Do Unions Benefit Workers?

Do unions uphold worker rights?  This seems to be one of the central issues at stake in Wisconsin, Indiana, Ohio and other states where legislation is being introduced to curtail the ability of public and/or private workers to organize and bargain collectively.  In all of the debate about worker rights, the interests of two groups of workers are seldom mentioned, however.

Unions have a long history of difficulty in pursuing even the interests of the majority of their members.   Although their proponents often equate unions with support for policies that help working class Americans, there is no reason to think that the two are natural allies.  There are many cases where unions have taken positions directly at odds with the interests of their own members.  These range from the influence of organized crime, scandals such as the Union Labor Life Insurance Company, and corruption by individual union leaders such as Sandra Bullock of the Washington Teachers Union.  Unions have also taken positions that harm the general long-term interests of workers in general.  A good example is their consistent opposition to trade agreements.  But one might argue that at least union leaderships are subject to elections and can be replaced by a majority of their members.

But there are two categories of workers that unions clearly do not represent and their rights and interests are usually overlooked in debates about union rights.  The first is the large number of union members who do not want to belong to a union but must because a majority of their co-workers have voted to belong to one.  In almost all cases union elections are a relatively close call.  That is precisely why unions supported card check legislation, which would have let them avoid elections.  This means that a large number of union members actually oppose having to join.  Why does not matter.  It may be because the union is corrupt, or charges high dues, or pursues policies that the worker disagrees with, or makes donations to political candidates that the worker opposes, or because the worker thinks he can do better if he is not treated like everyone else.  In any case, under current law in most states the worker has little recourse.  Even if he is allowed to avoid formal membership, he will be charged “dues’ for having the “benefit” union representation.

A common argument for coerced membership is that otherwise even those workers who wanted union representation would be tempted to withhold support once they had received the benefits of higher wages and better working conditions.  This in turn would weaken the union’s ability to function.  The free rider problem is common to all collective groups yet it is not necessarily all that serious.  Many voluntary groups manage to overcome it.  Tocqueville remarked on the degree to which Americans engaged in collective action, yet in almost no form of association other than government itself is a majority allowed to impose membership and obligations on a minority that wants no part of it (agricultural marketing orders are another unfortunate example).  So when we talk of rights, we might think more of the large number of union members, often younger and more confident, who would do away with union obligations and benefits if given the choice.

The second category of worker is even more numerous.  It consists of those standing outside of the factory gates.  Union policy is by and large premised on increasing wages by capturing a higher portion of the surplus between the value that consumers attach to a value or product and the cost of producing it.  This surplus can go to the producer in the form of profits, workers in the form of wages above their average productivity, or consumers.  In a competitive market, consumers would capture most of this surplus.  Firms or workers who tried to capture a greater percentage of the surplus would face competition as others entered the market.   One way to capture more of the surplus is to prevent competitors from entering the market.  Antitrust law wisely prevents companies from taking actions that unfairly restrict other companies from gaining market share by lowering prices.  But unions are not subject to these prohibitions.  In fact, much of the value in unions is their ability to prevent employers from hiring non-union workers at lower wages, even thought these workers might really need and want the work.  In all of the talk about union rights, the right of the worker making $9 dollars an hour to strike a deal with Ford Motors by agreeing to work for slightly less than union wages is never mentioned.  The extent to which union members act in the interest of all workers can be seen from the willingness with which they agree on seniority rules and tier pay rates that treat existing members better than new ones.

The problem for unions is that this model is unsustainable in an increasingly competitive and global world.  Even in the public sector, the barriers that protect unions from competition are slowly being worn down; not by Republicans but by the very world we live in.  In order to adapt unions will have to pursue a much different model.  This will be the subject of the next post.

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