Collective Bargaining is Destroying Us

November 8, 2011



The National Labor Relations Act was a huge mistake. Collective bargaining provides no benefit to society and costs hundreds of billions of dollars a year. And it poisons U.S. politics.

The main argument for collective bargaining is that it increases workers' wages. It does, but that increase comes out of the pockets of others, and I don't mean the employers. Collectively bargained wage increases result in price increases. Higher prices cause sales to go down, resulting in layoffs. The sales that do occur take more money from customers, who then have less to spend on other stuff, hurting both the customer and other businesses.

An arbitrary wage increase - any wage increase not the result of market forces – must be paid for elsewhere. If that were not true, we could simply set the minimum wage at $50 and move everyone into the upper class. Real wages increase only when production increases, and that happens when new businesses are started or more people go to work or when productivity increases as a result of advances in technology or increased worker skills. This is the way it is and always has been.

The belief that unions are beneficial comes from what economist Henry Hazlitt called “the fallacy of overlooking secondary consequences." Hazlitt said there is a tendency for people to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy would be on all groups. In other words, intellectual laziness.

It also comes from union-produced propaganda financed by union dues deducted from workers’ paychecks.  And the myth is perpetuated by Democratic politicians on whom are bestowed over 90% of union political spending.

The Costs

Here are some of the costs that can be blamed on collective bargaining:

  • Lost production due to unemployment.

  • Higher taxes and or curtailed government services made necessary by overpaid public employees.

  • Social costs associated with the poverty and desperation caused by unemployment.

  • Lost production due to poorly-educated children coming out of schools where unions block steps to improve the quality of teachers and interfere with attempts to find innovative solutions.

  • Governmental agencies that exist only because of collective bargaining, including federal agencies such as the National Labor Relations Board, the Office of Labor-Management Standards, the Federal Labor Relations Authority, the Federal Mediation and Conciliation Service and state agencies such as the Michigan Employment Relations Commission and the Office of the State Employer.

  • Union dues.

  • Salaries paid to "release time employees" - employees who the union contract allows to devote all or part of their time to union functions.

  • Lost production due to strikes.

  • "Make work" schemes such as the railroad industry regulation that, for 40 years after coal-fired steam locomotives were replaced by diesel, required each train to have a fireman.

  • The legal costs and lost production for management and union representatives involved in the collective bargaining process itself.

Dysfunctional Government

Collective bargaining also contributes to the intense animosity between the Republican and Democratic parties, which makes it impossible for Congress to act for the good of the country. Democrats, blinded by the support they get from unions for their campaigns and their liberal agenda, don't see the illogic of collective bargaining. They eagerly go along with anything organized labor wants. Republicans, on the other hand, have several reasons to hate unions. One is the support they give to Democrats. Another is that they interfere with the right of businesses to operate freely. And some Republicans are actually smart enough to understand that the whole idea of collective bargaining is idiotic - that the notion that employers should be forced to negotiate compensation with employee groups is ridiculous. They understand that a free labor market maximizes income and distributes it fairly.

It may be the most contentious issue separating Democrats and Republicans. A good example of what drives Republicans crazy was the National Labor Relations Board's decision this year to hear a request from Boeing's machinist union (an AFL-CIO affiliate) in Washington state to block construction of a new factory in South Carolina, a right-to-work state. The union contends that by building the factory in South Carolina, where there is no machinist union presence, Boeing is interfering with the union's right to strike. A ridiculous action by the NLRB, and it is happening because President Obama put Craig Becker, a former lawyer for the AFL-CIO and SEIU, on the Board via a recess appointment at the end of 2009.

I am pretty damned liberal. I'm in favor of gay marriage, women's right to abortion, gun control and legalization of drugs. I am an atheist. I believe that human activity contributes to global warming and I support a carbon tax - it's not like we couldn't use the revenue. But collective bargaining has made no sense to me since I was in my teens, and my experience and research since then has confirmed those early inclinations.

I think there are a lot of Democrats out there who don't really like unions and have serious doubts about collective bargaining, and I think there are a lot of Republicans who are social liberals and economic conservatives - they don't like unions, but are uncomfortable with conservative Republican stances on abortion, gay rights, gun control and the environment. The views of two groups are actually pretty similar. They could peacefully co-exist, or even join in a new political party. If the National Labor Relations Act was repealed, making collective bargaining voluntary, much of the animosity between the Republican and Democratic parties would fade away and they might be able to work together again.