Trade Unions

The following arguments depend somewhat on whether you value the existence of a "Middle Class" in America. I say this because the rise of trade unions in America is certainly one significant way in which a strong Middle Class was historically established. Personally, I believe that a strong Middle Class is economically essential because these are the people who have sufficient disposable income to purchase products, and purchasing power is essential to a healthy economy. As Robert Reich argues, the extremely rich do very little for the economy on the grand scale because, while they have enormous purchasing power, they do not use it in helpful ways. While those in the middle class (perhaps 85% of Americans) spend almost 100% of their income in the marketplace, wealthy people (perhaps 5% of Americans) can't come anywhere close to that. Thus, a shift in wealth from the Middle Class to the Upper Class has the direct effect of removing a huge amount of purchasing power from the marketplace. That's what has been happening for the last three decades. Little wonder that small businesses are pessimistic about opening or expanding their businesses. 

Why did trade unions arise? The history of unionization in the late 19th Century and early 20th Century is striking. Communities were very often dominated by one or a few big employers. Laborers were paid whatever the employer wanted, usually as low a wage as possible, still keeping the laborers healthy enough to work. If pay was insufficient to meet family needs, the laborer had no chance of improving his position. Basically, he could quit and find some other job. But where? When groups of laborers attempted to unite and fight for higher wages, better working conditions, or health benefits, they were often beaten down by police or murdered by thugs. So long as the wage "negotiation" was between the industry and the individual laborer, the individual didn't have a chance.

Unionization meant that laborers had significant power to negotiate with employers in order to improve their situation. But this usually meant creating a "union shop" where all laborers had to participate and pay dues. This is where the inevitable long argument of the libertarian begins, that no one should be forced to do anything they do not want to do. Of course, the counter-argument here is that laborers who choose not to belong nevertheless reap the benefits of the union's collective bargaining without helping or paying for it. It can be argued that majority rules. If the majority want a union to represent them, then everyone has to participate. This principle runs throughout our society, yet it seems to be something that no libertarian will ever agree to.

The attack on unions today threatens not only the welfare of laborers but also the very existence of a middle class. In that sense, while it seems to make sense to Conservatives and Libertarians, it makes no sense for the health of our economy.