The raging controversy in Wisconsin over eliminating collective bargaining “rights” for government employees cast a bright and harsh light on public-sector unions. Some commentators have distinguished public-sector unions from private-sector unions, but the vested interests of the two are much the same. Both are expressions of what might be called “the modern union,” which came to dominate the American labor movement through New Deal legislation in the 1930s. Differences between the two forms of union should be acknowledged, however.
There is no question that the tax funding of public-sector unions creates important distinctions from those in the private sector. For one thing, private-sector unions negotiate in the context of limited money; if they demand too much the company cannot compete against rivals and union members could find themselves unemployed. By contrast public-sector unions have no similarly clear limit on available money and government has no competitor. Thus public-sector unions are among the loudest voices for increased taxation and big government to sustain their wages and benefits.
Reducing those wages and benefits has become a popular cause largely because private-sector workers (even within unions) make considerably less than the government employees whom they are heavily taxed to support. In December 2009 the U.S. Bureau of Labor Statistics reported that government employees at the state and local levels earned an average of $39.60 an hour (including benefits), while private workers earned $27.42—over 30 percent less. Moreover, according to the Bureau of Labor Statistics, private workers have a 20 percent chance of losing their jobs in any given year; public workers have a 6 percent chance.
Reducing the power of either form of union is far less popular than reducing public-sector costs for at least two reasons. First, all modern unions benefit from legal privileges such as collective bargaining and the government certification that bestows a virtual bargaining monopoly on specific unions. Second, such prerogatives are widely viewed as workers’ rights to be cherished in the same manner as constitutional rights. That’s why Jesse Jackson compares Wisconsin’s massive pro-union demonstrations to Martin Luther King’s 1965 march in Selma for the voting rights of blacks.
Is it accurate to equate collective bargaining with workers’ rights? Is it accurate to view public- and private-sector unions as distinct rather than fundamentally similar? The answers lie in history.
It is important to define unions precisely. In a free-market context a union is nothing more than a collective agency through which workers protect common interests and secure common advantages through negotiation or other forms of persuasion, such as boycotts or peaceful strikes. Individual workers assign their right to negotiate to the collective agency in much the same manner as they might assign power of attorney; no one is forced to join or to pay dues. Thus the union is a collective expression of the individual right to free association and to contract one’s own labor. Employers remain free to decline negotiation and hire replacement workers.
Many conservatives and libertarians would consider the foregoing definition of unions to be unrealistic. In his article “The Myth of the Voluntary Union,” economist Thomas DiLorenzo argues that those who believe unions can be voluntary fall into “an easy trap . . . detached from any reality and history.” He insists that “violence against competitors has always been an inherent feature of unionism, even apart from the ‘violence’ of State-imposed legislative privileges that unions enjoy” (emphasis added). DiLorenzo refers specifically to the legal power of collective bargaining and to a history of brutal strikes as proof of unionism’s inherent violence. Yet it is not clear that violence is inherent in unions.
Could unions exist without legal privileges in a society in which employment relationships were not mandated, in which there were no restrictions on self-employment or home industry? Are free-market unions possible?
The current paradigm of a modern union is rooted in the presidency of Franklin Delano Roosevelt. It was created through New Deal legislation, especially the Wagner Act, which established the legal right of workers within an industry or company to unionize if a majority of them voted in favor of doing so. The result has been far from an expression of the free market. For example a modern union receives government certification in order to engage in collective bargaining. In other words, the government authorizes it as the sole representative of a set of workers and legally requires the employer to give the monopoly union a seat at the negotiating table. This monopoly shuts out other groups or dissenters from negotiating their own contracts on their own terms. In many cases individuals can choose not to join a specific union but nevertheless they remain bound by union contracts and are required to pay union “fees.” The modern union thus represents a forced transfer of authority from individual workers to a collective.
Government schools, which are operated by what is arguably America’s strongest union, teach that the New Deal transferred power from business to labor. And without question the modern form of union gained political clout. But the political transfer was far more complex than it is portrayed to be.
Wagner and Big Business
In his essay “Labor Struggle: A Free Market Model,” Kevin A. Carson argues that the Wagner Act was designed to centralize, bureaucratize, and tame the unions to the advantage of big business, which was already no stranger to privilege and subsidy. That is why some of the most vigorous advocates for modern unionism were leaders of industry, such as Gerard Swope, president of General Electric. By specifying who could negotiate terms and how strikes could occur, Wagner removed some of the most powerful tactics from the labor movement. Carson comments, “The primary purpose of Wagner, in making the conventional strike the normal method of settling labor disputes, was to create stability and predictability in the workplace in between strikes, and thereby secure management’s control of production” (emphasis in original).
Certification created labor monopolies that eliminated the need for business to negotiate contracts with multiple groups or individuals within the same company. Business also benefited from the unions’ acting as enforcement agents, policing their own memberships’ compliance with contracts. They prevented wildcat strikes and punished boycotts, work slowdowns, and other labor tactics that had proven both popular and effective in the past.
Leaders of modern unionism were aware of the benefits they offered to big business. In Ethics and American Unionism (1958), Sam Dolgoff wrote of John Lewis, president of the United Mine Workers of America (UMWA) from 1920 to 1960, “In 1937, Lewis assured the employers that ‘a CIO contract is adequate to protect against sit-downs, lie-downs, or any other kind of strike’. . . . [T]he corporations accepted . . . ‘industrial unionism’ because as a matter of policy, the mass-production industries prefer to bargain with a strong international union able to dominate its locals and keep them from disrupting production” (emphasis added).
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