The Truth About Labor Day
By Gary Galles – 09/03/2007
Labor Day is supposed to honor all American workers. And every year, union Labor Day rhetoric does just that. Unfortunately, it then makes the false leap to the claim that unions advance the interests of all American working men and women, not just their members. In fact, despite unions’ pro-worker rhetoric, the effect of most union activities and union-backed policies is to harm most American workers. Unions succeed by preventing competition from other workers who are willing to do the same work for less. Those workers either become unemployed or must go elsewhere to find jobs, increasing the supply of labor services in non-union employment, pushing down wages for all workers in such jobs as a result. The resulting union wage premium does not come out of the pockets of employers as much as from the pockets of other workers, as a result. Since less than 10 percent of the American private-sector workers are unionized, this means that more than 90 percent of private-sector workers are injured by this most basic exercise of union power.
Anti-worker effects are also vividly illustrated by the history of union violence and threats against “non-cooperative” employees. There have been thousands of attacks against such workers in recent decades, and well more than 100 deaths.
Aware that their government protection against workers who are willing to do the same job for less stops at the border, unions have also been the primary movers behind government protectionism of all stripes. But protectionism undermines the interests of all those workers who would have gained from expanded exports, as well as those who, as consumers, would have gained from access to lower cost and superior quality imports.
There are many other ways unions have sold workers’ interests short. Their opposition killed the 1996 Teamwork for Employees and Management Act, which would have raised workers’ value to employers by putting their productivity-enhancing insights to better use, because such cooperation would not be controlled by unions. They have conducted campaigns to harass and regulate non-union apprenticeship programs out of existence, keeping non-union workers from acquiring the skills to earn a better living in order to stave off future competition for union workers. They have long undermined enforcement of the Supreme Court’s 1988 Beck decision that workers can withhold support for unions’ political activities, as well as spending over $100 million to defeat “paycheck protection” initiatives. Their support for the Davis-Bacon Act has inflated government construction costs for decades, raising the tax burden on all American workers. Similarly, they have been the primary opponents of privatization and other reforms that would improve government operations from education to poverty programs, but threaten their existing chokehold on those jobs. And all this has occurred even though more than a third of union members routinely vote against the positions their union leaders fund.
Unions are also major supporters of schemes that require higher taxes (and regulatory burdens, which act as taxes), at a time when the average American already spends more to fund government than on food, clothing and shelter combined. And because taxes reduce saving and investment, they also reduce the accumulation of capital, which is the source of increased productivity, they reducing workers’ future earning power.
American workers have accomplished incredible things in our history. There is nothing wrong with taking pride in those accomplishments this Labor Day. But there is something wrong with unions hijacking that pride by taking credit for what they did not do, especially when they claim that they represent all working men and women, when most of what they do and support injures the vast majority of workers, in order to protect their own vested interests.
Gary M. Galles is a Professor of Economics at Pepperdine University and an adjunct scholar at the Ludwig von Mises Institute. He is also a research fellow at the Independent Institute, a member of the Foundation for Economic Education faculty network, and a member of the Heartland Institute Board of Policy Advisors.