Support Workers, Not Pushy Unions, This Labor Day: Amity Shlaes

Sure, we push people into unions. But that's OK. Unions are good for the worker. You gotta love 'em.

That's the Labor Day message Americans have received for three-quarters of a century from both organized labor and the National Labor Relations Board. These days the pushiness is still evident.

You can see it in the non-optional rule that the NLRB, which is tasked with overseeing unions and the companies they work with, issued last week. The rule requires private-sector employers to post a notice reminding workers they have the right to unionize. You can also see the pushiness in the NLRB's brazen behavioralism. Its plan to penalize Boeing Co. for launching a new operation in (largely non-union) South Carolina rather than (heavily unionized) Washington state is just one recent example.

But let's question the premise behind the push. For although unions may be good for a worker, singular, they are not always good for workers, plural. Especially when it comes to finding a job. That's the evidence from a natural experiment President Franklin D. Roosevelt inadvertently set in train when he enacted the basis of modern labor law, the Wagner Act of 1935.

The law's framers drew confidence from great labor heroes such as the bushy-browed tough guy John L. Lewis and the statesmanlike Samuel Gompers, the head of the American Federation of Labor, who helped Woodrow Wilson forge international labor legislation at the Versailles Peace Conference. As law, the Wagner Act was grand, creating the NLRB and setting the terms of the modern collective-bargaining system. It launched the era of the intensely aggressive "closed-shop" rule, under which a job applicant at a unionized company must belong to the union to be considered.

The closed shop proved too pushy even for many union friends. In 1947, Congress edited the Wagner Act down into a more ambivalent, but still aggressive, law called the Taft-Hartley Act. Taft-Hartley ended the glory days of the closed-shop bullies. But it also allowed unions to demand dues, or the equivalent amount in fees, from the non-union workers who would now sit beside unionized ones.

This compulsory payment inspired companies and states to push back yet again and write their own labor laws, state-level "right-to-work" legislation. Such laws generally sought to widen choice in regard to unions, and affirmed a non-member's right to work without having to pay dues.

Over the years, 22 states have enacted right-to-work laws. Anecdotal evidence suggests that employers, and many workers, prefer the right-to-work states. South Carolina, where Boeing wants to make the 787 Dreamliner, has been a right-to-work state since 1954. Washington, where the NLRB wants Boeing to stay, rejected such a law in 1958. Sometimes, companies feel safer escaping the NLRB's jurisdiction altogether; that may be what's motivating Audi's interest in building cars in Mexico rather than in Chattanooga, Tennessee, where its parent company, Volkswagen AG, has a plant.

A look at Bureau of Labor Statistics data over recent decades gives substance to the impression that right-to-work means less unemployment. In 1990, the average jobless rate was 5.1 percent in right-to-work states and 5.6 percent in other states. In 2000, it was 3.8 percent in right-to-work states and 4.1 percent in others. In July 2011, unemployment was 8.1 percent in right-to-work states and 8.4 percent in others.

Oklahoma has muddied the data a bit by becoming a right-to-work state in 2001. Excluding Oklahoma, total private employment from 1990 to 2010 increased by an average of 35 percent in right-to-work states and 16 percent in other states.

Were other factors than unions driving migration? Sure: weather, for starters. But three northern right-to-work states, Nebraska and the Dakotas, currently have unemployment levels of less than 5 percent, the envy of Minnesota and Michigan.

A more serious rebuttal to the argument that right-to-work is good for workers involves pay levels. The median wage in right-to-work states is $14.74, almost two dollars lower than the median in other states. But that disparity narrows when you consider cost-of-living in right-to-work states is generally lower.

And, more importantly, you have to weigh the wage against the unemployment and the migration. The point is that the performance of unionized economies, especially heavily unionized ones, hasn't been strong enough to warrant the unions' arrogance or the ancient laws that institutionalize their clout. Workers, not the NLRB, and certainly not administrative labor courts, ought to make the call on unions. The best Labor Days will come in the future, when unions are truly voluntary. After all, as a speaker at the Council on Foreign Relations noted in 1918, American unions have to be voluntary to be democratic.

"There may be here and there a worker who for certain reasons unexplainable to us does not join a union of labor," he said. "This is his right no matter how morally wrong he may be."

The name of the speaker was Sam Gompers.

(Amity Shlaes is a Bloomberg View columnist and a senior fellow in economic history at the Council on Foreign Relations. She oversees the Echoes blog. The opinions expressed are her own.)

© Copyright 2011 Bloomberg

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