America has come to another Labor Day, a government-sponsored PSA for unions to take credit for every worker gain and offer increased unionization as the answer to every worker complaint. Perhaps the leading example this year was President Joe Biden’s Labor Day proclamation, which included statements such as “Everything that supports a sustainable middle-class life was made possible by unions,” a statement with as lopsided a relationship with the truth as many of his statements about Afghanistan.
Such claims lead Biden to the oxymoronic conclusion that he supports unionization that deprives members of a host of decisions – including deciding not to join a union or to be left alone by their organizers or to negotiate directly with employers, and in many cases the union whose representation they are forced to accept was not voted for by a single current worker – because “American workers should make their own decisions – free from coercion and intimidation” about their workplace associations.
That is sharply inconsistent with what the Supreme Court found in its Janus decision – that unions inflict a “significant impingement on associational freedoms that would not be tolerated in other contexts.”
Further, Biden is leading his party in pushing the PRO Act, which would go even further, to “dismantle virtually every existing safeguard against union monopoly in the private-sector workplace,” in Carl Horowitz’ words.
Among other things, it restricts the freedom which it is allegedly intended to advance by requiring employers to provide private employee information (including cell phone numbers, email addresses and work schedules) to union organizers, would allow unions to initiate snap elections in non-union workplaces more rapidly, limiting opponents’ ability to present opposing positions and codify “card check” elections, eliminating the protections against coercion provided by a secret ballot.
To illustrate the distance between the “we do it all for you” promotional rhetoric of unions and reality is perhaps most clearly illustrated by their perennial claims that union efforts to raise their workers’ wages raise everyone’s wages. Unfortunately, that claim, which is the centerpiece of their claim that they benefit non-union workers (which comprises roughly 93% of workers), as well, violates one of the most central principles of economics.
Economics begins with the fact that we live in a world of scarcity, so that every choice requires that something else of value must be given up (i.e., “There’s no such thing as a free lunch”). Advancing your well-being in such a situation, therefore, requires making choices whose benefits, seen by the chooser, are greater than their highest valued foregone option – the opportunity cost.
With regard to union claims of benefits for non-union workers, the central error is treating non-existent options as alternatives.
Unions leverage special government-granted powers (e.g., unique exemptions from antitrust laws) to prevent other workers willing to do the same work for less from competing with union employees. That is a form of collusion that, done by any business, would be legally prosecuted.
The higher union wages that result are then given credit for raising all workers’ wages, because they supposedly force up other employers’ wages to keep their workers from leaving for those better-paying alternatives. In other words, non-union employers must improve their job offers to keep up with the rising opportunity cost reflected in what they could make with higher union wages.
However, higher union wages would force other employers to pay more only if it increased the number of such high paying jobs. The reason is that employers need only outbid employees’ actual options to retain them. If there are no more jobs created in industries facing increased union wages, no non-union worker actually sees improved employment alternatives.
In fact, by artificially forcing up the cost of hiring their workers, unions reduce rather than increase the number of such jobs, reflecting the reduced output consumers will buy at the higher prices that result (that is, reflecting the law of demand). Non-union workers’ alternatives are worsened, not enhanced.
The displaced workers are forced into competition with others for non-union jobs. They increase the labor supply for such non-union employment, which reduces rather than increases wages for all workers in those areas (not just those newly forced into them). Consequently, not only do union wage premiums fail to benefit all workers, they primarily come out of other workers’ pockets.
That means union power cuts the real earning power of 13 out of 14 workers. And since unions also hike government service costs directly, as well as through other cost-increasing policies (e.g., the Davis-Bacon Act and Project Labor Agreements) which big labor’s political clout has pushed through, all of us are also harmed as taxpayers.
As with so many of their other claims, the assertion that unions benefit all of us by increasing wages generally is false, unable to even conform to the most basic economic analysis. Reality is the opposite of the annually repeated Labor Day story. If we are to really believe the verbal commitments to the advancement of freedom we hear from unions and their Democratic sponsors, we should reject their policies that reduce our labor market freedoms.
Gary M. Galles is a professor of economics at Pepperdine University.