The View From 1776
Tuesday, January 04, 2011
Labor Unions’ Zero Sum Game
Labor unions gain their higher-than-free-market wages and benefits by raising prices consumers must pay and by reducing wages and benefits that can be paid to non-union labor.
The ineluctable fact is that organized labor feather-bedding and restrictive work rules reduce production efficiency and output levels per labor hour.
This always has meant reduced profits for employers and fewer jobs and lower pay for non-union workers. There is an ultimate limit to labor union extortion in the private sector: bankruptcy of the employer, as we saw in the case of Chrysler and Government Motors.
No such limit exists in the public employees sector. Public employees’ unions have raised the level of the game to winner-take-all stakes. They control the election of their employers, the politicians, via election campaign contributions and free campaign work.
Today public employees’ labor unions indirectly control the economy. We taxpayers work for them.
That may be about to change.
Read William McGurn’s column in the January 4, 2011, edition of the Wall Street Journal.
Labor’s Coming Class War
Private-sector union workers begin to notice that their job prospects are at risk from public-employee union contracts.
Jeffrey Brown of PBS’s “NewsHour” recently summed up the year’s economic performance by invoking the most overworked chestnut of modern American punditry: “the disconnect . . . between Main Street and Wall Street.”
The notion that Wall Street and Main Street are fundamentally at odds with one another remains a popular orthodoxy. So much so that we may be missing the first stirrings of a true American class war: between workers in government unions and their union counterparts in the private sector.
In theory, of course, organized labor is all about fraternal solidarity. For many years, it is true, private-sector unions supported collective-bargaining rights and better benefits for government workers, while public-employee unions supported the private-sector unions in their opposition to legislation such as the North American Free Trade Agreement in the 1990s.
Suddenly, it’s a different world. In this recession, for example, construction workers are suffering from unemployment levels roughly double the national rate, according to a recent analysis of federal jobs data by the Associated General Contractors of America. They are relearning, the hard way, that without a growing economy, all the labor-friendly laws and regulations in the world won’t keep them working.
What’s more, “blue-collar union workers are beginning to appreciate that the generous pensions and health benefits going to their counterparts in state and local government are coming out of their pockets,” says Steven Malanga, a senior fellow at the Manhattan Institute. “Not only that, they are beginning to understand the dysfunctional relationship between collective bargaining for government employees and their own job prospects.”
The signs of this new awakening are gathering. In New Jersey, Gov. Chris Christie rightly becomes a YouTube sensation for taking on his state’s obstinate public-sector unions. The more interesting story, however, may be the president of the New Jersey Senate, Steve Sweeney