The liberal writer John B. Judis,
who means to offer a compliment, says it “may be the most
radical thing the Obama administration has done.” He is
referring to the National Labor Relations Board’s complaint
against Boeing Co. (BA)
The company wants to produce airliners in a nonunionized
plant in South Carolina rather than a unionized one in
Washington state, in part because of repeated strikes at its
facilities in the Puget Sound area. The NLRB says the move is
illegal union-busting.
Republicans and business groups are apoplectic. They call
the complaint a payoff to the unions, question its legal basis
and portray it as an assault on the country’s 22 right-to-work
states, which prohibit making union membership a condition of
employment. Sixteen Republican governors have asked that the
complaint be dismissed. But rather than backing down, the NLRB
has further angered its critics by proposing to speed up
employee votes on whether to unionize. Employers say they need
time to make the case against unions, but the board calls a
longer voting process “an unnecessary barrier” to unionizing.
Underlying this dispute -- and an earlier one over
Democratic proposals to let unionizing elections take place
without a secret ballot -- is a fundamental difference in
perspective about the decline of unions. Liberals fear it will
lead to the immiseration of the middle class. Conservatives tend
to see it as inevitable and beneficial, because unions undermine
the competitiveness that modern economies require.
A Gradual Decline
Between World War II and the 1960s, about a third of U.S.
workers belonged to unions. Since then, the percentage has
fallen to 12 percent. In the private sector, only 7 percent of
employees are unionized.
Liberals see this decline as the result of deplorable
policy choices. In their view, since the 1970s corporations have
used their political power to block unionization, and then
gained more power as unions weakened. The signal moment in this
narrative is President Ronald Reagan’s firing of striking air-
traffic controllers in 1981. Government was no longer on the
side of unions, as it largely had been since the New Deal. The
consequences, to hear liberals tell it, have been an unequal
society with a smaller and poorer middle class, and with workers
getting a shrinking share of national income. It follows that we
need to make labor law more sympathetic to unions to reverse
these baleful trends.
Competitive Disadvantage
This storyline gets one thing right: Government policy did
have a lot to do with the decline of unions. But it wasn’t labor
law that mattered. In a study of the decline of unions between
1973 and 1988, economist Henry Farber and sociologist Bruce
Western found that the chief reason was that nonunionized
companies grew faster than unionized ones. Employment at
unionized companies dropped by 2.9 percent per year while
employment at nonunionized companies rose by 2.8 percent a year.
Another paper by the same authors confirms that the union
elections overseen by the NLRB were a sideshow: If the NLRB had
held no unionization elections since 1972, the percentage of
Americans in unions would have dropped by only an additional 1.7
percent.
You might be thinking that unionized companies shrank
mainly because they tended to be in declining industries. But
you would be wrong. Economist Barry T. Hirsch has found that
only 20 percent of the decline in unions between 1983 and 2002
resulted from shrinking unionized industries. Eighty percent of
it resulted from a decline within industries. Take
manufacturing: Between 1973 and 2006, the number of unionized
workers in that sector dropped by 6 million, but the number of
nonunion employees rose by 1.5 million. In short, unions
declined because unionized companies couldn’t compete with
nonunionized ones.
Role of Government
Government abetted the decline by encouraging competition
among companies: For example, by liberalizing trade and
deregulating product markets such as trucking. The more
competitive markets became, Hirsch concludes, the worse
unionized workforces did. It is therefore not surprising that
over the last few decades the labor movement has become
increasingly public-sector in its orientation: Government
workforces are of course largely shielded from competitive
pressures.
This explanation for union decline fits with what we know
about how unions grew in the first place. Michael Wachter, a
professor of law and economics at the University of
Pennsylvania, points out that union membership exploded in this
country thanks to the highly unusual circumstances of the Great
Depression and World War II, when discouraging competition was
official government policy. Organized labor began its slow
decline as government policies gradually liberalized.
Let Them Go
The shift toward a more competitive economy has not hurt
workers in general: Total employee compensation as a share of
the economy held fairly steady during the second half of the
last century even as unions were shrinking. (It’s true that
wages as a share of the economy fell, but that was a result of
the increased cost of benefits.) The shift has, however,
increased inequality among workers, with more rewards going to
those with higher skills.
If we want to reverse the unions’ decline, the kind of
labor-law changes that the Obama administration’s appointees to
the NLRB have in mind -- such as speeding up elections -- are
unlikely to do the trick. We would have to reduce competition
among companies, too, domestically and internationally. The
economy would have to be far more regulated than anyone in the
mainstream of American politics has advocated. And we would
almost certainly have to be willing to be a poorer country. We
shouldn’t want any of that.
Our country has plenty of economic problems. But we also
have blessings, and the continued decline of labor unions is one
of them.
(Ramesh Ponnuru is a Bloomberg View columnist. The opinions
expressed are his own.)
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