David R. Henderson  

Unions: Bob Barro's Mistaken Analogy

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Reflections on World on Fir... What I'm Reading...
Labor unions like to portray collective bargaining as a basic civil liberty, akin to the freedoms of speech, press, assembly and religion. For a teachers union, collective bargaining means that suppliers of teacher services to all public school systems in a state--or even across states--can collude with regard to acceptable wages, benefits and working conditions. An analogy for business would be for all providers of airline transportation to assemble to fix ticket prices, capacity and so on. From this perspective, collective bargaining on a broad scale is more similar to an antitrust violation than to a civil liberty.
This is from Robert Barro, "Unions vs. The Right to Work," in today's Wall Street Journal. His analogy is mistaken. Here's the correct analogy:

An analogy for business would be for providers of airline transportation to vote to force all airlines, even those that don't want to join, to comply with ticket prices that the business association sets.

In other words, the key ingredient that Bob Barro misses is the element of coercion. If teachers simply got together and negotiated with school districts, but those who didn't want to join the union were free, not only not to join, which Barro advocates, but also to negotiate their own deals, then the problem with unions as monopolies would pretty much go away. Many of these people would negotiate for lower wages than the union would want, as a way of keeping their jobs and/or their flexibility. One could imagine that new hires especially, given unions' typically seniority rules, would most value their ability to negotiate a separate, and probably lower, wage.

The "right-to-work" laws that Barro discusses prevent unions from being able to force people to join and prevent unions from collecting dues from those workers who refuse to join. That's good. (Actually, it's almost good. If a business wants to deal with a union that requires everyone to join or pay dues--whether there would ever be such a case is doubtful--the business and union ought to be able to do that. That's simply freedom of association and it's something that right-to-work laws prevent.) But right-to-work laws don't undercut the ability of the union to be the sole bargaining agent. And that's the problem. As I pointed out in an earlier post, this power to be the sole bargaining agent is a power, not a right. There's no such thing as the right to make peaceful people join something they don't want to join.


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CATEGORIES: Labor Market



COMMENTS (20 to date)
Maniel writes:

David,
I believe that the situation is more destructive than you describe in the public sector. A labor union within a private company draws a boundary between managers and workers, thereby immediately rendering the company more adversarial, less efficient, and less competitive. The response of workers to form unions and sacrifice part of their pay to support union bosses may be a direct response to incompetent management and, more than likely, provides a biased sample. However, companies with unions tend to be susceptible to competition from non-union companies and we have witnessed private-sector unions working their way out of jobs. That is actually good news for two reasons: the remaining companies are more efficient and more likely to stay in business; and, taxpayers are not (directly) stuck with bailing out unaffordable, under-funded pension plans, health-care plans, etc.
In the public sector, of course, the unions have more than coercion on their side: they have the power of campaign donations. In my city, their focused donations to union supporters has led to a council which has voted them unsustainable wage, retirement, and health-care plans and brought city government to insolvency. We are way past right-to-work laws; this is a blatant conflict of interest. In my opinion, public-sector unions are unconstitutional – I would support an amendment making that explicit.

Gabriel rossman writes:

>(Actually, it's almost good. If a business wants to deal with a
>union that requires everyone to join or pay dues--whether there
>would ever be such a case is doubtful--the business and union
>ought to be able to do that. That's simply freedom of association
>and it's something that right-to-work laws prevent.)

I can think of three reasons why a business might want to require all of its workers to join the union.

1. In a project-based industry (eg, Hollywood) there might be some efficiencies in the firms essentially outsourcing various HR functions (e.g., recruiting and administering benefits) to the unions.

2. The employer might have a "taste" for dealing only with union labor.

3. An employer might create a closed shop not as a true preference but under duress as a concession to a critical mass of unionized workers. Note that these employers would probably prefer the "power of constraint" of a RTW law.

Pandaemoni writes:

All firms and governments in a sense subject to the same criticism. If 100 capitalists start a corporation, they elect a Board, which elects a CEO, whose job (in part) it is to negotiate with employees and other parties on behalf of the 100 shareholders. Likewise, a "government" is (at its best) there to represent the people.

It's true that an organization can abuse the power that collectivization gives them, and the larger the collective (as a percentage relative to all those who might be in a similar position within the relevant market), but that's true of all collectives.

The big problem seems to be that we regulate monopolies other than unions, but not the unions themselves. That, and there are no constraints on governments abusing their bargaining power other than the weak sauce of public opinion (which is rather like relying on shareholder opinion to rein in a monopoly).

It's not we'll be free of collective bargaining if unions are forbidden to engage in it by law, it's that collective bargaining will be an "employer only" perk. As for the average garbage collector and state health and safety inspector, will his/her right to "individual bargaining" be preserved? Will the the state actually agree to sit down with them, hear their proposals on changes to their benefits, and say anything other than "no"?

I am guessing that without collective bargaining, there will be no bargaining, collective or individual. The only time the State will have an incentive to change benefits (other than to decrease them) will be when the employee attrition rate is too high in given departments. Employees will bargain with their feet, and be powerless otherwise.

That may be the better system from the standpoint of economic efficiency in most (if not all) cases, but it's far from being the ideal that some people sell it as. It's also not "clearly" better a priori than the status quo if you take the employees' interests into account as well as the taxpayers'.

Phil writes:

I think you don't take it far enough:

An analogy for business would be for providers of airline transportation to vote to force all airlines, even those that don't want to join, to comply with ticket prices that the business association sets

AND

... to forbid anyone who has every previously purchased a ticket from walking away if the price is too high, and looking for other forms of transportation. Customers have two choices: "negotiate" a ticket-price contract with the airlines, or never leave the house.

Salem writes:

This was a great post. But there's one point that you're missing - the closed shop prevents unions competing for members. When workers have multiple possible unions they could join, it keeps the unions honest because members have both voice and exit. The closed shop reduces these options, which is no doubt why it is associated with union corruption.

wintercow20 writes:

Chapter 18 in Hayek's Constitution of Liberty is one of his more clearly written chapters. The interesting part for me was that he chose the union issue as the first to write about after he laid out his theory of what a free society ought to look like.

frankcross writes:

I don't quite get this for public unions. The government employer is a monopoly (or monopsony if you wish). Seems like equal bargaining power if the union is also a monopoly.

Beyonder writes:

I think Pandaemoni makes some great points. I would add that it doesn't seem to me that people are being coerced into joining unions as either an empirical or theoretical matter.

For one, I am always suspicious when the only claims about a rights violation comes from afar (i.e., from people far removed from the purported victims of the violation). The people in the best position to determine whether coercion is taking place are the people purportedly being coerced. Complaints about coercion are certainly not coming from unionized workers, but rather seem to come exclusively from right-leaning academics and politicians.

Second, a person is no more "forced" to join a union than they are "forced" to submit to any of the other terms and conditions of their employment. If you don't want to pay union dues, don't apply for a union job. Saying that I have been coerced to join a union after I applied for a union job is no different than saying I have been coerced into folding sweaters after I took a job at the Gap.

Beyonder writes:

I think Pandaemoni makes some great points. I would add that it doesn't seem to me that people are being coerced into joining unions as either an empirical or theoretical matter.

For one, I am always suspicious when the only claims about a rights violation comes from afar (i.e., from people far removed from the purported victims of the violation). The people in the best position to determine whether coercion is taking place are the people purportedly being coerced. Complaints about coercion are certainly not coming from unionized workers, but rather seem to come exclusively from right-leaning academics and politicians.

Second, a person is no more "forced" to join a union than they are "forced" to submit to any of the other terms and conditions of their employment. If you don't want to pay union dues, don't apply for a union job. Saying that I have been coerced to join a union after I applied for a union job is no different than saying I have been coerced into folding sweaters after I took a job at the Gap.

Yancey Ward writes:

Beyonder,

You are forced to join if a majority of your colleagues vote to unionize, and you don't. Or you must quit your job. Is that not coercion? Indeed, the employer is forced into the union by coercion as well. A clean line can be drawn- anyone can join a union, any employer can choose to bargain with that union or not-exclusively or not-, and any worker can choose to join, bargain for himself, or join another competitor union. No coercion in any of that, is there?

Beyonder writes:

In both the cases of the employee forced to join a union, or the employer forced to employ a unionized work force, both "coercees" weighed the pros and cons of working with the union, and decided that the pros outweighed the cons. Just because you can imagine a state of affairs that might suit you better individualy, does not mean that you have been coerced, or that your decisions were somehow made under duress.

If an employer changes the terms and conditions of my employment I am faced with the same choice as to whether to accept the change or quit and find another job that suits me better. Just because I may have liked the job better prior to the change does not mean I have been coerced into accepting it.

Roman writes:

What do you think about the following video of George Washington and George W discussing collective bargaining? Accurate?

http://www.youtube.com/watch?v=6x-jC5h421U

Yancey Ward writes:
In both the cases of the employee forced to join a union, or the employer forced to employ a unionized work force, both "coercees" weighed the pros and cons of working with the union, and decided that the pros outweighed the cons. Just because you can imagine a state of affairs that might suit you better individualy, does not mean that you have been coerced, or that your decisions were somehow made under duress.

The last sentence is true as long as the law is silent on how the initial decisions are reached. The law in this case is not silent. An employer must, by law, negotiate "in good faith" with a union that wins certification from the NLRB. One of those "cons" you so efficiently glossed over in the first sentence is that an employer can be fined or imprisoned for not doing so. The other "con" you omitted is that an employee must pay union dues even if he doesn't want any part of a newly unionized shop (and note that conditional word "newly"). Both depend on the use of governmental coercion for enforcement. By your reasoning, you are not being coerced to give me your wallet- you just weighed the pros and cons of ignoring my gun. Your conception of what coercion is is cramped and incomplete.

Beyonder writes:

Firstly, I don't have any specific axe to grind here, and so I am not (at least not intentionally) glossing anything over.

Second, I had always understood that an employer was free to close up shop if at any time they decided it was not in their interest (economic or otherwise) to stay open. If that's the case, you only risk imprisonment if you elect to run your firm while refusing to deal with the union that has been installed in accordance with the governing legislation and the wishes of the majority of the employees. If you choose to continue to carry on business, it can only be because the business owner thinks it is in his interest to have done so.

The problem with metaphors like the 'gun' one you offer is at the end of the day, one can only shrug one's shoulders and say "really?". Do you really think being asked to pay union dues is akin to having a gun pointed at you? Because I don't -- not even loosely metaphorically. Threats of violence vitiate consent. There is no parallel between being robbed at gunpoint and being required to comply with democratically-enacted legislation.

Pandaemoni writes:

Yancy Ward:

You are forced to join if a majority of your colleagues vote to unionize, and you don't. Or you must quit your job. Is that not coercion?

I can see that that is coercion, in the sense we all understand it, but the same is true is my employer changes the conditions of employment. Unless you are in a position to negotiate, your decision comes down to accepting the changes or quitting. Yet, I find it hard to call that "coercion."

I didn't vote for Obama either, but I don't fee that any legislation he proposes that I am subject to is "coercive." Changing jobs is easier than emigrating.

As one real life anecdote, my own employer recently switched from a very comprehensive group health insurer to one that offers more limited coverage (with higher deductibles and co-pays) for the same premium from the workers. As I am relatively highly placed I was able to go to the CFO and express my concerns and hear why the change was made (reasoning which makes sense for the company, but which in no way alleviates from the perspective of the employees the higher deductibles, higher co-payments, and limitations on the coverage now offered).

Would I say that I have been coerced by my employer? At least workers vote on unionization, my company didn't even announce that we were considering a change in in our insurance until the day we all had to enroll in the new plan.

That is not to say that my company shouldn't have changed insurers. The change made economic sense, and I chafe because the gains are captured solely by my employer and not at all by those of us who "merely work here" while the costs largely fall on us. Have I been coerced into the change? Probably not.

Beyonder writes:

Pandaemoni. Why is it that you regard having to go along with the wishes of the majority of your fellow employees to form a union as coercion, but being forced to bend to the will of your employer as non-coercive? At least the former has the advantage of being democratic.

Just because you are forced to make unpalatable or unpleasant choices, or can imagine a set of choices you would prefer, does not mean you are coerced.

complexphenom writes:

@ Beyonder "Why is it that you regard having to go along with the wishes of the majority of your fellow employees to form a union as coercion, but being forced to bend to the will of your employer as non-coercive? At least the former has the advantage of being democratic."

Really? It's "democratic" when you're automatically deducted Union dues up front on your paycheck and there's now way to opt out of that?

An employer never "forces" his/her employee to "bend to [their] will" since an employee always has the choice to quit his/her job. If you feel your skill set might be lacking, learn some more marketable skills and improve your prospects. In the end you have choices. Unlike being a teacher in Wisconsin where dues and membership are mandatory.

How can a private organization (public unions) have power over whether or not someone gets to work in a particular field? That's basically what Unions are doing. That's coercion. You shouldn't be prevented from having a particular job merely because you choose not to join a particular private group. Membership in a private group should never be prerequisite for any kind of employment. Such power over the individual employee is absurd. Forced membership (where your only other option is to not pursue that line of work) is absurd. I should be free to work where I'm wanted, regardless of what any 3rd party pretending to represent me might have to say.

Beyonder writes:

Complex Phenom. My point was really that either both are coercive, or neither are. I think that neither are.

The decision to certify a union is democratic in the sense that it is the outcome of a majority vote of your fellow employees. This is the same type of democracy that governs a national election. In contrast, an employer's decision to cut health care benefits is typically made unilaterally. In both cases you end up doing something your would prefer to forbear from doing, but I don't think in either case you have been coerced into doing anything.

BTW, forced group membership (and the concommitant membership dues) is a precondition to a more jobs than you may realise. Lawyers must belong to their local bar associations and pay them dues regardless of whether they personally agree with the stances that association takes. Same with doctors, accountants, actuaries, and many others. This is the price most professions make in exchange for having a single voice that gets heard. So to your last point, you are not remotely free to work in any number of professions on account of third parties -- not just in unionized professions. Whether all jobs and professions should be free from forced membership is an interesting question, but it is far from the reality we live in.

Bottom line is, if you choose to work in a regulated profession, or a unionized profession (which teaching has been for quite some time), I don't see how you can claim to have been coerced into performing the requirements of that profession.

Rich writes:

Amen.

My job at BLS, along with 75 others, is going away; we got the news last week. The union's position is that the workers with lowest tenure (not, mind you, the lowest performance ratings, but that is another subject) should be the ones who are dismissed.

I am *forbidden* from approaching BLS and offering to take a pay cut in order to retain my job. That is what unionization means in a non-right-to-work state.

Max writes:

I heartily agree with you all. As our education system fails the best thing for it is to cut the hell out of the funding, and take away the teachers right to collective bargaining. Do you people have any conception of how underpaid teachers are relative to the job they do and the hours they put it? If you had to spend your entire professional life working with other people's children how much would you want to be paid? What if you were expected as a matter of course to work endless hour outside of school because you are soooooo "passionate" about other peoples brats? Perhaps the problem is not that teachers and other public employee's get paid to much (average public sector wages are lower than in the private sector after all) but that we all pay too little (in taxes!!!). IE "I'm Scott Walker, I just gave away 140 million in corporate tax breaks and now we have 140 million $ deficit to fill. Sorry Public sector employees you all lose. Give me a break.

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