The other side of unions

Mises:

Freedom of contract and association were essential principles. A laborer was perfectly free to reject any offer of compensation that an employer might make to him, and an employer was likewise entitled to reject any offer made by a laborer. An employee was free to withhold his labor services if unsatisfied with his employer's terms; likewise, a group of laborers jointly exercising this individual right were permitted to do so. No one, however, was allowed to prevent individuals who wished to work from exercising their right to do so.

Strikers – like anyone else – were forbidden to interfere with consumers' right to shop where they liked. And strikes could not obstruct suppliers from making deliveries, since to do so would again violate the rights of others. Finally, since the employer's plant was private property, the employer had the absolute right to decide who would be permitted to enter, and complete strangers who wished to enter for the purpose of agitating his employees could be lawfully excluded altogether.

This common-sense legal approach to labor unionism began to give way with the Norris-La Guardia Act, signed by Herbert Hoover in 1932. The legislation made "yellow dog" contracts – in which an employee could be required to promise to refrain from union activity as a condition of employment – unenforceable in the courts. The Act also exempted labor unions from prosecution under the Sherman Antitrust Act. Although the Sherman Act should certainly have been (and still should be) repealed, if there were ever an institution guilty of "restraint of trade" it was labor unions, which not only withheld their own labor but which also used intimidation and force to keep down non-union competition. They would henceforth be exempt from behavior that the law deemed criminal in any other context.

The Act also prohibited the federal courts from issuing injunctions against labor unions in some cases and seriously crippled their ability to do so in others. Subsequent Supreme Court decisions made clear that the Act in effect shielded unions from prosecution for activities they may have engaged in during labor disputes. The injunction had been used to put a stop to union violence and property destruction when local authorities seemed unwilling or unable to protect life and property. Unions hated them.

[...]It is one of the many myths of American labor history that the courts issued injunctions frequently and indiscriminately. Labor economist Sylvester Petro undertook a thorough study of the period from 1880 to 1932 and found injunctions to be exceedingly rare: federal injunctions were issued in not even one percent of all work stoppages, while state injunctions were issued in less than two percent of all work stoppages. And these few injunctions were issued not to thwart labor union activity per se but to put a stop to violence against persons and property. Now even this protection of the employer's rights – yes, employers have rights, too – would henceforth be absent.

The New Deal added the National Labor Relations Act of 1935, more commonly known as the Wagner Act, to the mix. It had once been the case that a worker who did not wish to join a union or pay its dues refrained from joining and was not obligated to pay dues. Thanks to the Wagner Act, that individual freedom disappeared. From then on, if a majority of workers in a given bargaining unit chose to unionize, then that union represented all the workers and could require them either to join or at least to pay dues.

The usual defense of such coercion is that since the Wagner Act called for a single certified bargaining agent to represent all workers in a given bargaining unit, it was only fair that all such workers be required to contribute something to the union. After all, it is argued, since all workers gain from the union's activities on their behalf, it would be wrong for them not to contribute toward union expenses. This objection overlooks the real problem, which is the idea of having an exclusive bargaining agent in the first place.

[...](As a result of the Taft-Hartley Act of 1947 – which labor historians detest despite the mildness of its provisions, which did little to overturn settled labor law – states have the right to pass "right-to-work" laws, which prohibit unions from attempting to force union membership and dues on workers as the price for keeping their jobs.)

Once officially designated by a majority of workers as the exclusive bargaining agent for all workers, the union is never required to stand for re-election. Even after all the workers who originally voted for the union have died or retired, the union is simply assumed to have the support of a majority of workers. The new slate of workers has no say in the matter at all.

The Wagner Act also forced employers to bargain "in good faith" with unions that were established by a majority of workers. Whether an employer had complied with the vague instruction to bargain "in good faith" would be determined by the all-powerful National Labor Relations Board.

Moreover, the Wagner Act also interfered with employers' freedom of speech by making it an "unfair labor practice" to attempt to influence their employees' decision whether to unionize or not. Employers were required to permit union organizers – that is, total strangers – who did not work for them to use company property for the purpose of persuading employees to unionize.

Furthermore, the Wagner Act gave labor unions a degree of legal insulation afforded to no other group in society. The Act made labor unions immune to claims of vicarious responsibility. In plain English, that means that labor unions are not legally responsible for any violence their members might commit, even if union officials themselves order the violence.

[...]The ways in which labor unionism impoverishes society are legion, from the distortions in the labor market described above to union work rules that discourage efficiency and innovation. The damage that unions have inflicted on the economy in recent American history is actually far greater than anyone might guess. In a study published jointly in late 2002 by the National Legal and Policy Center and the John M. Olin Institute for Employment Practice and Policy, economists Richard Vedder and Lowell Gallaway of Ohio University calculated that labor unions have cost the American economy a whopping $50 trillion over the past 50 years alone.

[...][T]he study did find that unionized labor earned wages 15 percent higher than those of their nonunion counterparts, but it also found that wages in general suffered dramatically as a result of an economy that is 30 to 40 percent smaller than it would have been in the absence of labor unionism.

[...]Labor historians and activists would doubtless be at a loss to explain why, at a time when unionism was numerically negligible (a whopping three percent of the American labor force was unionized by 1900) and federal regulation all but nonexistent, real wages in manufacturing climbed an incredible 50 percent in the United States from 1860-1890, and another 37 percent from 1890-1914, or why American workers were so much better off than their much more heavily unionized counterparts in Europe. Most of them seem to cope with these inconvenient facts by neglecting to mention them at all.