Reinventing America's Unions for the 21st Century

Edward Ring

Director, Water and Energy Policy

Edward Ring
September 2, 2014

Reinventing America's Unions for the 21st Century

Critics have suggested that leaders of the labor movement suffer from economic illiteracy that has made them the architects of their own demise. The unwillingness of unions to make concessions in the face of global competition starting in the 1960’s was a major factor in Americans losing millions of union jobs. In the present day, unions push for minimum wage hikes well beyond what inflation might justify (about $9.00 to $10.00 per hour), with “fight for fifteen” campaigns which, if successful, will carry the unintended consequences of higher unemployment and accelerated small-business failures. Today only about 7% of America’s private sector workers belong to unions.

One can also make the case that unions are becoming irrelevant because much of what they fought for is now enshrined in law. Labor laws protect workers from wrongful termination. OSHA standards ensure workplace safety. Social Security, Medicare, Medicaid, and a host of other social welfare programs all provide a safety net for the aged, disabled and unemployed. The Affordable Care Act, fraught with flaws that will hopefully either get repealed or replaced, at least guarantees anyone can purchase health insurance. Has the justification for unions in America largely withered away because of their successes?

What role, if any, should unions play in 21st century America?

The most difficult challenge to finding a consensus model for unions in 21st century America is the polarizing rhetoric that passes for discourse. Among pundits who are rewarded by the size of the audiences they can attract, or analysts and academics – of all persuasions – whose funding may hinge on how scrupulously they adhere to an ideological agenda, there are few incentives to search for common ground. But common ground exists.

The so-called left, embracing unions unconditionally, resisting nearly any sort of reform, needs to understand unions can exist, and even thrive, even if most of the proposed reforms were adopted. Right-to-work laws, for example, have actually resulted in rates of union membership increasing in some states. Right-to-work and non-exclusive representation are ways to both make unions more accountable and hence more relevant, at the same time as they fulfill some of the most cherished objectives of reformers.

Recent efforts by labor organizers to embrace new types of labor organizations, such as worker centers and partnerships with like-minded activist organizations, indicate growing recognition of the need for labor to evolve. The worker councils adopted in Germany – and rejected in America because of outdated NLRB restrictions – offer interesting elements of how unions may evolve. For labor leaders to pursue some of these new approaches at the same time as they accept right-to-work laws, and other reforms, might provide a common path forward.

On the other hand, the so-called right wing needs to better understand that the need for a labor movement of some sort remains urgent. The debate is just beginning over what may constitute an optimal political economy for Americans in an era of globalization, an aging population, unprecedented gains in productivity, and a scandalously overbuilt financial sector. Productive and competitive capitalism is good. Casino and crony capitalism is bad. Some level of government sponsored health and retirement security is good – incentive killing, bureaucracy enabling, efficiency destroying, financially bankrupting excessive entitlements are bad. Black and white world views may be comforting to those who hold them, and policies without underlying principals risk becoming rudderless monstrosities, but nonetheless, reality is nuanced.

Both left and right, but especially those on the left, need to recognize the clear distinction between a labor movement as exemplified by private sector unions – or whatever they may evolve into – and public sector unions. The unique problems of government unions are well documented; they elect their own bosses, they negotiate with an entity that is not required to earn a profit but instead compels taxpayers to give them money, they control the government which gives them the ability to intimidate their critics, and their agenda is inherently oriented towards bigger government regardless of whether or not bigger is better for the public at large.

A less understood but even more menacing aspect of public sector unions is their corrupting influence and symbiosis with the most powerful and monopolistic elements of the private sector. Large corporations benefit by working with government unions – their ability to comply with burdensome regulations allows them to eliminate smaller competitors. The financial sector makes hundreds of billions each year investing government union controlled pension fund assets, and by collecting fees to finance government deficits. Government unions and corporate monopolies alike benefit from social upheaval, because the adversity washes away critics and competitors. They are both threatened by disruptive innovation and limited government. To equate the labor movement of private individuals with the alleged labor movement of government employees is a misconception that, if not overcome, gravely threatens America’s prosperity and freedom.

A reformed, evolved labor movement, accountable to its membership, limited to the private sector, would have the ability to help reconstruct a centrist consensus in America – rejecting cronyism and embracing capitalist competition.

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Ed Ring is the executive director of the California Policy Center.

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