal.
But what of competition in the labor market? Does it not induce a “race to the bottom” that ultimately injures workers? I believe it does not. I believe that wages tend to rise in free labor markets commensurate with the productivity of the workers. I therefore find some union wage-raising activities to be at least partially superfluous and at most counter-productive. Matt Zwolinski, PhD, explains:
Matt explains in the first part of the video that “competitive pressure,” i.e. employers outbidding one another for labor, “forces capitalists to pay workers close to the value of what those workers produce, whether they want to or not.” This creates a floor below which management can not sustainably pay workers. This floor rises as technological advancements increase worker productivity.†
Just as there is a floor to what employers may sustainably pay a worker, there is also a ceiling: Workers can not reasonably expect to be paid much more than the ever-present competition. As union workers clamor for higher wages and stronger labor regulations, they have neglected the first fact of labor markets: other people in this world will do the same work for less, and management has sought out these other people. In a notable recent example, the city of Camden is about to replace it’s expensive, unionized police force with a non-union county police force. Here again, the response is not to compete with the non-union labor, but rather to file a protectionist lawsuit to stop the move.
High wages and labor regulations are least partially behind America’s mass-exodus of jobs to overseas. Union reaction to this move, predictably, has been not to oppose regulation and step up competition, but rather to quash competition—this time by pushing for higher taxes on companies that offer work to people on the other side of an ocean or politico-geographic border, most of whom will work for less and with less.
Workers can not expect to be paid any more than they bring to a company. This is the GM bailout scenario. Companies simply can not stay afloat when they pay union workers more than their labor is worth. The United Auto Workers were understandably elated when the government bailed them out at others’ expense.
The question has been asked: What if these wage ceilings do not offer workers enough to survive? Matt answers this question in the second part of the video above, beginning at 2:10:
Even when exploitative or unfair exchanges do take place, the institutions of a free market ensure that they will at least usually be mutually beneficial, because the exchanges are voluntary.
Matt uses payday loans as an example. I would consider the purposeful choices of low-wage, migrant workers: When people in droves and across generations risk live and limb to cross the border, only to accept low-wage jobs in tough conditions, the inference I draw is that they generally consider these prospects to be improvements upon whatever conditions they were leaving. Once here, if they want to make themselves more competitive by offering to work longer hours for less money, no union, in my view, has the right to impose wage and labor restrictions on them, either through legislation or otherwise.
It is tough for me to imagine why jobs that literally don’t offer workers enough to survive would be so attractive to so many people. In reality, jobs that literally don’t offer enough to survive will not last because these jobs, almost by definition, are not worth doing. Consider the case of jobs that have been obsoleted by improved technology, such as that of the iceman, who, in the days before refrigerators, would drive around town and sell ice for people’s in-home iceboxes. If immigrants today came to America in droves and took up jobs as icemen, they would quickly find that these jobs would not offer them enough to survive. These jobs would not offer enough to survive because they aren’t worth doing. Customers in modern America would rather buy refrigerators to pay icemen to deliver ice. In light of the union activity that I described above, I imagine that unionized icemen would attempt to realize living wages first by negotiating untenable contracts, then by advocating regulations that would favor them and harm refrigerators, and finally by protesting (and maybe even sabotaging) refrigerators and their manufacturers. This is the opposite of progress. Instead, workers ought to be—and are—driven away from jobs with low wages that are not worth doing and towards higher paying jobs that are worth doing. In fact, if workers were not so driven, then we would likely be dealing with true slavery, in which workers are bound against their will to jobs that kill them. I would support any effort, union or otherwise, to end such reprehensible assaults on human freedom and dignity.
(As an aside, I have not actually studied the history of iceman labor unions. I’d like to know what they actually did when refrigerators were introduced. I might end up with my foot in my mouth. In lieu of a detailed history, enjoy this obituary of an iceman union guy who was reluctant to let his wife buy a refrigerator. But see the Luddites.)
In conclusion, when union supporters object that, in absence of unions, workers would not earn a living wage, I believe they mean not that the workers lives are literally in jeopardy, but rather that workers would not enjoy a standard of living to which they believe workers ought to be entitled. Yet in encouraging anti-competitive union activities, union supporters hold many workers to a lower standard of living by excluding them from the labor markets that would improve their conditions.
† I’ll pause here to acknowledge an ongoing dispute I’ve had with a colleague who is of the opinion that technological advancements also cause crises of unemployment and demand that ought not be tolerated. I don’t agree that these alleged crises offset the benefits of technological advancements in free labor markets, but that discussion is ongoing.
Also, it is commonly observed that average wages across the workforce have not increased much since 1980, in spite of large advances in worker productivity. One reason for this apparent stagnation is the changing demographic of the workforce and the addition thereto of many workers who have up until recently been traditionally or technologically excluded from the workforce. Although wages have stagnated on average, new entrants to the workforce have made significant gains. Don Boudreaux explains here.