By Dr. Gary North
Dr. North is editor of Biblical Economics Today, from which this article is reprinted by permission. Biblical Economics Today is available free on request: P.O. Box 8567, Durham, N.C. 27707.
Why should we speak of a Christian view of labor unions? The best reason is that almost all Christians have some opinion on the place of work in the life of a Christian. Max Weber, the German social scientist, wrote an important book at the turn of the century, The Protestant Ethic and the Spirit of Capitalism, in which he argued that the idea of the calling—one’s vocation—was a central feature in the attitudes of Protestant laymen who helped lay the foundations of modern production methods and organization. If the idea of work is central to the Christian tradition, and this tradition led to the creation of modern capitalism, then we ought to pay attention to a related topic, the labor union. Labor unions are not the major part of the total American labor force, contrary to popular opinion. They are important in the large industries such as autos, steel, and television, but only about 25 per cent of the American labor force belongs to any union, and many of these are weak, rather insignificant organizations. As I hope to demonstrate, it is almost impossible for trade unionism ever to control over half of a nation’s labor force in a democratic country, and where unions control more than this, labor mobility will be reduced markedly.
Do unions raise wages? Unquestionably they do. Do monopolies in business raise prices? Unquestionably they do. Labor unions raise wages in exactly the same way that a business monopoly raises prices: by artificially restricting the supply of a particular resource. Over the long run, with rare exceptions, no monopolist can keep prices raised in this fashion apart from direct government interference into the market. If the government keeps out competitors, then it is possible for monopolists to keep prices above what they would have been in a free market for years or even decades. In the case of diamonds, the DeBeers oligopoly has kept diamond prices up throughout the twentieth century, but it takes the collusion of the South African government to maintain this monopoly (or at least it took such collusion originally).
The economics of monopoly pricing is the foundation of all modern trade unionism. This is either not understood by the supporters of trade unions, or else it is rejected as irrelevant. You will search your days in vain trying to find a supporter of trade unions who is also a supporter of business monopolies, yet the economics of each is identical. The labor union achieves higher than market wages for its members by excluding non-members from access to the competition for the available jobs. In other words, those who are excluded must seek employment in occupations that they regard as second-best. They bear the primary burden in the marketplace; they are the ones who pay the heaviest price for the higher than market wages enjoyed by those inside the union.
How can unions exclude outsiders from the bidding process? There are many ways, all used effectively by unions over the decades. First, there is raw power. They beat up their competitors. They throw paint bombs (paper bags filled with paint) at the homes of their competitors. They threaten the children of their competitors. Their children exclude the children of the competitors from social activities at school, meaning public (government) school. They shout "scab" from their picket lines. (Strange, isn’t it, that those who defend labor unions seldom shout "scab" at Ford salesmen who are challenging the so-called monopoly of General Motors?)
Second, and most effective, trade unionists have been able to convince legislators to enact legislation that excludes non-union workers whenever 50 per cent plus one worker vote to choose a particular labor union as the sole bargaining agent in a plant or industry or profession. The skilled trades were the first to get state governments to pass such legislation, and immediately blacks in the South disappeared from the skilled trades. Then professional associations got such legislation passed, most notably lawyers, physicians, and dentists. Then, in 1935, the Wagner Act was passed at the national level. It established the National Labor Relations Board (NLRB), a consistently pro-union bureaucratic Federal agency. As far as the favored unions are concerned, 75 per cent of all workers are potential "scabs," and the NLRB keeps them in their second-choice jobs.
There is a third, less evident, means of insuring labor union monopoly pricing. This is the minimum wage legislation. This legislation is always supported by trade union officials, whose members are always earning wages higher than the proposed minimum wage. This legislation sees to it that regions that have less developed unions, such as the South—in fact, primarily the South—cannot attract industry so easily from the more heavily unionized Northeast. The minimum wage was the primary means of warfare by unions against non-union workers after World War II until very recently. It still may be the primary weapon. The primary loser is, of course, the urban teenage male black, who cannot get into the Northern union, or migrate to the South, or offer services to employers that are worth the minimum wage.
Employers pay higher wages than the market would have dictated when their labor force is unionized.
Of course, employers outside union domination pay lower wages, since they are not compelled by competitive market forces to bid away labor from unionized firms. Since 75 per cent or more of all workers are not in a union, they cannot gain legal access to the labor markets where 25 per cent of the workers are employed. They have to work elsewhere. Thus, non-unionized employers are granted a subsidy from government: lower priced workers.
When was the last time you heard a supporter of labor unions argue that the reason why unions are wonderful is because they grant a subsidy to the employers who employ 75 per cent of the American labor force? Yet this is precisely the economic effect of compulsory government-enforced trade unionism.
The Law of Market Competition
"Buyers compete against other buyers. Sellers compete against other sellers." Not that difficult a concept, right? Apparently it is the most difficult concept in economics, if we are to judge by the arguments people use in favor of increased government intervention into the free market.
Buyers of labor services compete against other buyers and potential buyers of similar (substitutable) labor services. This means that employers are in constant competition against other employers in the labor markets. They are forced to bid up the price of labor until the point that they can no longer afford to hire any more laborers, or, in the case of the most successful bidder, until all the competition has dropped out of the field. This is the explanation for the curious phenomenon that labor unions subsidize non-unionized industries that are buying labor services from those excluded by law from competing for jobs in unionized industries. The buyers of labor in unionized industries have been compelled by law to depart from the "labor auction" in which 75 per cent of American workers are offering their services to the highest bidder.
On the other hand, sellers compete against sellers. This means that those who are harmed by trade unionism are those excluded from union membership. They are denied the right to compete for jobs in certain segments of the economy. They have been denied their right to bid, just as the employers in the unionized markets have been denied their right to bid.
The biblical view of man is work-oriented. It affirms that man was placed on the earth to subdue it to the glory of God (Gen. 1:28; 9:1-7). It is not each man’s right to work. It is his duty to work. What is his lawful right is his right to compete for the job he wants, his right to compete for the labor services he wishes to purchase. No one has a right to my job, including me. Anyone should have the right to compete for my job, including me. And I have the right to compete for his.
The striker argues that he has the right not to work, but his employer does not have the right to hire someone to replace him. Modern compulsory trade unionism is based on the wholly immoral premise that the worker owns his job (can exclude others from the position) even though he refuses to work for his employer. To add insult to immorality, most trade unionists also want government food stamps, unemployment benefits (tax-free), and other forms of taxpayer-financed benefits while they are striking. The consumer is supposed to finance his own funeral, and the coercion of law then becomes total.
Obviously, nobody inside the union could reap monopoly wages if everyone were in the union who wanted to compete for the available jobs. The union would then become superfluous. It is only because of the artificial barriers set up against other workers that the union members reap their monopoly gains. This is the reason why, economically speaking, the trade union movement in its present, coercive form will never be more than a minority movement. The union needs the majority of workers outside the union movement, since the union membership has to have victims among the working class in order to reap its monopoly returns.
Once a man’s contract has expired, he should have the right to walk off the job if he wants to. He should not have the right to keep his employer from hiring a replacement. Similarly, any employer should have the right to fire a worker, once the contract has expired. But he should not have the right to exclude that worker from competing in other labor markets. Trade unions deny both these premises.
Voluntary unionism is lawful, so long as the civil government does not do more than enforce the contracts agreed to by employers and laborers. A union can help to spread information of better wages or better jobs, thereby helping its members to keep alert to the true value of the services they are offering for sale. Unions can be self-help societies. But when compulsory, under coercive civil law, they are immoral. They must be recognized as such by orthodox Christians.
For further reading, see Prof. Sylvester Petro’s many books, including Labor Policy of the Free Society, Power Unlimited: The Corruption of Union Leadership, The Kohler Strike, and The Kingsport Strike. Also of interest: W. H. Hutt, The Strike-Threat System.
Let the Market Decide
If you believe that the state should not intervene in dealings between employers and employees, then that means not only no Wagner Acts, but no right-to-work laws and no administrative review of wage settlements as well. Yet we seem to be headed for ever more intervention by the state in dealings between employers and employees, in the internal affairs of unions, and in the wage-price relationships in industry. Having created our Frankenstein, we are now going to break him to our will.
In the process the state is almost certain to undertake to dictate decisions about matters that should be left to the market place, and to create authoritarian patterns of action that will be degrading and debilitating to employers and employees alike.