At the second presidential debate, President Obama trumpeted the accusation, “Governor Romney said we should let Detroit go bankrupt.” It was a reference to a 2008 New York Times editorial by Mitt Romney in which he argued against a government bail out of the auto industry and for the alternative of bankruptcy. Thus, the uncompetitive automakers could re-negotiate labor agreements that added a then-estimated $2,000 to each car. Eliminating the “modern union” would be far preferable.
Obama’s subsequent mega-billion bailout is usually criticized either as crony capitalism or as a payoff to the unions. It was both. The interests of Big Business and Big Labor may clash on specific terms that are negotiated but those interests are fundamentally the same. They both oppose the genuine rights of workers.
WHAT IS THE MODERN UNION?
In a free market, a union is nothing more than a collective by which workers protect and secure common interests through negotiation or other forms of persuasion, such as boycotts or strikes. Workers assign their right to contract to the collective but no one is forced to join, pay dues or remain. Employers are free to decline negotiation and to hire replacement workers.
The current paradigm is rooted in the New Deal legislation of President Roosevelt, especially the Wagner Act, which established the legal “right” of workers to unionize if a majority within an business voted to do so. These unions were handed legal privileges such as collective bargaining.
The result is anything but free market. For example, a modern union receives government certification to engage in collective bargaining. In other words, the government authorizes it as a sole representative of labor and legally requires the employer to provide it with a seat at the negotiating table. This monopoly shuts out other labor groups and individual workers from negotiating their own contracts. Individual workers may choose not to join a union but nevertheless they remain bound by its contracts and they must pay its fees. Thus, the modern union constitutes a forced transfer of authority and rights from individual workers to a government-created collective.
THE LABOR MOVEMENT BEFORE THE MODERN UNION
19th century America was the heyday of labor activism. The most prominent labor federation was the Knights of Labor, established in 1869. By 1886, membership peaked at about 700,000 largely due to programs that aimed at empowering members both economically and socially. Through local chapters, worker-owned cooperatives were created, public education on labor issues was launched, and support networks were established to insure members against injury or ill health. Indeed, many labor organizations began as “benevolent associations” to care for the families of deceased or injured members. Although the Knights of Labor used pressure tactics such as boycotts, they did not emphasize strikes. Terence V. Powderly, who presided over the Knights from 1879 to 1893, openly opposed strikes, which he believed caused violence and increased conflict. He advocated peaceful negotiation instead.
With effective networks and diverse strategies, a grassroots labor movement grew in power; its threat to entrenched interests also grew. In 1877 and 1894, two massive strikes drove that threat home: the Great Railroad Strike which lasted 45 days; and, the Pullman Strike, which eventually involved about 250,000 workers in 27 states. In both cases, troops were sent to break the strikes.
By the 20th century the labor movement — notably, the Industrial Workers of the World or Wobblies – had become a significant political threat. Organized in 1905, the Wobblies had strong leaders who enthusiastically embraced strikes. With a large immigrant membership and socialist principles, the IWW also became a potent voice against America’s entry into World War I. This made them a prime target of the Department of Justice. In September 1917, 48 IWW meeting halls were raided and 165 leaders were arrested under the new Espionage Act. 101 went on trial; all were convicted and received sentences of up to 20 years.
Government had learned a lesson. An uncontrolled labor movement was politically dangerous, and bad for commerce.
THE MODERN UNION AS BUSINESS UNIONISM
In 1929 the Great Depression hit, with unemployment rising as high as 25 percent. Hundreds of thousands of people roamed across America, looking for work. A massive and migrating army of the unemployed is a formula for political labor revolt. Thus President Roosevelt offered a New Deal to American workers in an attempt to create stability. This is the context into which the modern union, or Big Labor, was born; it was a governmental response to labor upheaval.
Big Business also participated. No stranger to subsidies and legal privilege, Big Business saw advantages to regulatory stability and a controllable work force. It undoubtedly disliked some aspects of New Deal policy but Big Business had long favored Roosevelt’s general approach. And, so, some of the most vigorous advocates for modern unionism were leaders of industry, such as Gerard Swope, president of General Electric. By specifying who could negotiate terms and how strikes could occur, Wagner removed some of the labor movement’s most powerful tactics and made production more predictable.
How? Certification created labor monopolies and, so, eliminated the need for business to negotiate contracts with multiple groups or individuals. The monopoly union also acted as an enforcement arm, which policed its members’ compliance with contracts. The unions prevented wildcat strikes and it punished unsanctioned boycotts, work slowdowns, and the other labor tactics that had proven effective in the past. Modern unions offered Big Business more control over production.
Leaders of Big Labor were well aware of the benefits they offered to Big Business. John Lewis, president of the United Mine Workers of America (UMWA) from 1920 to 1960 assured employers that a contract with leadership “is adequate to protect against sit-downs, lie-downs, or any other kind of strike.”
Thus, the grassroots labor movement withered. One casualty was the National Federation of Mine Laborers, which had been the parent union of Lewis’ UMWA. The parent constitution had established a network of decentralized and largely autonomous “Lodges.” When Lewis became President, he did away with both the decentralized structure and the autonomy. The Wagner Act completed the centralization of control. It was a scenario that other Big Labor leaders were happy to play out.
Thus, at its creation, the modern union was an arrangement of shared advantage between Big Labor, Big Business, and Big Government. The relationships were not always cordial but they were basically convenient.
Among those victimized were smaller employers, the grassroots labor movement, and self-employed or non-unionized workers.
Could unions exist without legal privileges?
Voluntary unions have existed in the past and would almost certainly arise today if workers perceived a benefit to them. The clout of a voluntary union would come from members who freely assign their rights of contract. In modern unions the opposite transfer occurs. Even members who join freely cannot quit or negotiate later for themselves. Thus, the modern union strips individual workers of free association and the right of of contract. It should be abolished for the sake of workers’ rights.