Do unions cause inequality?
By Dr. Robert Owens
We hear quite a bit about inequality today. This seems to be the mantra in the waning of the Obama Administration with the President saying, "Income inequality is "the defining challenge of our time." This is all code for another of President Obama's descriptions of the same policy, the need to, "Spread this wealth around," or in other words "From each according to his ability to each according to his need."
Let's spread the wealth around and end inequality. One of the President's and the Democrat Party's most powerful allies in this long march to the promised land of a worker's paradise where everyone is truly equal are the unions.
At one time it was dangerous to belong to a union in the United States. They were considered illegal combinations in restraint of trade even though freedom of association has long been considered a right under the First Amendment to the Constitution. People died organizing and participating in strikes. Names like the Matewan Massacre, the Haymarket Riot, and the Battle of Blair Mountain convey the very real image of war that was fought for the right to organize. This was a war that was decisively won by the unions. This war for the allegiance of American labor was not won through the superior organizing techniques of the union bosses. From the major battles of the 1800s and the early 1900s the unions were failing. The workers just didn't want to join. Then along came FDR and his New Deal. He passed pro-union legislation and with the patronage and support of the Federal Government unions not only flourished they triumphed.
According to the Progressives monopolies are terrible. They benefit few and penalize many. Never mind that before Rockefeller established his powerful Standard Oil a gallon of kerosene cost 58 cents and after he had gained 90% of the market the price had fallen to 7 cents. Or that under Carnegie's US Steel, which controlled all steel production, the price of steel dropped. Monopolies in production were universally branded as evil and they were made illegal by the progressives under Teddy Roosevelt "The Trust Buster" as he rigorously enforced the Sherman Antitrust Act and saved the people from the exploitation of efficiency and lower prices.
Monopolies were and are considered universally evil except when it comes to unions. Unions have been allowed to exercise absolute control of entire industries. Just ask yourself, how many auto worker unions are there? How about Electricians, plumbers, carpenters? How many unions compete with the NEA or SEIU? These powerful unions have gained strangleholds over entire sectors of our economy. They exercise coercive authority to allow some to work at their given professions and to deny others the same opportunity. Through their unlimited power to exact unwilling support from anyone in their grasp they gain billions to support the very politicians who pass laws giving them the power to extort the money. Through their government granted authority to become the sole negotiators of everyone's pay, even those who don't belong to the union, they effectively come to control the employers to a major extent.
Using the government awarded monopolistic and coercive power to drive up wages and benefits they drive up operating costs and prices. By artificially driving up the wages of their members so that they can then collect bigger dues they distort the market place and artificially force down the wages of non-union workers. You see unions can force wages above the levels that would be achieved in a free market only by limiting the supply with the threat to withhold labor if their demands aren't met.
Workers in the private sector have been rejecting the big union cartels for generations. Their participation rate has fallen from a high of 35% in the 1950s to its present dismal level of 11.1%. According to the Washington Examiner, "The job sectors with the highest unionization rates in 2015 were in "protective service occupations," primarily law enforcement, at 36.3 percent and education at 35.5 percent. The lowest rates were for retail sales at 3.3 percent and farming and forestry at 1.9 percent."
And even this declining state of unionism is only possible because of the heavy hand of government patronage. Rick Berman, president of the business-backed Center for Union Facts, attributed the stability in the numbers to pro-union policies under President Obama. "Union membership is apparently receiving a boost from an activist National Labor Relations Board. By tilting the scales in favor of labor organizers, the board and the sympathetic Obama administration are propping up Big Labor rather than helping the rank-and-file."
As private sector employees bailed out of unions every time they had a chance, the employees-for-life in the civil service bureaucracy organized to gain an inordinate level of power over the government. In 2009, for the first time in American history, government employees accounted for more than half the nation's union membership.
Even FDR, the patron saint of unions warned about the distortions and disruptions of public sector unions.
In the President's Aug. 16, 1937 correspondence with Luther C. Steward, the president of the National Federation of Federal Employees he said "meticulous attention should be paid to the special relationships and obligations of public servants to the public itself and to the Government."
He added, "All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management."
And, "The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations."
He continued, "The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters."
He concluded, "The pay is fixed by Congress and the workmen are represented by the members of Congress in the fixing of Government pay. In other words, you would not have the representatives of the majority as the sole bargaining agents? Not in the government, because there is no collective contract. It is a very different case. There isn't any bargaining, in other words, with the government; therefore the question does not arise."
This is in effect a money laundering scheme. The unions bargain with the politicians who raise the pay of their members which raises the dues collected by the unions who then contribute money to the very politicians who raise their pay. And even in the public sector when given the choice to remain in unions or leave when given the chance as in Wisconsin they are leaving in droves.
So how do unions cause inequality? By controlling the labor in major industries they distort the free market by artificially raising the cost of labor over what it should be according to production costs and sales receipts. This in turn contributes to economic misallocations of resources and malinvestments which sets the stage for the creation of bubbles, booms, and busts.
In America all people are equal before the law and all should have equality of opportunity. However, it is a fact apparent to anyone who has interacted with anyone else that all people are not equal in talent, motivation, experience, or desires. Therefore inequality as a result of the varying application of these four attributes will always exist.
Such horror shows as the USSR, Cuba, and Venezuela have tried this through collectivist pipedreams that became the nightmares of their captive people.
If unions are all about the free association of workers go to Chicago or New York and try to start a competing carpenters union. See how well that goes. I would suggest that you wear a hard hat.
Dr. Robert Owens teaches History, Political Science, and Religion. He is the Historian of the Future @ http://drrobertowens.com © 2016 Contact Dr. Owens firstname.lastname@example.org Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens