Which is better for economic growth: Collective bargaining unions or right-to-work-laws?
Harvard economics professor Robert Barro argues that right to work laws are better for economic growth – which includes higher employment – than unions are:
Labor unions like to portray collective bargaining as a basic civil liberty, akin to the freedoms of speech, press, assembly and religion. For a teachers union, collective bargaining means that suppliers of teacher services to all public school systems in a state—or even across states—can collude with regard to acceptable wages, benefits and working conditions. An analogy for business would be for all providers of airline transportation to assemble to fix ticket prices, capacity and so on. From this perspective, collective bargaining on a broad scale is more similar to an antitrust violation than to a civil liberty.
In fact, labor unions were subject to U.S. antitrust laws in the Sherman Antitrust Act of 1890, which was first applied in 1894 to the American Railway Union. However, organized labor managed to obtain exemption from federal antitrust laws in subsequent legislation, notably the Clayton Antitrust Act of 1914 and the National Labor Relations Act of 1935.
Remarkably, labor unions are not only immune from antitrust laws but can also negotiate a “union shop,” which requires nonunion employees to join the union or pay nearly equivalent dues. Somehow, despite many attempts, organized labor has lacked the political power to repeal the key portion of the 1947 Taft Hartley Act that allowed states to pass right-to-work laws, which now prohibit the union shop in 22 states. From the standpoint of civil liberties, the individual right to work—without being forced to join a union or pay dues—has a much better claim than collective bargaining. (Not to mention that “right to work” has a much more pleasant, liberal sound than “collective bargaining.”) The push for right-to-work laws, which haven’t been enacted anywhere but Oklahoma over the last 20 years, seems about to take off.
The current pushback against labor-union power stems from the collision between overly generous benefits for public employees— notably for pensions and health care—and the fiscal crises of state and local governments. Teachers and other public-employee unions went too far in convincing weak or complicit state and local governments to agree to obligations, particularly defined-benefit pension plans, that created excessive burdens on taxpayers.
In recognition of this fiscal reality, even the unions and their Democratic allies in Wisconsin have agreed to Gov. Scott Walker’s proposed cutbacks of benefits, as long as he drops the restrictions on collective bargaining. The problem is that this “compromise” leaves intact the structure of strong public-employee unions that helped to create the unsustainable fiscal situation; after all, the next governor may have less fiscal discipline. A long-run solution requires a change in structure, for example, by restricting collective bargaining for public employees and, to go further, by introducing a right-to-work law.
There is evidence that right-to-work laws—or, more broadly, the pro-business policies offered by right-to-work states—matter for economic growth. In research published in 2000, economist Thomas Holmes of the University of Minnesota compared counties close to the border between states with and without right-to-work laws (thereby holding constant an array of factors related to geography and climate). He found that the cumulative growth of employment in manufacturing (the traditional area of union strength prior to the rise of public-employee unions) in the right-to-work states was 26 percentage points greater than that in the non-right-to-work states.
Make sure to read the whole thing. This may seem like a no-brainer argument, but you’d be surprised at the number of people who believe that union states actually spur more economic growth than the states that are staunchly right-to-work. For example, after you’re done with Professor Barro’s piece, read Obama’s boss AFL-CIO “leader” Richard Trumka’s “argument” about how all we need to do is raise taxes, rather than limit collective bargaining, to stimulate the economy and create jobs.
And, of course, this post wouldn’t be complete without mentioning a couple of other union-related stories:
1) Last night’s mindless Oscar nod to “union rights.” Not entirely unexpected, mind you, but nevertheless it’s just one more reason not to watch Hollywood “award shows.”
2) Fox News’ Mike Tobin, covering the big labor rallies in Madison, Wisconsin, was assaulted over the weekend and threatened with more as union thugs staged an angry chant against Fox News.
Where are the widespread calls by the mainstream media, liberal pundits, Democrat “leaders” – including President Obama – on the issue of the multiple New Tone/”civility” violations taking place at union rallies all across the country? Not.holding.my.breath. If this had been the Tea Party, on the other hand …