Labor: A Free Market or a Rigged Market?

By David K. Shipler

Imagine working hard for a big company, say, Walmart, and feeling that your paycheck should be higher. Imagine going to the store manager and asking for a raise. Imagine him saying no—well, you don’t have to imagine that, because that’s the way it will surely be if you’re all alone. But now imagine that all your colleagues, all the cashiers and stockroom workers and salespeople go together to the manager and ask for a raise. Will he take notice? You bet. And if he doesn’t, watch what happens if you and your co-workers threaten to strike.

That’s the simplified sketch of what collective bargaining is about. It is what labor unions do—unions that have become an endangered species in the private American economy, where only 6.6 percent of workers are members, according to the Labor Department’s latest figures, from 2014.

That means that the vast majority of employees, with the exception of highly skilled professionals who are valued enough to negotiate their terms, cannot influence their wages, vacations, pensions, health insurance, or job security. A larger minority of government employees are unionized—35.7 percent at last count, mostly police officers, firefighters, and teachers—but that figure is dropping too, and will probably get another downward kick by the Supreme Court, if the conservative justices rule as they indicated during a hearing this week.

The United States, then, is likely to become an economy with virtually no labor unions if the trends of recent decades persist. About one-third of American workers were union members fifty years ago, and just over one-tenth are today. What are the implications?

The reasons for the drop are both economic and political: the declining manufacturing base of unionized jobs, the growth of the non-unionized service sector, and a spreading stain of anti-labor legislation in Republican-controlled states to bolster business interests and reduce union contributions to Democratic candidates. The Supreme Court seems poised to add to the political assault by declaring unconstitutional the fees that unions collect from non-member government employees to fund collective bargaining. Negotiating wages, benefits, and job security, the conservatives argue, is “speech,” and non-members may not be compelled to fund it, even as they benefit from the results.

Of course, you and I fund lots of speech that we find disagreeable, most notably through our taxes for the salaries of certain legislators and government spokesmen. Just think how much less painful April 15 would be if we had, say, a Form 1776 to take deductions for statements by Paul Ryan, Ted Cruz, and Marco Rubio, not to mention the White House, State Department, and Pentagon press secretaries. Getting a First Amendment refund from the IRS would be delicious.

But back to reality. The demise of unions has tilted the playing field of the marketplace  to the severe disadvantage of workers, especially those from the lower middle class on down. Labor is a commodity, and if you can’t get a good enough price for yours in one place, you can theoretically shop around for higher pay, and you might succeed in a robust economy where people with your skills are in short supply. However, doing the search and negotiation by yourself is likely to be fruitless if your skills are relatively low—even if your work is essential to making the country run comfortably.

Unions have been heavily involved in one answer to the low-skills handicap. The building trades, especially, have been training apprentices in joint labor-management programs as part of a burgeoning effort to upgrade the skills of young Americans who don’t go to four-year colleges. Courses are sometimes given as part of the high school curriculum. This begins, in small measure, to address a huge problem, for in July 2015, when the general unemployment rate was 5.3 percent, the rate for youth was 12.2 percent, and 13.8 percent (5.53 million) of those 16 to 24 were neither in school nor in jobs.

The apprenticeship idea, long popular in other industrialized countries, has been championed in the U.S. by Robert I. Lerman, an economist at the Urban Institute, and the concept is catching on, with tax credits offered in some states, such as South Carolina, to businesses that hire apprentices. The U.S. has 450,000 people in apprenticeship programs, an increase of about 70,000 in the last year, but it’s a small percentage of the workforce. “If we had the same share of our workforce in apprenticeships as Australia, Canada, and England,” Lerman said at a forum last November, “we’d have 4 million apprentices.” Certain unions have been key players in this effort.

Granted, labor unions aren’t always on the good side of issues. Construction unions discriminated for years against non-whites. Some unions impeded technological advances to preserve members’ jobs. After railroads switched from coal-fired steam to diesel, for example, railroad unions’ featherbedding kept an extra man in the locomotive to shovel coal that wasn’t there. For years, the printers union in New York prevented the shift from old Linotype machines to cold type and less labor-intensive offset printing, thereby jeopardizing the financial health of newspapers.

 Advocacy for union members can be absolutist. Police unions reflexively defend officers who have shot unarmed black men and boys, and they usually resist the creation of civilian review boards for oversight. Teachers’ unions are vilified on the political right—and not only the right—for their contracts’ seniority, tenure, and job-security provisions that can require cumbersome investigations and hearings before firing an incompetent instructor. Many incompetents surely remain in the classroom as a result. But this is also a matter of due process, which protects against unjustified dismissals.

The positive side of the coin is burnished by unions’ longterm records in promoting worker safety regulations, overtime pay, paid vacations and sick leave, the 40-hour work week, pension plans, and the like. Would Americans have these benefits without labor unions having demanded them? It’s hard to think so. Then there’s the shop steward in an office, a store, or a factory—someone to go to safely, usually without fear of retaliation, when you have a dispute with management.

Private employers are not covered by the First Amendment, so unions in the private sector would not be affected if the Supreme Court rules as expected in Friederichs v. California Teachers Association. But public employee unions would be damaged financially by no longer being allowed to collect fees from non-members in a government workplace. Presumably, more employees will become “free riders,” taking the enhanced wages and benefits that unions negotiate without having to pay a dime. Unions might try to attract more employees by more aggressive bargaining and job actions to dramatize their effectiveness. This would be a prescription for disruptions in public services.

On the other hand, if unions falter, government workers will suffer, and so will the public good, as lagging wages and benefits fail to entice the best teachers, police officers, firefighters, and others who provide the essential services of a modern, advanced society. There is a haunting probability that we will get to see what that looks like.