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A Christian View of Labor Unions

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Tags Free MarketsU.S. Economy

05/01/2018

Within certain segments of the Christian community, primarily the Christian Reformed tradition imported from the Netherlands, there is considerable support for the creation of Christian labor unions as an alternative to the secular unions of today. Outside of the Christian Reformed circles, there is almost no discussion of this program within churches. One or two denominations, most notably the Seventh Day Adventists, discourage members from belonging to labor unions. On the whole, the trade union issue is not discussed by churches in any official capacity.

Labor unions are not the major part of the total American labor force, contrary to popular opinion. They are important in the large industries such as autos, steel, and entertainment, but only about 25% of the American labor force belongs to any union, and many of these are weak, rather insignificant organizations. As l hope to demonstrate, it is almost impossible for trade unionism ever to control over half of a nation's labor force in a democratic country, and where unions control more than this, labor mobility will be reduced markedly.

Do Unions Raise Wages? (Whose? How?)

Unquestionably they do. Do monopolies in business raise prices? Unquestionably they do. Labor unions raise wages in exactly the same way that a business monopoly raises prices: by artificially restricting the supply of a particular resource. Over the long run, with rare exceptions, no monopolist can keep prices raised in this fashion apart from direct government interference into the market. If the government keeps out competitors, then it is possible for monopolists to keep prices above what they would have been in a free market for years or even decades. In the case of diamonds, the DeBeers oligopoly has kept diamond prices up throughout the twentieth century, but it takes the collusion of the South African government to maintain this monopoly (or at least it took such collusion originally).

The economics of monopoly pricing is the foundation of all modern trade unionism. This is either not understood by the supporters of trade unions, or else it is rejected as irrelevant. You will search your days in vain trying to find a supporter of trade unions who is also a supporter of business monopolies, yet the economics of each is identical. The labor union achieves higher wages for its members by excluding non-members from access to the competition for the available jobs. In other words, those who are excluded must seek employment in occupations that they regard as second-best. They bear the primary burden in the marketplace; they are the ones who pay the heaviest price for the higher than market wages enjoyed by those inside the union.

How can unions exclude outsiders from the bidding process? There are many ways, all used effectively by unions over the decades. First, there is raw power. They beat up their competitors. They throw paint bombs (paper bags filled with paint) at the homes of their competitors. They threaten the children of their competitors. Their children exclude the children of the competitors from social activities at school, meaning public (government) school. They shout "scab" from their picket lines at strikebreakers. (Strange, isn't it, that those who defend labor unions never shout "scab" at Ford salesmen who are challenging the so-called monopoly of General Motors?)

Second, and most effective, trade unionists have been able to convince legislators to enact legislation that excludes non-union workers whenever 50% plus one worker vote to choose a particular labor union as the sole bargaining agent in a plant or industry or profession. Professional associations first got such state legislation passed, most notably lawyers, physicians, and dentists. Then, in 1935, the Wagner Act was passed at the national level. It established the National Labor Relations Board (NLRB), a consistently pro-union bureaucratic Federal agency. As far as the favored unions are concerned, 75% of all workers are potential "scabs," and the NLRB keeps most of them in their second-choice jobs.

There is a third less evident, means of insuring labor union monopoly pricing. This is minimum wage legislation. This legislation is always supported by trade union officials, whose members are always earning wages higher than the proposed minimum wage. This legislation sees to it that regions that have less developed unions, such as the South -- in fact, primarily the South -- cannot attract industry so easily from the more heavily unionized Northeast. The minimum wage was the primary means of warfare by unions against non-union workers after World War II until very recently. It still may be the primary weapon. The primary loser is, of course, the urban teenage male black, who cannot get into the northern union, or migrate easily to the South, or offer services to employers that are worth the minimum wage.

Employers pay higher wages than the market would have dictated when their labor force is unionized. Of course, employers outside union domination pay lower wages, since they are not compelled by competitive market forces to bid labor away from unionized firms. Since 75% or more of all workers are not in a union, they cannot gain legal access to the labor markets where 25% of the workers are employed. They have to work elsewhere. Thus, nun-unionized employers are granted a subsidy from the government: lower priced workers.

When was the last time you heard a supporter of labor unions argue that the reason why unions are wonderful is because they grant a subsidy to the employers who employ 75% of the American labor force? Yet this is precisely the economic effect of compulsory, government-enforced trade unionism.

The Law of Market Competition

"Buyers compete against other buyers. Sellers compete against other sellers." Not that difficult a concept, right? Apparently, it is an extremely difficult concept in economics, if we are to judge by the arguments people use in favor of increased government intervention into the free market.

Buyers of labor services compete against other buyers and potential buyers of similar (substitutable) labor services. This means that employers are in constant competition against other employers in the labor markets. They are forced to bid up the price of labor until the point that they can no longer afford to hire any more laborers, or, in the case of the most successful bidder, until all the competition has dropped out of the field. This is the explanation for the curious phenomenon that labor unions subsidize non-unionized industries that are buying labor services from those excluded by law from competing for jobs in unionized industries. The buyers of labor in unionized industries have been compelled by law to depart from the "labor auction" in which 75% of American workers are offering their services to the highest bidder.

On the other hand, sellers compete against sellers. This means that workers who are harmed by trade unionism are those excluded from union membership. They are denied the right to compete for jobs in certain segments of the economy. They have been denied their right to bid, just as the employers in the unionized markets have been denied their right to bid.

The Biblical View of Work

The biblical view of man is work-oriented. It affirms that man is made in the image of God (Gen. 1:26). It affirms that man was placed on the earth to subdue it to the glory of God (Gen. 1:28; 9:1-7). Man is to define himself in terms of his theocentric labor. Unquestionably, the compulsory labor union denies two groups the right to fulfill this cultural mandate: buyers of labor services whose firms are unionized and sellers of labor services who cannot gain admission into trade unions. Coercion has been applied by union members or the civil government which eliminates their right to bid.

When the phrase "right to work laws" was coined in the early 1940's, the anti-unionism forces gained an effective weapon. Yet in terms of biblical economics, it is an illegitimate concept. It is not each man's right to work. It is his duty to work. What is his lawful right is his right to compete for the job he wants, or his right to compete for the labor services he wishes to purchase. Admittedly, a "right to compete law" lacks the same political appeal. The "right to bid" sounds even less effective. Yet it is this right which we must defend as free men. No one has a right to my job, including me. Anyone should have the right to compete for my job, including me, and l have the right to compete for his.

Strikes

The strike is absolutely immoral, given modern law. The striker argues that he has the right not to work, but his employer does not have the right to hire someone to replace him. Modern compulsory trade unionism is based on the wholly immoral premise that the worker owns his job (can exclude others from the position) even though he refuses to work for his employer. To add insult to immorality, most trade unionists also want government food stamps, unemployment benefits (tax- free), and other forms of taxpayer-financed benefits while they are striking, The consumer is supposed to finance his own funeral, and the coercion of civil law increases further.

Obviously, nobody inside the union could reap monopoly wages if everyone were in the union who wanted to compete for the available jobs. The union would then become economically superfluous. It is only because of the artificial barriers set up against other workers that the union members reap their monopoly gains. This is the reason why, economically speaking, the trade union movement in its present, coercive form will never be more than a minority movement. The union needs the majority of workers outside the union movement. Since the union membership has to have victims among the working class in order to reap their monopoly returns.

Voluntary Unions

Once a man's contract has expired, he should have the right to walk off the job if he wants to. He should not have the right to keep his employer from hiring a replacement. Similarly, any employer should have the right to fire a worker, once the contract has expired. But he should not have the right to exclude that worker from competing in other labor markets. Trade unions interfere with these rights. They prohibit men from working out their salvation with fear and trembling. They deny the right of others to fulfill the cultural mandate (Gen. 1:28; 9:1-7) before God and before men.

Voluntary unionism is legitimate, so long as the civil government does not do more than enforce the contracts agreed to by employers and laborers. A union can help to spread information about the availability elsewhere of better wages or better jobs, thereby helping its members to keep alert to the true value of the services they are offering for sale. Unions can be self-help societies. But when compulsory, under coercive civil law, they are immoral. They must be recognized as such by orthodox Christians.

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This article previously appeared at GaryNorth.com.

For further reading, see Prof. Sylvester Petro's many books, including Labor Policy of the Free Society, Power Unlimited: The Corruption of Union Leadership, The Kohler Strike, and The Kingsport Strike. Also of interest: W.H. Hutt, The Strike Threat System.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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