Labor Day Thoughts
/As a starting proposition, who could be against low-paid workers getting a raise? Especially when the bosses are rich capitalists making millions?
On the other hand, it doesn't necessarily follow that labor unions on the Wagner Act model are the answer to those questions. After the passage of that statute in 1935, the American manufacturing sector rapidly unionized, with union representation of workers in the U.S. reaching a peak of about 35% of the labor force in the mid-1950s. If you looked around in the 1950s and 60s, it would have been easy to think that unionization had been a big success. Unionized workers earned substantial premiums over the non-unionized, with additional "benefits" (pensions, healthcare) as well, and even some arguable safety improvements attributable to union efforts.
And then there started the very gradual implosion. As I observed in this post back in 2015, "Gradually, the unions put their employers out of business." That post focused on the steel industry, where by 2015 all of the major unionized producers had gone bankrupt with the exception of U.S. Steel, while the non-union producers survived and grew to some extent (against very tough foreign competition). The story in many other big industries has been similar: autos and auto parts, tires and rubber, mining, construction. By 2016, according to the latest data from the BLS, the union percentage of the private sector labor force had fallen to only 6.4%, and was continuing to fall year after year. Check out this piece from Oren Cass on Friday in the City Journal on the perverse incentives of adversarial Wagner Act style unionization. It's not that the unions don't continue to organize; and they rarely get thrown out of a company once organized. It's that the unionized companies are severely disadvantaged in a competitive marketplace, and they gradually downsize and/or go out of business. Also, there is very little "union premium" in wages left to point to, especially after you net out union dues.
Over in the public sector, there is no discipline of the competitive marketplace. State and local governments don't (and maybe can't) go out of business. For many years after the Wagner Act, most state and local governments continued to resist unionization. After all, in the public sector, there is no "greedy capitalist" to blame for paying substandard wages. But the restraints on public sector unionization gradually fell off in the 1950s through 70s. Those latest BLS data show the public sector unionization rate at 34.4%, approximately the all-time record.
But without the discipline of the marketplace, the public sector union movement has fallen into inevitable excess and abuse. You people around the country undoubtedly have your own examples, but here are a few from the union capital of New York:
- Municipal unions are by far the largest contributors to political campaigns in New York City, and have near complete control over the City Council. After a couple of decades of Republican mayors, the union-favored candidate (de Blasio) won the last (2013) election for mayor, and is heavily favored this time around. Shortly after taking office in 2014 he awarded billions of dollars in retroactive raises to the major municipal unions -- raises that had been resisted for years by his predecessor.
- All the municipal unions have massively underfunded defined-benefit pensions, with costs deferred well into the future but poised to explode upon the taxpayers when least expected.
- While Google and Uber and others proceed rapidly toward the enormously complex goal of achieving the driverless car, down in the New York subway running a subway train along a completely pre-determined guideway with nothing else on it takes two people -- one to start and stop the train, and another to open and close the doors. Discussions of automating these functions never even get started. Nobody but the insiders knows what comparable overstaffing exists out of sight in the rest of the system.
- Unionized construction of major projects like subway and water tunnels somehow costs five to ten times comparable costs from other international cities like London, Paris and Milan.
- Teachers are almost completely insulated from serious evaluation, and literally can't be fired after a brief probationary period, no matter how incompetent or ill-suited to the job. Unionized public schools far underperform their non-unionized competition, to the severe detriment of the many low income students trapped in the system.
- Teachers unions, with massive contributions to politicians and clear support of the mayor, fight a largely-successful and never-ending effort to slow the development of the non-union competition, such as charter schools.
And many, many more examples could be cited.
But there is a huge and little-recognized problem with public-sector unionism, which is a First Amendment issue. In New York as in most other states, workers in unionized public sector workplaces are compelled to support the union. Under Supreme Court precedent, workers who dissent from the union's political agenda -- almost always, support of Democratic candidates -- can get themselves exempted from having to pay their portion of the union dues that goes to explicitly political activities. But many people in the unions have a fundamental disagreement with the entire public sector union mission, and with the many excesses and abuses (like most of those cited above) that arise from the collective bargaining efforts rather than only from the explicitly political activities. Aren't even the collective bargaining efforts also inherently political, and don't they equally implicate First Amendment principles?
In a case called Abood back in 1977, the Supreme Court answered that question "no," and upheld the right of public sector unions, against a First Amendment challenge, to collect from dissenting members all dues except those relating to explicitly political matters. But those who think that public sector unions are an entirely bad idea that they shouldn't be compelled to support have continued to press the issue. Three years ago a case potentially raising the issue called Harris v. Quinn reached the Supreme Court; but the Court ducked the issue. However, in a concurrence, five justices (you can guess who -- Alito, Roberts, Scalia, Thomas and Kennedy) suggested that they would be willing to reconsider Abood. Then last term a case called Friedrichs reached the Supreme Court, squarely presenting the core issue of Abood. The court below (Seventh Circuit) had felt bound to follow Abood. But when the case got to the Supreme Court, Justice Scalia had died. The result was a one-line per curium affirmance:
The judgment is affirmed by an equally divided Court.
Well, now we have Justice Gorsuch. A new case called Janus raises the same issue as Abood and Friedrichs, and the lawyers have filed a petition for certiorari. How serious is this? Well, consider this article from today's New York Post titled "UFT may have to dramatically slash $182 million budget":
The United Federation of Teachers is drafting plans to dramatically slash its $182 million budget — anticipating a Supreme Court ruling that would bar mandatory deduction of union dues from government workers’ paychecks to support union activities, The Post has learned. The ruling could deliver a severe blow to union budgets by reducing membership and revenues by millions of dollars.
That's quite a reaction, considering that the Supreme Court hasn't even yet granted cert. However, the smart money is clearly betting that the Court will take Janus and that Abood will be reversed. The results over a period of years could be a shrinkage of the public sector union movement by half or more. My sympathies clearly lie with the taxpayers -- and even more importantly, with the students -- in this matter.