The Economics and Politics of the Pro-Union Protecting the Right to Organize Act

June 30, 2021 Updated: July 12, 2021

Commentary

For many decades now, the percentage of private-sector American workers who belong to a labor union has been declining.

According to a Hoover Institution study by Richard A. Epstein, the percentage of unionized workers in the private sector has fallen to 6.2 percent in 2019 from nearly 20 percent in 1983. Attempts by union organizers to persuade employees to unionize have failed in such high-profile cases as the Tennessee Volkswagen plant in 2019, the Nissan plant in Canton, Ohio, in 2017, and the Alabama Amazon warehouse earlier this year.

In the hope of reversing the long-term decline in union membership, President Joe Biden, House Speaker Nancy Pelosi (D-Calif.), and Senate Majority Leader Chuck Schumer (D-N.Y.) are pushing strongly for passage of legislation labeled the Protecting the Right to Organize (PRO) Act.

The intent of the PRO Act would be to radically change existing labor laws to favor union organizers. Among its sweeping changes, the act would overturn the right-to-work laws—laws that protect workers from having to join a union as a condition of employment—in 27 states; take away workers’ right to secret ballots when voting for or against adopting a union, stripping away workers’ privacy by compelling employers to share their employees’ personal contact information with union organizers; and a host of other provisions. (Details are available in analyses by The Heritage Foundation and the Competitive Enterprise Institute.)

To understand this proposed legislation better, we need to view it from two different perspectives: economic and political.

The Economics of Labor Unions

The central myth of unionism is the assertion that wages are as high as they are only because of the successful collective bargaining of labor unions. Actually, this is partially true: Unions exercising the power and privileges conferred to them by their exemption from the anti-monopoly provisions in the Clayton Antitrust Act of 1914 and the Wagner (National Labor Relations) Act of 1935 can indeed extract above-market wages from employers who face the grim choice between economic ruin and making concessions to labor unions. The downside of procuring above-market wages in this way is a decrease in the number of jobs. That’s why the cities with the highest unemployment rates decades ago were union strongholds.

It’s true that wages were minuscule during the rapid industrialization of the U.S. economy in the 19th century. Wages were low for two reasons: the relatively low productivity of labor then and the merciless economic law of supply and demand. As I have written before, the greatest factor working against the interests of labor in the late 1800s wasn’t the presence of greedy employers, but that there was too small a number of greedy employers. As the economy grew, more entrepreneurs started businesses and had to bid for workers. Also, increased capital accumulation and investment increased labor productivity. Unions did nothing to promote either of those pro-worker advances. (See details in the late F. A. Harper’s “Why Wages Rise,” available for free via the Mises Institute.)

On a personal note, 50 years ago, I worked as a janitor for Chrysler. The union rep told me to rest on my broom. I politely declined, because keeping busy at the tedious work was the only way for me to keep my sanity. The union also protected workers who showed up so drunk or stoned that they slept through their shifts. I knew that this would cost many of the salt-of-the-earth, hard-working American workers in UAW their jobs, because Japanese autoworkers didn’t share the corrupt UAW ethic of demanding more money for less work. And so it came to pass: Tens of thousands of UAW jobs evaporated in subsequent decades—some to foreign competition and others due to high UAW wages acting as a stimulus for more rapid adoption of automation.

Today’s workers, benefiting from an abundance of employers and massive capital formation over the past two centuries, are doing quite well without the assistance of labor unions—that’s why workers so often vote against joining unions.

Look at our recent past: In 2019 alone, the unemployment rate fell to a half-century low, accompanied by strong increases in median household income, including impressive gains of 8.5 percent among black households and 7.1 percent in Hispanic households. Entrepreneurs and businesses in America created an impressive 2.1 million new jobs, even as the number of unionized workers dropped by roughly 170,000. Basically, private-sector labor unions have become largely irrelevant to workers.

The strongest economic argument that union sympathizers can come up with is the statistic that wages in right-to-work (RTW) states are 3.1 percent lower than those in compulsory union membership states.

In the first place, we should recall that nothing is stopping workers from voting to unionize, so the fact that they’re choosing not to do so indicates that they perceive more value in being independent than in belonging to a union. Another point to consider is that 3.1 percent difference is largely illusory. Historically, most RTW states—many in the south—were poorer. The fact is that they have been closing the gap in recent years. Also, the pro-union states tend to be Democratic, and Democratic states tend to be high-tax and high cost-of-living jurisdictions, so the economic benefit of a 3.1 percent income advantage turns out to be chimerical.

The following statistics (pdf) for the 2001 to 2016 period show that RTW states have been enjoying superior economic performance to forced-unionism states:

Employment in the private sector increased 27 percent in RTW states, more than 10 percentage points greater than non-RTW states.

Private-sector GDP growth has risen 38 percent in RTW states, compared to 29 percent in non-RTW states.

Manufacturing GDP increased by over 30 percent in RTW states, compared to 21 percent in non-RTW states.

Personal income in RTW states rose 39 percent in RTW states, compared to 26 percent in non-RTW states.

The overwhelming evidence is that workers in RTW states are prospering more than the people in union-stronghold states. What, then, explains the desperate efforts of Democrats to boost unions through the PRO Act? In a word: politics.

The Politics of Unionism

In trying to convince workers of their value, unions tout the alleged benefits of collective bargaining. The fact, though, is that many of today’s unions spend far less than half the dues they collect from their members on collective bargaining. For example, in 2018 the Michigan Education Association, the state’s largest teachers union (disclosure: I am a former dues-payer to MEA) devoted a meager 9 percent (pdf) of its expenditures to collective bargaining.

Most union dues go to political lobbying. Labor unions are a major financial pillar of the Democratic Party. Data gathered by the Center for Responsive Politics shows that the vast majority of unions’ political contributions go to support the election of Democratic candidates. No wonder the Democratic Party is so eager to strengthen unions. This is a tried and true way for them to force workers to contribute to their campaigns, even if the workers oppose Democratic candidates and policies.

Democrats aren’t above trampling on the democratic rights of workers in ways other than capturing their financial support against their will. Pro-union government bureaucrats aren’t above defying the democratically expressed will of workers. In a case reported by the National Right to Work Committee, a nonprofit organization dedicated to protecting workers from union abuses, bureaucrats at Region 13 of the government’s National Labor Relations Board (NLRB) refused to honor the unanimous request of workers who wanted to decertify their union. Yes, every single member of the Indiana/Kentucky/Ohio Regional Council of Carpenters union at Neises Construction Company in Crown Point, Indiana, agreed essentially to dissolve their union. The NLRB bureaucrats rejected the decertification petition, and instead commanded that the employer bargain with the union—the very union that the employees explicitly requested not to represent them.

I agree with Democrats that U.S. labor laws need a major fix. What is needed, though, isn’t a reduction of employee freedom, but an expansion of it. It’s time to repeal the major labor union laws of the 20th century—the Norris-LaGuardia Act of 1932, the Wagner Act of 1935, the Taft-Hartley Act of 1947, and the Landrum-Griffin Act of 1959. What we need is a simple law that embodies this principle: To join or not to join a labor union is an inalienable right of each worker. Any American who wants to exercise his constitutional right of association and join a labor union is free to do so, and any worker who doesn’t wish to join a union can’t be compelled to do so.

Furthermore, the labor union exemption from the anti-monopoly provision of the Clayton Antitrust Act should be repealed. That way, more than one union can be formed in a workplace—a union for Democratic employees if they wish to have part of their union dues go to Democratic politicians, a union for Republican workers if they wish to support Republican politicians, and unions dedicated to any other commonly shared goal of employees. Some stiff competition between unions to see which one can best serve the desires of its members would increase each union’s value to workers, just as competition between car, computer, and cellphone manufacturers works to the benefit of consumers.

Individual free choice and healthy competition—what could be more American?

Mark Hendrickson, an economist, recently retired from the faculty of Grove City College, where he remains a fellow for economic and social policy at the Institute for Faith and Freedom.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Mark Hendrickson
Mark Hendrickson
contributor
Mark Hendrickson is an economist, who retired from the faculty of Grove City College in Pennsylvania where he remains fellow for economic and social policy at the Institute for Faith and Freedom. He is the author of several books on topics as varied as American economic history, anonymous characters in the Bible, the wealth inequality issue, and climate change, among others.