LABOR UNIONS’ importance in the workplace has fallen steadily since 1950, when roughly a third of American workers were unionized. Today, that number is well below 10% in the private sector.
The Employee Free Choice Act, now before Congress, aims to reverse that trend by making it easier for unions to gain certification and stiffening penalties for interfering with a unionization drive. After all, supporters argue, without union representation, how can individual workers have the bargaining power needed to get their fair share of the economic pie?
But maybe unions aren’t so crucial to worker well-being. When more than 90% of the private-sector labor force isn’t unionized, why do 97% of us earn above the minimum wage? If our bargaining power is so pitiful, why don’t greedy employers exploit us and drive wages down to the legal minimum?
The simple answer is that bargaining power comes from having alternatives. Even in the absence of unions, employers have to treat workers well to attract and keep them. In a workplace as dynamic as that of the United States, where millions of jobs are destroyed and created every quarter, a company’s ability to exploit workers is greatly limited by how easy it is to find another job.
Ultimately, it is competition among employers that protects us from exploitation. Even those who would seem to be the most vulnerable — immigrants who struggle to speak English, for example — can earn much more than the minimum wage simply because of competition for their skills. Cleaning people routinely earn $20 an hour, more than most cities’ so-called living wage.
Look at workers’ share of the nation’s income. In 1950, employee compensation was 53% of gross domestic income. In 2005, that number was 57%. Somehow, as unions’ strength dwindled over the decades, employees’ share actually grew. And it’s a share of a dramatically larger pie, the result of the incredible economic boom of the last half a century.
The source of such economic growth is better-educated workers and technology that makes them even more productive. Those with more skills are more attractive to employers.
But aren’t those gains mainly going to those at the top? Don’t we need unions to preserve the middle class? That’s the rhetoric that union leaders use. Yet real median family income has risen steadily since 1950. Some of that increase is because more families have two earners. But gains have been steady even for families in which only one person is working. The middle class isn’t shrinking; it’s getting richer. What used to be wealthy is now middle class.
Not every American worker shares equally in prosperity. But skipping a secret-ballot vote — as the Employee Free Choice Act would — is an odd way to help the disadvantaged. The argument is that if workers can simply sign a card in support of the union, they’ll avoid employer intimidation. But eliminating the ratifying vote replaces the threat of employer intimidation with the threat of union intimidation. That will probably increase union representation. But will it help workers?
Unions help those they represent by trying to raise wages above what they would otherwise be. To the extent they succeed, they reduce the demand for labor in unionized shops. That means more workers have to find employment in non-unionized shops, pushing down wages there. That’s especially tough on workers with limited skills and education. The sad irony of unions is that they can only improve the lot of their members at the expense of other workers.
A better way to increase wages is to make workers more productive. That lifts everyone’s standard of living.
Rather than trying to revitalize unions, we ought to be looking for ways to revitalize our moribund public education system. That is the road to true, long-term prosperity.