Montréal, 18 mars 2000  /  No 58
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Dr. Younkins is a Professor of Accountancy and Business Administration at Wheeling Jesuit University in West Virginia.
by Edward W. Younkins
          Many individuals in society applaud the virtues of unionism. Embedded in our culture is the idea that unions are legitimate institutions that played a key role in American economic and social progress and that, without unions, the U.S. would have fallen into labor chaos and class warfare between workers and capitalists. Unions are given credit for raising the standard of living of workers, instituting democracy at the workplace, promoting social justice, and protecting helpless workers who were powerless when pitted against the giants of industry.
          This is not the true nature of unions. Although they claim to be organized against employers, they are fundamentally organized against other workers. Unions are cartels of workers who collude to raise their wages above free-market levels. The ideas of labor's disadvantage and exploitation that provide the ideological foundation of unionism are notions derived from socialism. 
          During the years 1932-35, Congress passed Acts that empowered unions by instituting a legal framework for labor relations that discarded common law rules of property, contract, and tort that applied equally to all parties, replacing them with a coercive framework heavily favoring the worker over the employer. This New Deal decision was one of the biggest mistakes in American history. 
The Nature and Methods of Unions 
          A labor union is an organization of workers in an industry, trade, or profession with the goal of achieving a monopoly of employees therein in order to have the ability to determine the working conditions for its employees. The main function of unions is to protect union members from the consequences of a competitive market – in a free society union employees would be in competition against other employees in the labor market. Labor unions are able to attain higher than market wages by restricting the supply of labor through the exclusion of non-members from access to competition for available jobs. 
          Contrary to popular belief, employers and employees are not competitors – their relationship is essentially one of cooperation and mutual benefit. While there is occasional and sporadic conflict between employees and employers (e.g., during contract negotiations and grievance proceedings), unions are basically organized against other workers. Unions align with management in their efforts to reduce the supply of labor available to firms. When a company agrees that a given union will be the exclusive bargaining agent for its workers, competing workers who are unorganized or not members of that particular union are excluded from bidding for productive employment. 
          A union's goal is to organize all competing workers in a given industry, trade, or profession. This is true because if only a portion of the workers are organized, thereby receiving higher wages, the employer with union workers will likely lose business to non-unionized competitors with lower labor costs and hence able to sell at lower prices. The threat from competing workers in the free market would lead to the collapse of unionism in that industry, trade, or profession. 
          The only way that unions can attain their purposes is through the coercive power of government. Unions are state-protected monopolies or legal cartels. Labor legislation grants union employees the privilege to command higher wages than they could earn in a competitive market. Legislation excludes non-union workers whenever greater than 50 per cent of workers in a plant, industry, or profession select a particular union to be their exclusive bargaining agent. Labor legislation is intended to improve the union's well-being and protect the jobs and wages of one group of workers by restricting the opportunities of other workers. 
     « Labor legislation is intended to improve the union's well-being and protect the jobs and wages of one group of workers by restricting the opportunities of other workers. » 
          The unemployed non-unionized workers are not allowed to compete and thereby bring down the higher than free market wages of the privileged union workers. Those excluded from higher paying union jobs are forced to compete for work in the free labor market. Their addition to the existing supply of free market labor further drives down wage rates in non-unionized occupations. To add insult to injury, those excluded from higher paying union jobs are restricted by the floor instituted by minimum wage laws that frequently prevent employment at the reduced market wage rate that would have prevailed in the non-organized sector in the absence of such legislation. The effect of both the minimum wage and the union wage is to raise wages above the market level, which, in turn, results in unemployment.  
          Legislation that mandates unionization decreases the economic freedom of both employers and workers. A firm may prefer to ignore a union, just as workers may prefer to deal individually with the employer. 
          Most harmed by unionism are the workers excluded from union membership. There is a redistribution of wealth in the form of higher wages to union workers at the expense of lower wages to free market workers. Of course, the union must have a co-existing free labor market to absorb those excluded from union membership. The employers in a non-unionized sector are essentially granted a subsidy by the state in the form of lower-priced employees. Also hurt are consumers of goods and services produced by union workers. Higher union wage costs are passed on to consumers in the form of higher prices than would have existed in a free market. The wealth transfer effected by unions is accomplished involuntarily, through coercion and intimidation. 
          The failure of union-determined wages to adjust to competitive market conditions leads to both unemployment and a distorted allocation of labor resources. An unregulated labor market would be the most conducive to employers' and workers' economic well-being and pursuit of happiness – men should be free to contract with whomever they want and to have as wide a range of labor market choices as possible as long as they don't infringe on the equal rights of others. 
Labor in a Free Market 
          Every person in a free market economy is free to accept the best offer that he receives. Whereas competition among workers makes certain that no one is overpaid, competition among employers ensures that no one is underpaid. In a free market, labor would be treated the same as any other factor of production. If employers would combine to pay less than the market rate, other businessmen would come to the market and offer more to laborers, ultimately bringing wage rates up to the marginal productivity of labor. A free market order allocates to each worker the fruits of his labor. 
          The sale of a private citizen's labor is not a concern of the state. In the absence of government interference, each worker earns what he is worth and every person seeking work will be able to find a job. The cure for widespread unemployment is to repeal the laws that prevent workers from competing for higher paying jobs or from taking lower paying jobs. Each person looking for work should be permitted to accept a job at the highest wage he can get – the cure for unemployment is free competition for jobs. In addition, the appropriate relationship between wage rates and prices can only result in a free market. Also, involuntary unemployment cannot occur in a free society. In a free market the terms must be agreeable to both parties. If no agreement is made, unemployment will result. However, this is voluntary unemployment, since one party has decided not to accept the other party's offer. 
          When the market is not allowed to operate freely, unemployment will result. If unions are granted monopolistic power they will be in a position to demand benefits greater than they could get in a free market. In addition, it is more moral to let people work for less than a minimum wage then force them to be unemployed as a consequence of the state's conception of what a minimum wage should be. It is certainly better for men to work for less than the minimum wage than forcing them to be dependents of the state. Minimum wage laws have the same restrictive effects as compulsory and exclusive unionism – both destroy the natural rights of individuals to voluntarily bid for jobs. 
          In a free society, labor unions would simply be voluntary groups attempting to promote their  members' interests without the benefit of special immunities and privileges. There can be no moral objection to workers forming a voluntary, private association to represent them in employment negotiations. Such combinations of labor are morally permissible as long as the group does not interfere with the equal rights of others. It follows that labor law in a free society should protect the rights of the individual worker instead of « rights » of unions as organizations. 
          This involves freedom of contract whereby some workers would choose to join a particular union, some would choose to belong to other unions, and others would rather deal with the employers individually and directly. Most labor legislation attempts to replace private agreements and contracts with government edicts that protect the rights of one group of workers while denying the rights of others. If a right cannot be exercised simultaneously by all persons in the same manner, it fails to be a natural right. It follows that the only employment rights that can be held and exercised by all individuals in the same way and at the same time is the right to make and accept or reject employment-related offers to and from others. 
          Voluntary, competitive unions would not be as powerful as those granted monopoly status but power is not necessarily to the advantage of the employees. There should be no place for coercive labor unions within our legal system. Voluntary unions do all they can to raise their members' wages and working conditions except violate the rights of other people by initiating violence against them. Voluntary unions restrict themselves to legitimate activities such as mass walkouts and boycotts. Coercive unions are those which do all they can to promote their members' welfare both by legitimate, non-rights-violating behavior as well as by the use of physical brutality aimed at non-aggressing individuals. It follows that public policy should defend voluntary unions and eliminate coercive ones. 
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