Your Teacher Said What?! (25 page)

The NLRA was sold to the public as a way to prohibit any sort of coercion of employees by management. It still is. What a lot of people don't know—I didn't—is that it also
authorizes
exactly the same sort of coercion by employees against their coworkers: NLRA is majority rule on steroids.

 

“Blake?”

“Yes, Dad?”

“How many kids are in your class?”

“Nineteen.”

“Okay. What if ten of you voted to spend half an hour on a piece of homework, and nine of you wanted to spend as much time as you wanted?”

“I'd vote to take as much time as I wanted.”

“And what if everybody had do whatever the majority decided?”

 

Blake's eye rolling was pretty much all the answer I needed. But what makes no sense to her is the essence of the NLRA, which obliges employers to negotiate with only one union representing its employees and to enforce any agreement, even against employees who hadn't even voted to join the union in the first place. In fact, in its original form, the NLRA could require membership in the union—and even today, unions can collect dues from nonmembers if they are covered by a union contract. If you think it's okay to be required
by law
to give your dollars to someone who is going to use them to (for example) support political candidates that you may despise, you probably don't have a problem with this. But you should keep in mind what it means, which is that if you're a working in a unionized workplace, federal law states that you no longer “own” your own labor; a majority of your coworkers does.

 

It's not so hard to get grumpy about the coercion inherent in unionization; no one likes being forced to do something they wouldn't choose on their own, and forcing at least
some
workers to finance union activities is pretty much unavoidable, once you let unions in the door at all. But it's also not so hard to understand why unions get started in the first place: Everyone wants more money, and the one thing that unions unquestionably do is raise wages for their members over what the market would otherwise pay. (But it's not certain that unions actually deliver a long-term advantage to their members: If manufacturers pass the cost of higher wages along to their customers, then the advantage is temporary, because of price inflation.)

But a book about free-market economics should probably figure out whether unionization is, on balance, good or bad (or possibly just neutral) for the economy as a whole. After all, even if Ford Motor Company is “hurt” by paying an average of $75 an hour in salary and benefits to its UAW members, that doesn't necessarily mean that the U.S. economy is worse off, any more than the New York City economy is worse off because the Yankees pay Derek Jeter—a member in good standing of the Major League Baseball Players Association—$17 million a year.

What
does
make the impact on the economy negative is when unions are successful in raising wages above what workers could command if they were in a competitive marketplace. And while this is pretty obvious today—unions raise the wages of members up to 30 percent over those of comparable nonunion workers
³⁶
—it was actually a pretty big “if ” for a lot of workers during the first decades of trade unionism. Wherever employers operated as “monopsonies” (if a product or service has only one seller, it's a monopoly; if it has only one
buyer
, it's a monopsony), the labor marketplace was the opposite of competitive, and you can make a decent case that unions counteracted one negative force with another. Since monopsonies were rampant in early industrial America—there were entire towns where the only employer was a single coal mine or steel plant—it's not too surprising that unions found such places fertile ground for organizing workers.

Even during the heyday of trade unionism—basically from the 1930s to the 1950s—unions were appealing to the fraternal impulses of potential members as much as to their wallets. Unions were places of “brotherhood” and “solidarity.” The union hall for the shoemakers of my hometown, Cincinnati (which had been a pretty congenial place for craft unions since the Civil War), was built like a church—a church with a lot of pool tables—and described as a “labor temple” by “Brother” William Prout.

But like a whole lot of things about unions, brotherhood and solidarity are things that sound good but have some significant hidden costs. The biggest of these is the tendency to argue that the value of every worker is the same as that of every other worker; brothers shouldn't compete with one another, whether they are members of the same family or of the same union. The only exception (as with families) is the privilege of being an older brother—or, in union terms, having more seniority in a job.

This isn't exactly a recipe for increasing productivity. The fundamental problem with unions is that they reward the very human desire to lock in advantage once achieved. This is why they are inevitably hostile to the dynamism that is at the heart of free-market capitalism. Union apologists, in the Obama administration and elsewhere, can argue that while unions raise wages, they also promote productivity because of union training and reduced turnover. However, any such value is (a) so modest that you have to squint to find it in the economic literature; and (b)
always
less than the union-wage increases that accompany labor negotiations. What this means is that even when productivity in a unionized company is growing, wages grow even faster. And when wages increase faster than productivity, jobs decrease, as manufacturers have incentives to replace workers with machinery.

If replacing dues-paying United Auto Workers members with robots to assemble cars were the biggest impact of union intransigence about wages, it wouldn't be so bad: Productivity increases are
always
good for the economy. But the perversities of unions, and especially their ability to write laws regulating labor, frequently result in much worse outcomes. Consider the case of United Parcel Service.

UPS, like most businesses of comparable size, is subject to the National Labor Relations Act and is therefore a union shop. Specifically, it has a labor contract with the International Brotherhood of Teamsters, one of the country's largest unions.
³⁷
However, from the time it was founded, Federal Express, the primary competitor of UPS, was regulated not by the NLRA but by the Railway Labor Act of 1926 (it's a long story having to do with the fact that railroads and railroad employees were already subject to a different law that separated them as a labor class in the 1930s—yet another example of the ways unions—and government—distort the free market). Which is why, as Nick Gillespie reported in
Reason
magazine in 2009, UPS—and its Teamster “partners”—got Congress to include language in a bill reclassifying FedEx so that all of its nonpilot employees would be subject to the NLRA as well, thus giving the Teamsters carte blanche to organize—and raise FedEx's costs. The costs—to FedEx shareholders and customers—are likely to be measured in the tens, if not hundreds, of millions of dollars.

 

On April 24, 2010, the Public Employee of the Year Awards were broadcast to a national television audience for the first time. Among the candidates for the coveted title was Dennis Cosgrove, a school custodian from the borough of Queens, in New York City. His qualifications included the 3,200 hours he managed to work in the preceding year—all of it overtime. Cosgrove's accomplishment is even more remarkable when you consider that he lives in Florida full time.

Dennis Cosgrove is, I am happy to report, a fictional character. His moment of televised glory came courtesy of the writers of
Saturday Night Live
. Nothing like this could actually happen.

Then again . . .

In September 2008, the
New York Times
reported on the curious fact that thousands of retirees from the publicly owned Long Island Rail Road had somehow managed to “earn” more than $200 million in disability payments over the preceding eight years. In fact, nearly 97 percent of
everyone
who retired during that period applied for and received average disability payments of about $3,000 a month. This was in addition to an extraordinarily generous pension that, as guaranteed by the LIRR's union contracts, permitted retirement at age fifty and a pension based on the employee's last year's salary, which for the LIRR's senior engineers averaged between $215,000 and $275,000 a year. Those salaries, in turn, had gotten so high—up to three times “normal” salary—because of union rules that permitted, for example, earning four days' wages in a single shift—an accomplishment reached by one retired engineer
thirty times
in his last year.

Oh, and I almost forgot: Every one of these supposedly disabled and retired former employees gets to golf free at any public course. And that's where the
New York Times
found them, generally hitting those fairways and greens twice a week. Well, you have a lot of time to practice your backswing when you're a fifty-year-old retiree living on $170,000 a year.

Think the temptation to game the system is peculiar to New York or railroads? More than two-thirds of the highest-ranking officials of the California Highway Patrol pursue, and receive, disability before their retirement. That retirement, by union contract, is something to which they are entitled at age fifty, along with a pension—before disability payments—of 3 percent of their last year's compensation multiplied by the number of years they've worked. Which means that assistant chiefs who started at age twenty can retire when they're fifty years old at a salary of 90 percent of their last, and highest, paycheck. In New York, a “presumptive disability” law requires that a doctor assume that certain illnesses are job related, which means that firefighters or police officers with something wrong with their lungs qualify for disability even if they have a pack-a-day habit. It's no surprise that 80 percent qualify; one FDNY lieutenant retired in 2001 with an $86,000 annual disability pension after a doctor certified him as asthmatic—even though he is spending his retirement competing in triathlons.

Welcome to the wonderful world of public employee unions.

The unionized portion of the American workforce—less than 12 percent—is less than half of what it was at its 1954 peak of over 28 percent. The reasons are complicated: They include geography (as the U.S. population has shifted to western and southern states, whose history and local laws make them less welcoming to unions) and relative declines in historically unionized industries, particularly manufacturing and mining. But the decline hasn't been the same everywhere. While the percentage of union members in the private sector is now barely 7 percent, public-sector unions have more than picked up the slack. As of this writing, nearly 40 percent of America's public employees are members of unions; the United States Postal Service now has three times as many union employees as the auto industry. And with the most union-friendly president and Senate in decades, that number seems likely to increase.

The attractions of government work to unions (and unions to government work) aren't too difficult to figure out. The typical effect of unionization on wages, which is to inflate the take-home pay of union members somewhere between 10 percent and 30 percent over what their nonunionized colleagues earn, is certainly working pretty well in the public sector: The average government employee not only earns more than he would in a comparable private-sector job,
³⁸
but he also gets better benefits. And far more job security; as James Sherk of the Heritage Foundation puts it, “The government doesn't have to worry about going bankrupt, and there isn't much competition.”

Well, there
is
competition. But it's between different unions to see who can own the biggest share of the public trough. There's the 2.2 million–member Service Employees International Union, for example, which represents local and state government employees. The SEIU felt the wobble in its traditional business earlier than most and changed its name from the Building Service Employees Union in the 1960s
³⁹
(which is why it still represents hundreds of thousands of janitors and hospital and health-care workers in the private sector).

That same competitive urge has helped the SEIU to become one of the largest unions in the country—and when competitiveness wasn't enough, the SEIU earned a reputation for intimidating workers, tampering with their ballots, and even threatening Latino organizers from a rival union that it would call the INS to get them deported. But it wasn't its tactics that made the SEIU into what the Heritage Foundation calls “President Obama's favorite union”; it was the $85 million it spent in the 2008 campaign—nearly $30 million to support Obama alone. Andy Stern, the former president of the SEIU, actually has the distinction of having been the most frequent visitor to the Obama White House during its first year.

 

“Blake, have you ever heard the phrase ‘setting a fox to guard the chicken coop'?”

“I think so . . .”

“Why wouldn't it be a good idea?”

“Because foxes eat chickens?”

“They do. But what if the fox promised that he wouldn't eat
your
chickens?”

“I don't think I'd trust him so much.”

 

That's one way Blake is more skeptical than the Obama administration, which in March of 2010 named SEIU lawyer Craig Becker to serve on the National Labor Relations Board. Now, there's nothing new about setting foxes to guard the chicken coop when it comes to the NLRB, but Becker is a fox the size of a Bengal tiger. To understand why, you need to know why the number one priority of every union in the country is something called “card check ”—a procedure by which a union gets the right to representation if more than half the employees at any site sign a union card—something just as binding as an old-fashioned secret-ballot election.