How Labor Unions Hurt America

Imagine you own a grocery store. And you get together with all the other store owners in your state and you all agree that all stores will charge $10 for a loaf of bread. Because you know that the extra income from bread sales will give the families of store owners a higher standard of living.


The media would be outraged because they would claim that the natural price of bread is set by the market at, say, $3 and that the artificially high price of $10 is price-fixing.


The public would cry foul, that $10 for bread is just a transfer of $7 in excess wealth per loaf from the consumer directly to the grocery store owner. 


And both the media and the public would be right.


And this is exactly how labor unions work. Labor unions artificially fix wages, and those higher wages are always paid by the consumer.


If labor union wage demands are within a reasonable range of market wages, then that is fine. But union demands – including absurd union work rules – during most of the 20th century have produced wage rates far outside the market, driving many companies out of business or almost out of business including the steel companies and the railroads.


Today the biggest proportion of the unionized labor force is government employees. And the taxpayer – and many state budgets – are being gutted to pay those artificial wages, just as steel companies and railroads were gutted by unionized workers.


Today many unionized assembly-line workers at the Big 3 car companies, with only a high-school education, are earning more than $70 an hour in wages and benefits. And the car companies are going out of business because they cannot sustain those wages.


Hmmm. Sounds like a pattern here.


So it is better to let the market set wages for workers than to allow the wages to be set artificially by unions or government. If we allowed the oil companies to simply fix an artificial price for gasoline of $10 a gallon, they would get rich. Oil company executives, employees and stockholders would have higher standards of living and the public would pay for it.  


But we don’t allow price fixing. So why should we let unions fix wages? It is the exact same thing.


And business already is harassed by liberalism with taxation and regulation. Unions just will make it a triad.


Now the unions are pushing for what is called the Employee Free Choice Act, which is not free choice at all but quite the opposite. It is a system under which unions may try to organize workers at any given company into unions using an open ballot. In other words everyone in the company and in the union knows how you voted. Obviously this will give unions a big intimidation factor. If you vote openly against the union, you probably would  be singled out for intimidation and harassment if the company gets unionized. So you vote for the union.


Yet isn’t all freedom based on the sanctity of the private ballot? And isn’t the public ballot the tool of dictators and tyrants?


Yes and yes.


Meanwhile 34 members of the South Carolina House of Representative, led by Rep. Eric Bedingfield, have filed H. 3305, a  state constitutional amendment that would guarantee that workers in that state have access to private ballots in union elections.


Resolutions in both the South Carolina House and Senate are urging federal officials from the state to vote against the Employee Free Choice Act which also would allow arbitration boards – which will become politicized bodies – to impose contracts on stalled negotiators between unions and management.


The South Carolinians are right and they should be applauded.


The Wall Street Journal wrote recently about the Employee Free Choice Act: “So far… Democrats have been trying to present themselves as ‘moderates’ who won’t return to their bad special-interest selves pre-1994. But this union-enabling bill strips away that mask and exposes an anti-business animus out of the 1970s, if not the 1930s.”  


So in a time of economic uncertainty, is it a good idea to further weaken business?


And the American people have repeatedly polled overwhelmingly in favor of secret ballots. Because the majority of Americans recognize freedom, while the minority of union activists do not.


Other types of legislation that might follow strong-arm unionization also will strain the budgets of private business, taxpayers and consumers – mandated paid leave; government health care; expansion of the Davis-Bacon act which sets union wages for government-funded projects (which is why your new fire department building cost $12 million when it would have cost $3 million if it were a private building); and more opportunities to sue employers.


By the way, the same Congress that wishes to impose the EFCA does not allow its own employees to be unionized. They say it might threaten the operation of Congress!


Here is a typical statement from a labor union member: “The union helped me and my family to have a good life.” And when the average person hears this, they think he is right and that unions are a good idea.


But there are three factors involved in measuring well-being: The well-being of the worker; the well-being of the consumer; and the common good. And unions are good for the worker, but bad for the consumer and for the common good.


Here’s an example:


Imagine you are going to build a house and you are going to hire one single carpenter to build that house. You find carpenters available in your town in a range of prices from $25 an hour for a mediocre carpenter who can start right away to $40 an hour for an excellent carpenter who can start in 8 months.


Taking into consideration your budget and your time constraints you decide that you will hire a carpenter at $32 an hour who does very good work and is available next month. You have chosen from the free-market offerings in your town. The wages are set by the natural forces of supply and demand.


Now imagine that union activists come into your town and organize all the carpenters into a labor union. And they declare that all carpenters must be paid $50 an hour or more. Looking in from the outside, without considering any other factors, the average person might say, “That is a good idea. It gives the carpenter a higher standard of living. I am in favor of the union.”


But this would hurt you, the consumer, who wished to build the house.  When you have to pay that carpenter $50 an hour instead of the $32 an hour that you were offered under a free market, it is making you poorer. You have to pay that differential between the $32 an hour and the $50 an hour. You are paying to give that carpenter his elevated standard of living while your standard of living falls.


It also would hurt your fellow citizens. Because if labor costs are kept artificially high at $50 an hour, fewer people will be able to afford to build houses. The natural law of economics says that the more expensive items become, the fewer are made.


And it hurts your town, and the common good. Because if fewer houses are built, the overall price of houses will rise through the forces of supply and demand, i.e., the supply is restricted and the price goes up.


Unions were good things in the beginning. But today, the pendulum has swung and unions want to have full power over business ands consumers. This will harm America, business and people who want sustainable jobs. The Employee Free Choice Act is a union plan to use extra-constitutional tactics to weaken our nation… and our freedoms. It is a bad idea.


Please visit my website at www.nikitas3.com for more. You can print out for free my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.