Freedom of association in union representation elections requires that workers be able to cast an informed vote. Workers must have access to both pro- and anti-unionization arguments. We can count on union organizers vigorously to present pro-unionization arguments. They start doing so long before any representation election is scheduled because they must get 30 percent of eligible workers to sign cards requesting unionization before the National Labor Relations Board (NLRB) will order an election.

We usually can count on employers vigorously to present anti-unionization arguments, but they have less time than union organizers have to make their case. They often don’t know about union organizing efforts until the union has collected the requisite signatures. The time between the NLRB’s order to have an election and the actual election is crucial if workers are to be able to hear the employer’s side of the story and thus be able to make an informed choice about how to vote.

In 1947 Congress amended Section 7 of the National Labor Relations Act (NLRA) to make explicit the right of workers to refrain from unionization. To give effect to that right, Congress added Section 8(c), which affirmed the right of employers to engage in free speech during election campaigns. Congress wanted workers to hear both sides of the debate over whether to unionize so that they could make informed decisions.

In 1948 the NLRB endorsed this intent of Congress by declaring, in General Shoe Corp., that its primary duty under the new law was to support workers’ right to “make a free and fair choice” on the question of whether to unionize. Absent force or fraud, election debate is, the Board asserted, the best way to enable workers to do so.

In Linn v. United Plant Guard Workers (1966) the Supreme Court noted approvingly that the NLRB does not “police or censor propaganda used in the elections it conducts, but rather leaves to the good sense of the voters the appraisal of such matters, and to opposing parties the task of correcting inaccurate and untruthful statements.” The Court went on to affirm that “debate . . . should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks.”

Notwithstanding the clear intent of the 1947 Congress, and the eager endorsement of that intent by the 1948 NLRB, and the 1966 Supreme Court, the present NLRB demurs. It takes its orders from unions, and unions seek to silence employer speech.

The failed card-check bill would have silenced employer speech because it would have forced an employer to recognize a union as the monopoly bargaining agent over his employees if it collected the signatures of at least 50 percent of them on cards requesting such recognition. There would be no election campaign during which employers could give their side of the debate.

Card Check by Fiat

Union cronies in Congress failed to deliver on card check, but on August 26, 2011, the pro-union NLRB troika—Mark G. Pearce, Craig Becker, and Wilma B. Liebman—created a limited form of card check by regulatory fiat. In its Lamons Gasket decision the troika overturned the Board’s 2007 decision in Dana Corp.

The NLRA permits an employer voluntarily to recognize a union as the monopoly bargaining agent over his employees if the union collects the signatures of at least 30 percent of them on cards that request such recognition. In Dana Corp. the NLRB ruled that when an employer chooses to grant recognition to a union without first letting the employees vote on whether to be subjected to union rule, the affected employees could immediately demand an election to challenge the employer’s voluntary recognition.

In Lamons Gasket the troika declared that the affected employees would have to wait for at least six months, and in some cases up to one year, before they could hold a challenge election. This means that union rule over workers, lasting at least six months, can be achieved by a 30-percent card check rule.

Why would an employer choose to turn his workers over to union rule without a secret ballot election? Because he fears a “corporate campaign.” Following Saul Alinsky’s Rules for Radicals, a union picks a target enterprise to unionize and demands that the target not resist. If the target chooses to defend itself and its workers against unionization, the union forms coalitions with leftist community-activist groups to try to destroy the target’s standing in the community and its relationships with lenders, suppliers and customers. The union and its allies smear the target and its officials as monsters who want to take away their employees’ freedom of association. The union and its allies, often including benighted clergy, claim the moral high ground. But employers who choose to resist really occupy the moral high ground. They promote their employees’ freedom of association.

Shortened Election Process

In another attack on employer campaign speech, in June 2011 the NLRB troika decided to cut the representation election process from its present median of 38 days to ten days. With less time to speak, employers will speak less.

There are several reasons for workers to choose to be union-free. For example, union-free enterprises offer more job security than their union-impaired counterparts because the latter are too sclerotic to frequently changing global market conditions. Union-free firms can reward workers on the basis of productivity. In union-impaired firms pay is based on job classifications and seniority. Union-free workers are free to excel, while union-impaired workers are chained to a contract. Unions promote an adversarial relationship between workers and employers, while union-free employers are free to enlist workers as partners in building durable and growing value.

The NLRA illegitimately forces workers into representation elections. To make matters worse, the current NLRB seeks to obstruct the access of workers to arguments in favor of remaining union-free. Employers are the most reliable conveyors of those arguments. Employers must be free to speak.

To begin with some basics, what is work and what is a job? For economists, work is any activity that we would not perform without tangible compensation, usually money. In our work lives almost all of us are also motivated by nonmonetary considerations, and to the extent we diverge from the most remunerative activity available to us, we are blending work and leisure. A retired person who takes up college lecturing may do the work primarily for the satisfaction it brings. If his salary were withdrawn and he continued to teach, he would be enjoying leisure.

The goal of all economic activity is consumption, which to economists means not just mundane goods like faster cars but also “noble” ends like cathedrals. Jobs are therefore not ends in themselves, as much as public discussion would suggest otherwise. They are means to acquire income to be used for consumption and saving, in addition to personal satisfaction, learning opportunities, or socializing.

A person who lacks a job is unemployed if he or she wants work, has suitable skills, and has realistic expectations about compensation. These are vague terms; they make unemployment a murky concept. That goes double for underemployment, though both remain very real phenomena.

What is it about unemployment that makes it so problematic? Why can’t markets cure labor surpluses with lower wages as coffee surpluses are cured by lower coffee prices? Is government interference to blame, or is there something about free markets that allows unemployment to persist?

Both. Let’s look first at natural unemployment, which is unemployment not caused by government policies. Economists Milton Friedman and Edmund Phelps brought this concept to the fore during the 1960s even though, like most modern economic concepts, it had been recognized in various guises long before they wrote of it.

Labor markets, even when unhampered by government interference, are different from other markets. Nonmonetary considerations do not arise in other markets as much as in labor markets. Not just salary, but working conditions, job satisfaction, and advancement opportunities matter to most job seekers, often greatly.

A certain number of unemployed people are holdouts, people who might find some sort of job fairly quickly but are holding out for a higher salary, more job satisfaction, convenient location, and so on. Lumping all holdouts together is problematic. Some may harbor unrealistic expectations. Some feel constrained by their spouses’ wishes. Some have ample savings and can afford to hold out more stubbornly than others.

Some holdouts are reluctant to relocate. Moving is usually expensive and often emotionally distressful, especially to children. The current lingering housing crisis makes moving especially unattractive to some. People who are not only unemployed but also “underwater” in their mortgages—and particularly those who have simply stopped making payments, knowing that their lenders may not get around to their case for months or even years—are strongly inclined to stay put rather than accept distant job offers.

Efficiency Wages

Another form of natural unemployment is a bit subtle but very real. It goes by the name “efficiency wages,” based on the fact that recruitment and training costs are quite significant for most firms. Employers want their new hires to stick around so that these costs can be amortized over a reasonably long and productive term of employment. To motivate valuable new and old employees to stay, firms tend to offer compensation somewhat higher than the going rate for workers in any particular category. If the going rate is the wage that balances supply and demand for a particular labor category and if most offers are somewhat above this rate—efficiency wages—the result must necessarily be some unemployment. No one exemplified this theory better than Henry Ford and his outlandishly high $5-per-day wage beginning in 1914. According to one report, the policy eliminated complaints and reduced absenteeism by 75 percent. Total labor costs actually fell. There was a long waiting list for Ford jobs, but those men had other opportunities in the growing Detroit economy.

Government-Caused Unemployment

Government policies contribute to unemployment above and beyond natural unemployment. The most notorious of these policies are minimum wage laws. These laws make it illegal, effectively, for low-skilled workers to accept employment. Anyone who cannot generate $8 worth of production per hour cannot expect to be paid more than $8. Such unfortunate people might be productive at $6 per hour but are forbidden to accept employment at this rate and are instead condemned to joblessness and all its attendant miseries. This burden falls most heavily on black teenagers, whose unemployment rate (based on those seeking work and excluding those who are in school) is well over 40 percent. The benefits accrue mainly to slightly higher-skilled workers, who have climbed onto the metaphorical ladder leading to better jobs and who are shielded from competition from those excluded by minimum-wage laws.

Unemployment insurance softens the impact of joblessness and reduces the incentives to find a job. Recipients are supposed to show that they are actively seeking work, but this rule is easily sidestepped. There is nothing wrong with unemployment insurance per se. The problem is that the government forces all workers to buy this insurance whether it suits them or not. (Though nominally paid by employers, in fact the burden falls partly on workers and partly on employers.) Some workers might prefer to take that portion of their compensation in cash, but that choice is forbidden. Private carriers that might offer this insurance would, like all insurance providers, take steps to minimize adverse selection (the tendency for riskier workers to buy insurance) and moral hazard (the incentive for those covered to take risks that could get them fired).

Labor unions, as voluntary associations bargaining freely with employers, are unobjectionable. They did a lot of good in the past when working conditions in many places were pretty bad. But now they are granted special privileges by law—basically the privilege to engage in violent or coercive activities. The result is often wage agreements that are above market-clearing levels. Those left out are of course unemployed.

While labor unions can boost their members’ compensation at the expense of non-union workers, higher wages generally and higher living standards are due mainly to increased productivity, which in turn depends on high levels of capital investment. People are more willing to save and invest when they have confidence in the future, and that confidence comes from respect for property rights.

The Pain of Unemployment

Because unemployment, natural or government-caused, is such a personal matter, its impact is highly subjective, extending far behind lost wages.

A teenager looking for work may not be his family’s main source of income, but finding a job could be crucial to his life path. In my day teenagers could earn money delivering papers, mowing lawns, raking leaves, and shoveling snow. The work was unregulated and the income untaxed. Were we exploited? Hardly. We learned to take pride in our work, save for the future, and in contrast to our allowances, savor the special significance of money that we had earned.

A family breadwinner who loses his job and remains unemployed for an extended period of time will surely become discouraged, a term that only begins to describe the psychological devastation that can ensue. Men especially begin to see themselves as failures not just as breadwinners, but as husbands and fathers and more generally. Marital problems often arise. Children pick up on the distress and at certain ages wonder if they are to blame. Domestic violence and suicides are not uncommon. But losing a job may be no big deal for the senior citizen who works mainly for pleasure.

If anguish could be measured we would probably say that one year’s unemployment is more than twice as painful as six months’. As time goes by the jobless not only lose hope, but also suffer erosion of their work skills and attitude. Their former colleagues and clients tend to forget about them. Some without work turn to alcohol or worse in their despair.

Overqualification is a problem for many job-seekers. Employers are reluctant to hire people who are qualified to do better-paying work simply because those workers are likely to leave once they get a more lucrative offer. So some people simply “forget” to list that master’s degree on their résumé.

Unemployment and Macroeconomic Policy

Returning to Friedman and Phelps, the phrase they actually used was the natural rate of unemployment, the rate that would prevail when the economy is operating at full potential. Economies can operate below potential, as ours is presently, and they can sometimes operate above potential. Correspondingly we can have unemployment above the natural rate or, rarely, below. In the latter situation, we might see seniors lured out of retirement or young people lured into jobs before they finish school. But this situation is not our focus here.

Friedman was known for his opposition to Keynesian policies and his championship of free-market ideas. But that one word rate hints at the fact that Friedman fits squarely into the Keynesian macroeconomic project. Friedman viewed economics as an empirical science, not fundamentally different from physics, in direct opposition to the Austrian approach. He and Phelps spawned a cottage industry of searchers for the natural rate. Without that one word his work might not have received the broad attention that it did.

Some economists define the natural rate as an average rate (technically, a moving ten-year average). By this definition the actual rate must always lie above the natural rate at some times and below at other times. But this is simplistic. There is nothing “natural” about a moving average. Natural unemployment lies in the intentions and expectations of the people involved and is not so easily measured.

While the natural rate may be difficult to quantify and the highly subjective effects of unemployment cannot be measured, what about the amount of unemployment? Can it be measured? The Bureau of Labor Statistics (BLS) has that responsibility, and the numbers it announces get more attention nowadays than any others, with the possible exception of GDP growth figures. How does the BLS arrive at its numbers?

BLS Categories

To begin with, it must decide who is in the labor force and who is not. Among those who don’t hold jobs, infants, jail inmates, and people in nursing homes aren’t expected to work and shouldn’t be called unemployed. They are simply excluded from the labor force. Beyond that it starts to get fuzzy. Should that senior person who works mainly for nonmonetary reasons really be counted in the labor force? What about discouraged workers? A discouraged worker is one who wants work and has looked during the past 12 months, but not during the past four weeks. Do the statisticians really know who has looked and who hasn’t, and whether the reason was discouragement or something else?

Because of these and other ambiguities the BLS estimates unemployment in six different ways. U-3 gets the most attention. It is the number of unemployed divided by the size of the labor force. That number was 9.1 percent at press time. The next most widely followed version is U-6, which adds “marginally attached” workers—those who are out of the labor force but want work and have looked within the previous 12 months. It also adds those with part-time jobs who would like full-time work (again, how do they know?). This figure was a whopping 16.2 percent.

So which is the real unemployment figure, U-3 or U-6? There is no right figure, and the emphasis on U-3 is not some sort of conspiracy to hide the “real” situation. The figures are what they are, and it’s a mistake to read too much into them.

The biggest problem with unemployment statistics is not their fuzziness but, like GDP, the implications they carry: the idea that the government can and should proactively attempt to manage the unemployment rate. Such has been the presumption for at least 65 years.

Since 1948 the Federal Reserve System has operated under a dual mandate: maximize employment and stabilize prices. This is a direct reflection of the dominant macroeconomic theory of the time, which assumes the authorities could reduce unemployment by adding a little inflation, or vice versa. The theory seemed to work for awhile but fell apart in the 1970s, when the term “stagflation” appeared. We had the worst of both worlds for a time, and Friedman was ready with an explanation: Inflation could only temporarily boost unemployment—until such time as expectations caught up to reality. The Fed, as we all know, has injected massive amounts of reserves into the banking system with no discernible effect on growth or unemployment. So much for the dual mandate. More about this and other current conditions in part two, which will appear next month.

Franklin Roosevelt, a dedicated crony of private-sector unionism (PSU), believed that government-sector unionism (GSU) was “unthinkable and intolerable.” In 1955 George Meany, the first president of the modern AFL-CIO, opined that “It is impossible to bargain collectively with the government.” This sentiment against GSU was almost universally shared, but it could not withstand the realities of electoral politics.

The first government-sector union was created in New York City in 1958 at the behest of Mayor Robert Wagner—son of Senator Robert Wagner, the principal author of the 1935 National Labor Relations Act (NLRA), which imposed PSU. Mayor Wagner and union boss Jerry Wurf agreed that as many city workers as possible should be assembled into unions and forced to pay union dues. Wagner saw that a well-organized and well-funded union could be a formidable force in future elections by providing him with disciplined boots on the ground as well as other in-kind and pecuniary support. Wurf saw that he would get a special place at the table around which public policy is formed. Their scheme bore fruit in Wagner’s 1961 reelection effort. (In 1959 Wisconsin became the first state to authorize GSU.)

President Kennedy noticed the role government-sector unions played in Wagner’s 1961 victory, Fred Siegel of the Manhattan Institute writes. In January 1962, with an eye to his expected 1964 reelection campaign, Kennedy signed Executive Order 10988, which imposed GSU on many groups of federal workers. Thereafter GSU spread to as many as 30 states.

A Fourth Branch of Government

All federal and state statutes that authorize GSU are patterned on the NLRA. A key section of the NLRA imposes on employers a duty to bargain in good faith with unions. Thus a union can force an employer to bargain with it over all questions involving wages and other terms and conditions of employment. In practice the “good faith” part of the duty to bargain means that the employer must be willing to compromise during the bargaining process.

In ordinary contract law each party must consent to bargain with each of the other parties. All parties are free simply to walk away at any time, and any contract that emerges from forced bargaining is null and void. Not so with unions. Every collective bargaining (CB) contract emerges from forced bargaining, yet every CB contract is considered legal and is enforceable in the courts.

Elected government office holders are routinely lobbied by organized interests such as the Sierra Club and the Chamber of Commerce. But neither they nor any other ordinary lobbyist can force any elected or appointed government official to bargain with them, much less compromise with them. In contrast union officials have the power to force government officials to bargain and compromise with them on what burdens will be placed on taxpayers. In effect government-employee unions (GEUs) are a fourth branch of government with which the legislative and executive branches must bargain and compromise on matters of public policy.

Wages and other terms and conditions of government employment are matters of public policy. They are paid for by taxpayers. Taxes are supposed to be determined in the open by elected legislatures together with elected presidents and governors. Moreover, taxpayers are supposed to have access to and a voice in the legislative process.

In contrast the CB process is carried out behind closed doors. Taxpayers employ government workers but have no seat at the table. Government officials at the table do not represent the interests of taxpayers; they seek to expand the scope of their power and influence. To them bigger budgets are always desirable. GEUs seek better wages, benefits, and conditions of employment for government employees so they can justify raising dues. GEU bosses seek more perks and power for themselves. The two sides of the government-sector CB table are cronies. They both seek to pick the pockets of taxpayers.

Concentrated Benefits and Diffused Costs

Other things equal, no one likes having to pay higher taxes. But when everyone pays higher taxes the extra tax receipts are disproportionately spent in ways that benefit government-sector workers. Their wages go up, or other terms of employment are improved, or the budgets of their agencies expand so their prominence and power increase—perhaps all of the above. Private-sector employees pay the higher tax and get little or nothing back, but since the costs are widely dispersed, the per-person burden is not high enough to spark taxpayer resistance. (The revolt against GEUs in Wisconsin and elsewhere suggests that in some venues the per-person cost is getting high enough to create significant resistance.)

GEUs support their friendly politicians out of dues taken from the workers they represent. All taxpayers pay the wages of government employees, and some of those wages end up as union dues that become campaign donations to big-government politicians. In short all taxpayers, even those who favor smaller government, are forced into making campaign donations to big-government politicians. Meanwhile, the politicians, bureaucrats, and GEUs happily dance around their closed iron triangle, taxpayers be damned.

Keeping It All Going

In February 2009, using the Great Recession as cover, President Obama signed the American Recovery and Reinvestment Act (ARRA). It was a benighted Keynesian scheme based on the popular superstition that a recession can be cured by increasing government spending and handing out temporary lump-sum tax cuts. ARRA increased government spending by $499 billion and cut $288 billion in taxes. What was the result? Research done by Timothy Conley (University of Western Ontario) and Bill Dupor (Ohio State University) reveals that ARRA “created/saved 450 thousand government-sector jobs and destroyed/forestalled one million private-sector jobs” (“The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled”). In short most of the money went to bail out several states so they could avoid laying off GEU dues payers.

Another crony antic of the Obama administration was to impose a GEU on 40,000 TSA officers (TSOs), who thus become union dues payers. The TSA was created after the 9/11 attacks. At its inception most politicians, at least publicly, said that the job of officers was to react rapidly and flexibly to unpredictable security threats. Even politicians know that union-impaired workplaces don’t work like that. Unionization was banned until February 2011, when John Pistole, the Obama-appointed administrator, lifted the ban. Congress tried to intervene, but the effort was defeated in the Senate. The American Federation of Government Employees and the National Treasury Employees Union fought over which would get monopoly bargaining privileges over the officers. The Federation won. Now that they are union-protected, the officers will likely morph from grossly abusive to crudely invasive.

The Act contains two important provisions. Section 1 outlaws contracts and conspiracies in restraint of trade. Section 2 prohibits monopolization and attempts to monopolize.

Most people have a knee-jerk response to monopoly and collusive agreements and condemn such behavior out of hand. Before making a broad condemnation, we might consider the behavior more generally. The Bible’s book of Exodus gives us the Ten Commandments. The first two, and presumably most important, are: “Thou shalt have no other gods before me,” and “Thou shalt not make unto thee any graven image, or any likeness of anything that is in heaven above, or that is in the earth beneath, or that is in the water under the earth. Thou shalt not bow down thyself to them, nor serve them: for I the LORD thy God am a jealous God.” These two commandments establish God as a monopoly and to reinforce the monopoly, there shall be no God-substitutes. I do not think that many would condemn Christianity on the basis of its monotheism.

Another area of monopoly and collusion is marriage. The marriage license is in fact a collusive monopoly contract between two persons that closes—or at least is supposed to close—further competition.

The monopolistic and collusive characteristics of religion and marriage emerge naturally and benefit society. Therefore, we are faced with the question of what kinds of monopoly and collusion we would wish to restrain. I would venture to suggest that government-coerced and -encouraged monopoly and collusion should be restrained. Moreover, if the Department of Justice were really serious about Sherman antitrust provisions, it would focus on Washington as the main source of collusion in restraint of trade.

One of the most egregious examples of conspiracy and monopoly in the restraint of competition are Private Express Statutes. These are a set of civil and criminal federal laws that outlaw the delivery of first-class mail by all entities other than the U.S. Postal Service. As such they represent government coercion that bans peaceable, voluntary exchange in the delivery of first-class mail. Aside from the well-documented inefficiencies of the Postal Service, the postal monopoly should be condemned on that basis.

The U.S. Department of Agriculture (USDA) establishes fruit and vegetable marketing orders and milk marketing orders with the stated purpose of balancing the products’ availability with an adequate return to producers and the needs of consumers. Federal marketing orders are locally administered by committees of producers. Initiated by industry and enforced by the USDA, they bind an entire industry in a geographical area.

For example, there’s the Navel Orange Administration, in which growers get together and establish citrus production quotas in California and Arizona. Any citrus grower exceeding his market quota by bringing too much to market and threatening to lower prices faces fines and imprisonment. This collusion applies to nearly all commercially produced fruits and vegetables. The effect of market quotas is to generate prices that are higher than they would be without the government-backed collusion.

Mandated maximum quantities and/or minimum prices are surefire indicators of seller collusion in restraint of trade. An example of the latter is minimum wage law. The effect of a minimum wage is discriminating against low-skilled workers. What employer would find it profitable to pay the mandated wage of $7.25 to a worker capable of producing only $4 or $5 an hour?

The minimum wage can be used as a tool of collusion. For some activities low-skilled workers are a substitute for higher-skilled workers. Imagine that 100 yards of fencing could be produced per day either by employing three low-skilled workers at $13 each or one high-skilled worker at $38. A profit-motivated employer would hire the high-skilled worker because it’s cheaper. If the high-skilled worker demanded $50 a day, the employer would replace him with the three low-skilled workers. But suppose the high-skilled worker could lobby Congress to enact a $20-a-day minimum wage in the fencing industry. Now using the three low-skilled workers would cost $60. Thus the probability of the high-skilled worker getting $50 would be greater because he has been able to use government to price his competition out of the market.

The Davis-Bacon Act is a 1931 federal law that mandates that “prevailing wages” be paid on all federally financed or assisted construction projects. As such it is a union-supported super-minimum wage law. Its stated intention—as seen in the 1931 congressional testimony supporting the Act—was to price black workers out of the market. Representative Clayton Allgood of Alabama said, “Reference has been made to a contractor from Alabama who went to New York with bootleg labor. This is a fact. That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country. This bill has merit, and with the extensive building program now being entered into, it is very important that we enact this measure.”

Representative John J. Cochran of Missouri voiced similar sentiments, saying he had “received numerous complaints in recent months about southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South.” AFL President William Green made clear the unions’ interests: “Colored labor is being sought to demoralize wage rates [in Tennessee].”

The Davis-Bacon Act remains on the books today. The political rhetoric in support of the Act has changed but its effects have not. It remains an ongoing collusion against lower-skilled, non-union construction workers.

Just about every cabinet-level federal agency enforces some kind of collusive restraint on competition. Without government support, collusion has a tendency to break down primarily because what is in the best interests of an individual colluding member is not necessarily in the best interests of other members. For example, it pays a member to cheat on the agreement by, say, shading his price a bit to get more business. The members who abide by the agreement will find themselves losing business, and before long they will start cheating. The cheating becomes infectious, and the collusion breaks down. But if a federal law fixes the terms of the collusion, then to violate the terms is not simply a violation of a gentlemen’s agreement; it’s also a violation of the law, with the possibility of fines and imprisonment. In other words, effective collusion needs some kind of enforcement technique. Most often it is the threat of sanctions for noncompliance.

The bottom-line reality is that collusive monopolistic restraints on competition are deemed illegal and hence prosecutable only if the seller does not first secure Washington’s permission to rip off his fellow man.

There is no question that the tax funding of public-sector unions creates important distinctions from those in the private sector. For one thing, private-sector unions negotiate in the context of limited money; if they demand too much the company cannot compete against rivals and union members could find themselves unemployed. By contrast public-sector unions have no similarly clear limit on available money and government has no competitor. Thus public-sector unions are among the loudest voices for increased taxation and big government to sustain their wages and benefits.

Reducing those wages and benefits has become a popular cause largely because private-sector workers (even within unions) make considerably less than the government employees whom they are heavily taxed to support. In December 2009 the U.S. Bureau of Labor Statistics reported that government employees at the state and local levels earned an average of $39.60 an hour (including benefits), while private workers earned $27.42—over 30 percent less. Moreover, according to the Bureau of Labor Statistics, private workers have a 20 percent chance of losing their jobs in any given year; public workers have a 6 percent chance.

Reducing the power of either form of union is far less popular than reducing public-sector costs for at least two reasons. First, all modern unions benefit from legal privileges such as collective bargaining and the government certification that bestows a virtual bargaining monopoly on specific unions. Second, such prerogatives are widely viewed as workers’ rights to be cherished in the same manner as constitutional rights. That’s why Jesse Jackson compares Wisconsin’s massive pro-union demonstrations to Martin Luther King’s 1965 march in Selma for the voting rights of blacks.

Is it accurate to equate collective bargaining with workers’ rights? Is it accurate to view public- and private-sector unions as distinct rather than fundamentally similar? The answers lie in history.

It is important to define unions precisely. In a free-market context a union is nothing more than a collective agency through which workers protect common interests and secure common advantages through negotiation or other forms of persuasion, such as boycotts or peaceful strikes. Individual workers assign their right to negotiate to the collective agency in much the same manner as they might assign power of attorney; no one is forced to join or to pay dues. Thus the union is a collective expression of the individual right to free association and to contract one’s own labor. Employers remain free to decline negotiation and hire replacement workers.

Many conservatives and libertarians would consider the foregoing definition of unions to be unrealistic. In his article “The Myth of the Voluntary Union,” economist Thomas DiLorenzo argues that those who believe unions can be voluntary fall into “an easy trap . . . detached from any reality and history.” He insists that “violence against competitors has always been an inherent feature of unionism, even apart from the ‘violence’ of State-imposed legislative privileges that unions enjoy” (emphasis added). DiLorenzo refers specifically to the legal power of collective bargaining and to a history of brutal strikes as proof of unionism’s inherent violence. Yet it is not clear that violence is inherent in unions.

Political Evolution

Could unions exist without legal privileges in a society in which employment relationships were not mandated, in which there were no restrictions on self-employment or home industry? Are free-market unions possible?

The current paradigm of a modern union is rooted in the presidency of Franklin Delano Roosevelt. It was created through New Deal legislation, especially the Wagner Act, which established the legal right of workers within an industry or company to unionize if a majority of them voted in favor of doing so. The result has been far from an expression of the free market. For example a modern union receives government certification in order to engage in collective bargaining. In other words, the government authorizes it as the sole representative of a set of workers and legally requires the employer to give the monopoly union a seat at the negotiating table. This monopoly shuts out other groups or dissenters from negotiating their own contracts on their own terms. In many cases individuals can choose not to join a specific union but nevertheless they remain bound by union contracts and are required to pay union “fees.” The modern union thus represents a forced transfer of authority from individual workers to a collective.

Government schools, which are operated by what is arguably America’s strongest union, teach that the New Deal transferred power from business to labor. And without question the modern form of union gained political clout. But the political transfer was far more complex than it is portrayed to be.

Wagner and Big Business

In his essay “Labor Struggle: A Free Market Model,” Kevin A. Carson argues that the Wagner Act was designed to centralize, bureaucratize, and tame the unions to the advantage of big business, which was already no stranger to privilege and subsidy. That is why 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 most powerful tactics from the labor movement. Carson comments, “The primary purpose of Wagner, in making the conventional strike the normal method of settling labor disputes, was to create stability and predictability in the workplace in between strikes, and thereby secure management’s control of production” (emphasis in original).

Certification created labor monopolies that eliminated the need for business to negotiate contracts with multiple groups or individuals within the same company. Business also benefited from the unions’ acting as enforcement agents, policing their own memberships’ compliance with contracts. They prevented wildcat strikes and punished boycotts, work slowdowns, and other labor tactics that had proven both popular and effective in the past.

Leaders of modern unionism were aware of the benefits they offered to big business. In Ethics and American Unionism (1958), Sam Dolgoff wrote of John Lewis, president of the United Mine Workers of America (UMWA) from 1920 to 1960, “In 1937, Lewis assured the employers that ‘a CIO contract is adequate to protect against sit-downs, lie-downs, or any other kind of strike’. . . . [T]he corporations accepted . . . ‘industrial unionism’ because as a matter of policy, the mass-production industries prefer to bargain with a strong international union able to dominate its locals and keep them from disrupting production” (emphasis added).

Wagner and Grassroots Federations

Dolgoff outlined the impact of the Wagner Act on grassroots labor federations such as the UMWA. The National Federation of Mine Laborers had been the parent union of the UMWA, and by its constitution, “the Federation consisted of Lodges (Locals) and districts which vigilantly defended their independence from the domination of the National Office. Their insistence on autonomy and unity through federation (free agreement) was in keeping with the finest libertarian traditions of the American Labor Movement. . . . When Lewis became President in 1919 he did away with the federalist structure of the union, rooted out autonomy and self-determination of locals, centralized and took complete control of the union.” The Wagner Act completed the centralization.

Thus both Carson and Dolgoff argue convincingly that the modern union was an arrangement of shared advantage between big labor, big business, and big government. The relationship between business and unions was not necessarily cordial but it was often convenient.

Among those disadvantaged by the arrangement were smaller employers, the self-employed or non-unionized workers, and the broader grassroots labor movement itself.

Nineteenth-century America was the heyday of the grassroots labor movement. Fueled by a massive influx of immigrant workers and the rapid development of industry, a system of vigorous and varied labor organizations arose to address the specific needs of working people, which went far beyond a decent wage: Labor organizations often functioned as social and cultural support systems as well.

The most prominent nineteenth-century labor federation was the Knights of Labor. Established in 1869, membership reached 28,000 in 1880 and peaked at nearly 700,000 members in 1886. The primary demand of the Knights was an eight-hour day, but it also campaigned on such issues as ending convict and child labor. The Knights emphasized projects designed to empower its membership both economically and socially and to provide security for families. Through local chapters the Knights established worker-owned producer cooperatives; it launched public education campaigns to raise awareness of and sympathy for labor issues; and it organized social support networks to insure against the injury or ill health of members. Indeed many organizations or unions began as “benevolent associations” intended to care for the families of deceased or incapacitated members.

In “Revolutionary Tendencies in American Labor—Part 1,” Dolgoff explained that the labor movement “created a network of corporative institutions of all kinds: schools, summer camps for children and adults, homes for the aged, health and cultural centers, insurance plans, technical education, housing, credit associations, et cetera. All these and many other essential services were provided by the people themselves, long before the government monopolized social services wasting untold billions on a top-heavy bureaucratic parasitical apparatus; long before the labor movement was corrupted by ‘business’ unionism.”

Although the Knights of Labor used pressure tactics such as boycotts and the endorsement of friendly politicians, they did not generally emphasize strikes. Terence V. Powderly, who presided over the Knights during its ascendancy (1879–1893), openly opposed strikes, which he believed caused violence and increased conflict; he favored peaceful negotiation instead. Some local leaders within the Knights disagreed and flexed their autonomy by pursuing local strikes. Indeed, the internal conflict over strikes contributed to the Knights’ decline.

Labor organizations within the nineteenth-century libertarian movement adopted much the same approach as Powderly—namely the use of mutual support, persuasion, and education as tools of labor reform. Perhaps the most prominent of these organizations was the New England Labor Reform League (NELRL), established in Boston in 1869. Its membership boasted individualists Josiah Warren, William B. Greene, and Benjamin Tucker. Ezra Heywood’s The Word served as the NELRL’s publication. The foundational “Declaration of Sentiments” declared the League’s goals to be “Free contracts, free money, free markets, free transit, and free land—by discussion, petition, remonstrance, and the ballot, to establish these articles of faith as a common need, and a common right, we avail ourselves of the advantages of associate effort.”

One example of NELRL activity illustrates the broad manner in which the League defined labor activity. Along with his wife Angela, Heywood founded the Co-Operative Publishing Company from which pamphlets issued, including ones on birth control. The NELRL believed that women workers were victims of the poverty created by unplanned children; thus, birth control fell within the realm of labor reform. “Lady Agents” were sent out to tour the factories and other working-class haunts of New England. Once they had found an audience, the Lady Agents spoke on subjects that merged labor reform with family planning, all the while offering the Co-Operative pamphlets for sale.

With effective networks and diverse strategies, a broad grassroots labor movement grew in power; its threat to entrenched interests also grew. The threat came into glaring focus in 1877 and 1894 with two strikes that involved violence on both sides. The Great Railroad Strike of 1877 began in West Virginia over a cut in wages; lasting 45 days, it was finally put down by federal troops who went from city to city to quash sympathy strikes by industrial workers. The Pullman Strike of 1894 began in Pullman, Illinois, again over a cut in wages. Spreading nationwide, it also attracted wildcat sympathy strikes and ultimately involved about 250,000 workers in 27 states. Eventually President Grover Cleveland sent U.S. marshals and some 12,000 troops to break the strikes.

By the turn of the twentieth century the labor movement—notably, the Industrial Workers of the World (IWW, or Wobblies)—had also become a political threat to the status quo. Organized in 1905, the Wobblies had strong leaders but emphasized rank-and-file organization. Unlike the Knights of Labor, however, the IWW enthusiastically embraced strikes; indeed, it initially opposed the signing of all labor contracts specifically because they blunted the power to strike.

With a large immigrant membership and explicitly socialist principles, the IWW became a potent voice against America’s entry into World War I, which it viewed as a conflict in which the workers of one nation were fighting the workers of another for the profit of capitalists. Thus the IWW became 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. The next year 101 of them went on trial. All were convicted and received prison sentences of up to 20 years. Government repression effectively destroyed the IWW.

Government and big business had learned a lesson: An uncontrolled labor movement was unpredictable, politically dangerous, and bad for commerce. This was particularly true in the early 1930s, when Roosevelt swept into power in the wake of the Great Depression.

In 1929 the stock market collapsed and people panicked, causing runs on banks and massive bank failures. Unemployment rose as high as 25 percent while the personal income of those still employed declined. Large cities were hard hit, especially those dependent on heavy industries. Rural areas were devastated as crop prices tumbled and a severe drought turned farmland into dust. Hundreds of thousands of people were driven from their homes in search of any work whatsoever. Still other people left because of bank foreclosures.

A massive and migrant army of unemployed is a formula for labor revolt. Thus Roosevelt offered a New Deal to American workers; it was a series of interlocking economic programs implemented between 1933 and 1936. Through them the federal government’s regulation of all aspects of commerce increased dramatically; its purpose was to create stability, especially in the area of labor.

This is the context into which the modern union, or big labor, was born—a governmental response to labor upheaval and a big-business desire for regulatory stability. The business elite may not have liked every aspect of New Deal labor policies, but it had long favored Roosevelt’s general approach to labor relations.

The clout of a voluntary union comes from the individual members who assign their rights of contract over to a representative of the collective. In modern unions the opposite happens. Some members may join freely but they cannot later negotiate for themselves if they disagree with the union. Other members may be required to join as a condition of working in a specific industry or at a unionized company. Thus the modern union is the opposite of a grassroots organization; it strips individual workers of the rights of free non-association and of contract. The modern union—whether of the public or private sector—is the antithesis of workers’ rights.

In January the Bureau of Labor Statistics released union data that are almost all bad news for union bosses. In 2010 only 6.9 percent of people employed in the private sector were union members. In 2009 the figure was 7.2 percent. Unions now have a smaller market share of private-sector workers than they did prior to the enactment of the NLRA. Cronies to the rescue.

One union crony, Secretary of Labor Hilda Solis, is trying her best to revive private-sector unions. Her Strategic Plan FY 2011–16 promises “good jobs for everyone.” She defines “good jobs” in nine bullet points that echo union organizing propaganda. Later in the document she openly declares that “union jobs are, by and large, good jobs.” While there may be a few good union-free jobs, most union jobs are by definition good. So at least through 2016 the Department of Labor (DOL) will act as the Department for the Propagation of Unions. The principal means for achieving this fevered vision are spelled out in an accompanying document that describes a “new approach” to deploying DOL’s six “labor protection agencies” (most importantly OSHA, the Office of Labor-Management Standards, the Wage and Hour Division, and the Office of Federal Contract Compliance Programs) to harass union-free employers. With scarce resources, Solis says, DOL can only closely monitor enterprises that are “most likely” to fall short of DOL standards. Since union jobs are defined as “good jobs,” one naturally infers that many union-free enterprises will be hit hard by “labor protection” enforcers determined to increase the cost of remaining union-free.

In my March column, I discussed another union crony, Craig Becker, who holds a recess appointment to the National Labor Relations Board (NLRB). Becker holds openly pro-union, anti-worker, and anti-management sentiments. He has even written that no worker should be able to refuse to be represented by a union. Two days after the State of the Union address, wherein President Obama urged us all to seize our “Sputnik moment,” he resubmitted Becker’s name to the Senate for confirmation to a full five-year term on the NLRB. He may have a point. Like Sputnik, Becker is a relic of the socialist past. I doubt the Senate will confirm the nomination, but Obama can simply keep Becker on the Board by another recess appointment at the end of this year. As I wrote, Becker and his two sympathizers (Wilma Liebman and Mark Pearce) on the five-member NLRB are determined to impose card-check certification of unions through creative interpretation of the labor law.

They are creative on other questions as well. For example, in the Roundy’s Supermarket case the Board is struggling to find something in the NLRA that will justify allowing union organizers to trespass on private property with the specific intent of herding unwilling workers into the ranks of union dues payers. The unions are arguing that because Roundy’s allows the Girl Scouts to sell cookies and the Salvation Army to collect contributions on its property, it must also allow union organizers to sell their snake oil on its property. That argument makes Becker tingle all over.

Prosecutions and Waivers

Yet another union crony is Lafe Solomon, the NLRB’s acting general counsel. (He is “acting” because Obama couldn’t get his appointment confirmed by the Senate.) The general counsel is independent of the NLRB. His job is to investigate and prosecute alleged unfair labor practices and to supervise the NLRB’s field offices in their processing of cases. Last November voters in four states—Arizona, South Carolina, South Dakota, and Utah—adopted amendments to their respective state constitutions to make card-check union certification illegal. Solomon immediately sued all four states, asserting that the NLRA preempts state voters. Another example of Solomon’s hyperactivity on behalf of union bosses is his General Counsel Memorandum 11-04, issued in January. He directed all field offices to put default language in all settlement agreements between unions and employers which stipulates that if the employer is alleged to have violated any part of the agreement, he is to be considered guilty of all the allegations brought against him in the initial complaint that led to the settlement agreement.

Health and Human Services Secretary Kathleen Sebelius is yet another union crony. Obamacare gives her power to determine the rules and regulations that are and will be imposed in the health care and health insurance markets. Her decision-making process includes the interests of unions. For example, Sebelius has the power to grant waivers to the burdens of Obamacare to favored supplicants. Forty percent of the approximately 1,000 waivers she has granted have been given directly to unions, and many more have been given to enterprises on which unions depend for dues revenue.

Of course, Obama is the unions’ most important crony. The “structured bankruptcies” imposed by Obama on General Motors and Chrysler in the spring of 2009 were little more than egregious bailouts of the United Auto Workers Union (UAW), which put taxpayers on the hook for $60 billion. The stockholders and bondholders of those two companies were sacrificed to keep the UAW viable. GM and Chrysler had to be kept going because the majority of UAW dues payers worked there. The government seized 60 percent ownership of GM and bestowed another 17.5 percent ownership on the union. With its principal crony in charge, the UAW knows GM will be run to maximize the flow of union dues. Thanks to Obama the UAW now owns 55 percent of Chrysler. Chrysler no longer employs workers to make cars; it makes cars to employ dues-paying workers. Another example of Obama as a union crony is the $53 billion he wants to spend on high-speed rail. Because of project labor agreements and the Davis-Bacon Act, most of the people employed in this silly, wasteful, and destructive endeavor will be union dues payers.

In 2010, 36.7 percent of government workers were union members. A year earlier the figure was 37.4 percent. While government employees are only 17 percent of all employed people, government employee union members now are 52 percent of all union members. Crony unionism works in the government sector as well as the private sector. That will be the subject of my next column.

Is the governor’s proposal really an assault on human rights, as advocates of the Wisconsin state employees allege? (Their raucous protests at the state capitol were compared to rebellions in the Middle East.)

A few basics: In a freed market—meaning no privileges, no bailouts, no legal barriers to competition (domestic or foreign), no patents, no protected banking cartel, no regulatory impediments to self-employment, no vast tracts of government-held land—workers would be free to form voluntary associations called unions and business owners would be free to deal with them or not. If not, workers would be free to use nonviolent methods to gain recognition for their unions, including strike threats, boycotts, and sympathy strikes, as well as lesser measures. Violence by any party against any peaceful person would be illegitimate. Freedom of association would be complete, and coerced association would be beyond the pale.

Under such circumstances, everyone’s demands would be tempered by two powerful factors: freedom and competition. Pay workers too little, and they would be bid away by rivals or take up self-employment. Pay them too much, and rivals would attract customers with lower prices. Demand too high a wage, and risk losing out to someone else willing to work for less. Market rivalry would protect everyone from abuse, which is why competition—endless hosannas to it notwithstanding—is usually the target of government intervention.

Regarding government workers, it is a grave mistake to treat so-called public employment like other employment. Governments are monopolies that get their revenue by force, not through voluntary exchange. Thus they don’t face the market test of free competition, and they lack key price information with which to engage in economic calculation. The consequences of this difference are considerable.

As Freeman columnist Charles Baird notes, when government negotiates terms with employees, the parties are coconspirators in the looting of captive taxpayers. (Government employees aren’t taxpayers; they are tax-consumers.) Fundamentally they are not rivals but rather accomplices with a harmony of interests contrary to those of the taxpayers. This is aggravated by the fact that those unions are powerful political actors and rich sources of campaign contributions (the ultimate source of which is the taxpayers) and manpower. A politician negotiating with a government union whose election support he seeks is unlikely to have the taxpayers’ interest uppermost in mind.

Would the working conditions of state workers become intolerable if their unions were restricted? Not likely. But if they did, would it really be so bad if state governments had trouble finding employees?

So, does this mean that free-market advocates should side with the governor of Wisconsin? Actually, no.

State governments are in trouble because they spent profligately when revenues were rolling in and now can’t meet the pension and other obligations they’ve imposed on the taxpayers. As a result, they face a crisis of legitimacy. Some governors realize this and are trying to save the discredited system by trimming spending (for now) and making political hay by resisting the unions. The fiscal hawks even tout cutbacks as ways to produce more revenue in the future. Rarely do you hear a governor call for the shedding and demonopolization of functions like education. So this is largely a fight over how to preserve and divide the tax spoils.

* * *

What’s the Federal Reserve up to? The business news is abuzz with insider lingo like QE2, but what does it all mean? Ivan Pongracic, Jr., has been keeping close watch on what we like to call the Bureau of Counterfeiting.

Many people think the Fed is a private bank owned by the country’s bankers, who use it to profit off the American people. Hold on, Warren Gibson says. The Fed is bad enough without making up stories about it.

Imagine an honest child running a lemonade stand. Now imagine a bully who’s constantly proclaiming his good intentions as he puts the screws to the first child. Roger Koopman thinks this describes much of the U.S. economy.

Believing that government can manage an economy is like believing in leprechauns and unicorns, yet despite overwhelming evidence, people continue to do it. James Payne tries to figure out why.

Adam Smith is famous for his “invisible hand” metaphor, but he mentions it only once in each of his books—strangely, right about in the middle of each. Is there any significance to this? Mark Skousen thinks so.

Egyptians drove a dictator from power last winter, inspiring oppressed people throughout the Middle East and North Africa. What accounts for the sudden uprising after 30 years of subjugation? Nouh El Harmouzi traces its roots.

China is growing economically but not politically. The economy has been liberalized, but the country is still in the grip of a central government run by the Chinese Communist Party. James Dorn discusses China’s future in light of this contradiction.

When world trade revived after the fall of the Roman Empire, merchants from diverse cultures and countries needed a common legal system to peacefully resolve their contract disputes. What did they do? They generated their own—without government. Peter Leeson and Daniel Smith analyze the Law Merchant.

No one wants tainted food, but what’s the best way to prevent it: competition or government regulation? Speaking from experience, Paul Schwennesen makes the case for competition.

A lawsuit against Walmart could dramatically and unreasonably expand the number of class-action suits unless reversed by the U.S. Supreme Court. Wendy McElroy has the details.

Our columnists provide a cornucopia of keen insights. Lawrence Reed elaborates the benefits of competition. Donald Boudreaux debunks vulgar Keynesianism. Thomas Szasz undermines the psychiatric explanation for the attempted murder of a congresswoman. Burton Folsom, Jr., reviews the history of the income tax. John Stossel celebrates spontaneous order. Walter Williams scrutinizes poverty. And Aeon Skoble, reading the claim that war and taxes make America great, protests, “It Just Ain’t So!”

Our reviewers report on books covering the financial crisis, traffic jams, secular religions, and regulation.

The right question is not whether unions are good or bad. A union is a voluntary association of employees that attempts to increase the compensation of its members by bargaining collectively with an employer. No one should object to such an association, nor to its desire to improve its members’ welfare. Unions per se are neither good nor bad.

The right question, instead, is whether policy should attempt to give unions more power than they would have under laissez faire. To answer that question, consider the economic effects of such policies.

Without help from policy, unions might still form and attempt to bargain collectively, and some employers might agree because they find collective bargaining easier than negotiating compensation with every employee. The ability of these “free market” unions to increase wages, however, would be modest: if their demands implied compensation much above the individually negotiated levels, employers would just refuse to bargain with unions.

But this outcome – in which unions have little effect on wages and benefits – is exactly what economic efficiency demands. Absent policy protection, employers will hire additional labor when the value of the extra output this labor can produce exceeds the compensation the labor would require to voluntarily supply this effort. Any policy that raise labor’s cost above this level means that employers will hire fewer people and produce an inefficiently low level of output, or produce in an inefficient manner by substituting relatively expensive capital for what could be relatively cheap labor.

Given this economic reality, why does anyone support policies that protect unions?

Presumably, to redistribute income to union members. Protections for unions indeed have this effect, but this kind of redistribution makes no sense.

Union protections do not help the truly poor; they raise the wage of those who would earn a moderate wage without union protections. Indeed, by encouraging firms to hire fewer people, unions mean increased income for some but a zero income for others, thus exacerbating poverty. In extreme cases, union protections drive businesses overseas in search of cheaper labor, meaning large reductions in employment.

Union protections also raise the cost of goods and services in unionized sectors by increasing the cost of production. This means that everyone, including the poor, face higher prices for cars, houses, transportation, and so on. In the public arena, union protections mean higher costs of government services, which adversely affects everyone but especially the poor.

The bottom line is that government policy should not protect unions in any way. This means no requirements for employers to bargain collectively, no rules that force all employees to be covered by union contracts, and no impediments to hiring non-union labor. Similarly, it means no restrictions on firing strikers, or closing plants, or hiring replacement workers.

Jeffrey Miron is Senior Lecturer and Director of Undergraduate Studies at Harvard University and Senior Fellow at the Cato Institute. Miron blogs at http://jeffreymiron.com and is the author of Libertarianism, from A to Z.

The 112th Congress is not likely to enact the sort of changes to American union law preferred by the bosses of the Service Employees International Union (SEIU), but Obama is very likely to try to do so through administrative and executive fiat. As Shelby Steele says, Obama’s “policymaking has been grandiose, thoughtless and bullying.” Two non-union examples (mine not Steele’s): Obama, when faced by Senate opposition to his grandiose cap-and-tax war against carbon, deliberately went around Congress to his thoughtlessly green appointees in the EPA to attack carbon through administrative fiat. Again, when faced by two court decisions that told him he could not shut down offshore oil drilling in the Gulf of Mexico, he deliberately went around the court decisions to his EPA and his Interior Department effectively to prevent drilling by holding up the permitting process.

The five-member National Labor Relations Board (NLRB) is appointed by the president, with concurrence of the Senate, to five-year terms. At this writing there are only four members. Three of them—Wilma Liebman, Brian Hayes, and Mark Pearce—are serving Senate-approved terms. Liebman, the chairman of the Board, is a former union lawyer with a long record of serving the interests of unions. Her term expires August 27. Obama may reappoint her, but the new Senate may not go along. While in private practice Hayes represented management interests in labor disputes. His term expires in 2015. In private practice Pearce represented union interests in labor disputes. His term also expires in 2015.

Becker Versus Workers

The other member, Craig Becker, was never approved by the Senate. He is on the Board because in 2010 Obama used his recess appointment power to get around Senate confirmation. He may have to do the same to keep Liebman on the Board when her term expires. Becker is unique in his pro-union, anti-worker sympathies. As I will show below, he is an Obama kind of guy. While a package deal between Obama and sufficient Senate Republicans involving Liebman and a Republican appointee to fill the fifth seat may be put together, there is no way Becker can avoid a Senate filibuster against his appointment to a regular term.

Right now there are three reliably pro-union votes on the NLRB. They can do what they want in each case that comes before them. The imminent danger to worker freedom is best understood by examining the views of the most articulate and forceful of the three—Becker. When he was appointed, Becker was associate general counsel to the SEIU. Earlier, as a professor of law, he published many articles in scholarly journals in which he promulgated his pro-union vision.

He doesn’t think any worker should be allowed to be union-free. In his own words, “Just as U.S. citizens cannot opt against having a congressman, workers should not be able to choose against having a union as their monopoly-bargaining agent.” Apart from the obvious rejoinder that unions are not governments, Becker, like Obama, doesn’t believe in the consent of the governed. They are Mountaintop people—that is, elitists.

In a 1993 article in the University of Minnesota Law Review, Becker argued that existing union law can and should be interpreted to strip employers of any “legally cognizable interest” in the process by which their employees unionize. When faced with aggression, employers should be forced not to resist. Just after Obama’s inauguration, Becker composed executive orders that the President then imposed on workers and employers. For example, if a union-impaired federal contractor supplying services to the federal government loses a contract to a union-free firm, the latter must extend preferential hiring offers to the unionized workers of the former and recognize and bargain with the unions representing those workers.

Reversing Course

Last August 27, Becker, Liebman, and Pearce voted to reconsider two earlier NLRB cases that displeased union bosses. Existing law allows, but does not compel, an employer to turn his employees over to monopoly-bargaining unions on the basis of card check. In Dana Corp. (2007), the NLRB said that such workers had 45 days to request an election to void a card-check recognition. MV Transportation (2002) addressed the following: Suppose firm A is unionized and has to go out of business because it cannot effectively compete. Union-free Firm B buys A’s assets and hires workers, a majority of whom are former, unionized employees of A. Does Firm B have to recognize those workers’ union as a monopoly-bargaining agent for all of B’s employees? In 2002 the NLRB said that workers themselves should decide the question by an election.

In both cases the NLRB decided that a secret-ballot election, not administrative fiat, should determine the fate of workers. Now a majority of the Board wants to “reconsider” whether the two cases were correctly decided. It appears that Liebman and Pearce want to join Becker and Obama on the Mountaintop. When this NLRB reopens these two cases it is likely to reverse both, and those reversals will be the first steps on the road to compulsory private-sector card check without Congress. I have no doubt that Becker and the others will try to take the whole trip.

As voters across the country gave us the new Congress, voters in Arizona (Prop. 113), South Carolina (Amendment 2), South Dakota (Amendment K), and Utah (Amendment A) adopted amendments to their respective state constitutions that prohibit compulsory card check whether imposed by Congress or from the Mountaintop. States control the rules of unionism as they pertain to their state and local government employees, so these newly adopted amendments will protect those employees from card check. However, the National Labor Relations Act (NLRA) sets the rules for private-sector workers, and my guess is that federal courts will decide federal law preempts state law on card check.

In sum, David wins the bet, but workers are still exposed to the tyranny of the Mountaintop. The short-run consolation for workers who want to become and remain union-free is that a future NLRB can reverse what the existing Board does. The better, long-run, solution is the permanent repeal of the NLRA in favor of genuinely voluntary unionism.

The politicians have dug us a nice hole.

FEE Timely Classic
“Government Workers Are America’s New Elite” by Steven Greenhut