President Joe Biden declares his loyalty to organized labor at every opportunity. His fiscal stimulus, infrastructure plan and numerous executive orders have delivered favors and accommodations. When Apple retail workers in Maryland voted recently to unionize, he said: “I am proud of them. Workers have a right to determine under what conditions they are going to work or not work.”
It’s a moving sentiment, and one I suspect is popular in the US. It so happens I’m visiting London — a city cast back into lockdown this week not by a resurgent pandemic but by a national rail strike — and I am sorry to be the bearer of bad news.
Unions are promising more chaos across the public sector in a so-called “summer of discontent.” That term refers to the pivotal “winter of discontent” of 1978-79 — which saw multiple strikes, colossal economic damage, collapsing public support for unions, a Labor government thrown out of office and, in due course, Margaret Thatcher’s revolutionary war on organized labor.
The US came to a similar though less dramatic turning point in 1981 when President Ronald Reagan began firing striking air-traffic controllers. After that, many private-sector employers also took a harder line over pay and practices. Federal Reserve Chairman Paul Volcker saw this turn in labor relations as a watershed for the US economy.
Evidently, exercising one’s right to strike can have far-reaching consequences. But times change. According to Pew Research, 58% of US adults say the long decline in union membership has been bad for the country. Polling in the UK on this week’s strikes is mixed. One survey found that 58% supported the action, another said only 37% did. A lot will depend on how long the disruption goes on. Brits were initially supportive of industrial action in the 1970s, then became disenchanted and, in the end, furious. In the US, strikes have been few and far between for years. Unions are most popular when they’re docile.
Strangely neglected in most modern discussion of unionization’s pros and cons is the distinction between public and private employers. Biden champions unions as necessary to redress the imbalance of power between labor and capital. This fits well with the new enthusiasm for assertive antitrust regulation, premised in turn on increasing concentration and monopsony power in the market for labor. However, in both the US and the UK (unlike much of Europe), public-sector unions now dominate.
Whose excess of power are public-sector unions aiming to check? Presumably the government’s. Labor claiming its rightful share from capital is one thing. Demanding payment from taxpayers is quite another.
Compounding the problem, the public sector is usually a monopoly supplier. In private markets, a balance of power is struck among employers, unions and customers: If high wages make the product uncompetitive, buyers go elsewhere and the firm loses business. Either unions show restraint or they put their members out of work. The situation is different for public-sector monopolies. When high wages and benefits raise costs, money can be borrowed or taxpayers told to cough up, and customers have nowhere else to go.
Network Rail, which manages Britain’s railway infrastructure, is state-owned, and the train-operating companies depend on public subsidy. In the end, therefore, the National Union of Rail, Maritime and Transport Workers’ quarrel is with taxpayers. It has a decent case: Its members are being offered pay rises far below the current high rate of inflation, and layoffs have been threatened as well. But accounts of the agreements it has struck — on job demarcation (which workers do what and when), automation, new technology and other matters — evoke the obduracy of decades past. No private company could sustain such nonsense.
In the US, police unions work hard to keep their contracts confidential, secure generous legal privileges and keep bad cops on the payroll. During the pandemic, pressure from teachers’ unions kept schools shut for much longer than was necessary, imposing heavy costs on parents and children. Dock-workers’ unions have made America’s ports among the world’s least efficient, adding significantly to recent supply-chain disruptions. Across the public sector, wages are good, benefits are excellent and pensions (by private-sector standards) are off the charts.
The point is, unions don’t represent workers at large. They represent their members, and seek to advance their interests at the expense of whoever’s available — owners of capital, customers, non-unionized or foreign workers and, not least, taxpayers. Maybe organized labor has its place, but this week in London I see little to be proud of.
Bloomberg
