On labor day it is good to look back on the impacts of unions in America and the most important piece of pro-union legislation ever passed by congress.  In 1935 the FDR administration passed the Wagner Act into law. Before this law a man’s private property was his to deal with as he pleased and it was up to him whether to deal with others or not. After the Wagner Act all this went away if the man in question owned a business. It was this act that set up the National Labor Relations Board (NLRB). The NLRB serves as judge jury and executioner in all matters union when it comes to companies. It has been given the right to tell business owners what to do on their own property and what they can and must do as far as their dealings with unions and unionization. It was no coincidence that only 5 years after the Wagner Act union membership had more then doubled. It was a direct result of having union hardline tactics being sanctioned by the government. It put businesses, especially the borderline ones, on notice there days could be numbered. Two years later, just as the economy seemed to be waking up, it fell on its face again. To be sure the Wagner Act was not the only culprit, other governmental and Federal Reserve actions contributed, but it was none the less a major factor. The real question is the effect of unions been a net positive or a net negative?

The popular history tells us that in pre-union America there was no middle class and an oligarchy of unholy robber barons got rich forcing children to work for slave wages. It has to be true because we hear it so often and we even read it in our history books. The only problem is almost none of it is true. While unions have historically claimed to be responsible for much of the increase in the size of the middle class and higher incomes overall the facts just do not bear it out. The middle class was around and expanding long before unions had any impact on America. The middle class is in reality a product of the robber barons the unions love to malign. It was cheap steal, lantern oil, and wood produced by the likes of Carnegie and Rockefeller that gave rise to the middle class that characterized the Victorian era. Cheap raw materials made a slew of new inventions profitable and made things available to the masses that previous generations could not of even dreamed of. Large Victorian homes and farmhouses made from cheap dimensional lumber built with high quality tools from cheap steal are a hallmark of the nineteenth century middle class that are still with us. People being clothed by cheap clothes sewed on Singer sewing machines and fed by cheap food made possible by machines like the McCormick Reaper drove a ever increasing standard of living. Middle class America is a product of what should be called the age of the entrepreneur. Of course it all happened with hardly a union member in sight.

The fact is there is no evidence that the middle class expanded in relation to increased unionization. The opposite actually seems to be true. The progressive era saw a rapid expansion in unionization but little expansion in the middle class. The roaring 20’s saw expansion in the middle class and a decrease in union activity. As unions grew in power in the 60’s and70’s the U.S. grew weaker and correspondingly as unions grew weaker in the 80’s and 90’s the U.S. economy grew stronger. This is hardly evidence of either unions being good or bad but it jives with economic studies that show union activity is often harmful to the overall economy. Unions often like to promote themselves as being able to defy the laws of economics and walk on proverbial water but the facts bear out that even they have to bend to the laws of economics.

Many believe unions had to have helped but that idea does not necessarily line up with the facts. Although it is a clear unions increase the wages of union members, it is not at all the case this has translated into higher wages to the populous on a whole. In fact basic economic principals would indicate the opposite would be true for non-union workers. As unions make labor more expensive employers are forced to make that labor more productive to pay for the increase in wages, which means less workers are needed to do the same job. It is not a coincidence that right after unions force higher wages on a employers that the business expand the use of labor saving equipment. This forces more people out of the union shops who then have to compete for other jobs. More workers looking for jobs forces down wages overall. This was born out in a book by Mary Bennett Peterson called The Regulated Consumer where she showed an average negative impact of 4% lower wages for non-union workers.  Richard K. Vedder, Ph.D. & Lowell E. Gallaway, Ph.D. in their study Do Unions Help the Economy? added to the fuel to the debate by showing a 1.24% GDP drop for each 1% increase in unionized labor. Other studies by the Michigan based Mackinac Center for Public Policy also came up with similar findings.  Laws of economics would suggest unions would also effect the cost of living resulting in a lowering of the standard of living. Studies of right to work states bear much of this out also. Right to Work laws prohibit union membership from being a requirement for employment. F. Howard Nelson working for The American Federation of Teachers showed in his Interstate Cost-of-Living Index showed unsurprisingly Right to Work states have a lower cost of living then other states. Robert Reed (University of Oklahoma) in his study of Right to Work on wages showed that when all economic factors are taken into account Right to Work states have higher average wages (basically the standard of living allowed by the average wage was higher).

Other claims made by unions are equally dubious when examined under the microscope of history. A bumper sticker popular among union members says “if you like the 40 hour work week thank a union worker.” The truth is the 40 hour work week and overtime were not union inspired. They were part of FDRs plan to get employers to spread jobs around. This was prior to the Wagner act and the rapid expansion of unions it inspired. In fact it is hard to find a single claim by unions that can be substantiated when compared to the actual facts.

One lament often heard, even from conservatives, is that unions may have been once needed but have outlived their usefulness. To back this up those saying it point to the abuses outlined by the muckrakers of the late nineteenth century. It is true a labor glut caused by unrestrained immigration meant that no matter how bad the working conditions someone was not only willing to take the job but also glad to have it. This encouraged some businesses trying to stay competitive with other companies to cut corners in ways that many times endangered workers health and even lives. The bad labor practices ended mainly because economic prosperity forced employers to compete for labor through wages and working conditions. Legislation like child labor laws also made an impact, unionization not so much. In fact successful unionization was a result of the same labor competition that was raising worker salaries and conditions, not the cause.

The truth is unions are mere money machines built more on myth then truth. They exist not for the benefit of workers, whom they force off payrolls, but for the benefit of the rich union bosses. Their mythology still holds much sway, especially in liberal circles. They hope for more successful unionization of the American workforce.  Unfortunately history has shown that like a salmon going upstream to reproduce success to unions has been deadly. Union successes end up either reducing employment in an industry to the point of being irrelevant (USW), drive businesses off shore or just drive them out of business all together. It is this self destructive nature of unions that causes them to rise and then fall as a percentage of the work force.

Today the NLRB is pushing for increased unionization in the U.S. They seem to want to create 1937 all over again even though this is something we can not afford right now. Unfortunately for Americans jobs are not all that high on the Obama administration’s and the NLRB’s agenda as shown by their attempt to shut down the new Boeing factory in South Carolina.

“The Conservative Mind”

If you like this Pass this on