Labor unions play an important role in society
But America needs to prevent labor monopolies just as it does corporation monopolies
U.S. ports are on strike today as 50,000 longshoremen represented by the International Longshoremen’s Association (ILA), with commerce ground to a halt and the union demanding a 77% increase in wages over six years and protection of their high paying jobs against automation to improve productivity. U.S. ports are mostly owned by foreign entities and the ports compete with one another for traffic both on price and location. They have little interest in whether the outcome of this standoff raises prices for Americans as long as they have similar costs, all of which will be passed on to consumers.
The Biden Administration, now de facto the Harris Administration since Biden is effectively AWOL, will allow this labor dispute to fester through November 5th since Harris can’t afford to annoy unions she wants to support her candidacy. So the extimated $5 billion per day penalty of the port shutdowns will be a price Americans will have to pay for the next month or two.
If all U.S. ports were owned and operated by the same company, I am confident the Federal Trade Commission (FTC) would commence action to break up that monopoly, as it has with other monopolies over many years since the Sherman Anti-Trust Act of 1890 became U.S. law. Monopolies exist at the expense of consumers, curb free trade and don’t allow the market to set prices.
In the case of labor, all dock workers are members of the ILA. They have a labor monopoly, just as the United Auto Workers (UAW) have an effective monopoly over labor in the automotive industry, with only a handful of automotive assemblers (Tesla) and parts suppliers not represented by the UAW.
When I was CEO of Automodular Corporation I invited Canadian Auto Workers (CAW) leader Buzz Hargrove to organize my parts plants, and our management-labor relationship was characteristically negotiations in good faith that resulted in good wages and benefits and safe working conditions as well as a high productivity and well-motivated workforce. I benefited from having the CAW represent the workers in my plants. While the CAW was a tough negotiator, Hargrove was a great union leader and the result was fair and equitable.
This does not seem to be the case with the ILA. They have a monopoly and they are using it to hold American industry hostage to get massive rises in wages and benefits, far in excess of both inflation and productivity gains, and are negotiating to prevent the productivity gains which in the normal course make it possible for employers to pay higher wages and the economy to expand.
I am sure there are non-wage and non-job security issues that both sides have on their wish list, and I expect those differences will result in a “middle ground” solution. But a 77% wage rise (or even the 50% increase offered by the ports) is damaging to America, will fuel higher inflation for everything that travels through the idled ports, and will lead to higher wage demands by other unions in the country. A wage-price spiral is easy to trigger and hard to restrain.
The answer is not to limit the rights of workers to organize and bargain and when deemed necessary to strike to achieve a fair contract. Those powers are a benefit to society by curtailing management that might otherwise exploit workers to realize higher profits, a problem that existed throughout U.S. history until the 1935 Labor Relations Act that recognized the right to organize and the right to strike, important advances which made American society more equitable.
But in my opinion, it may be time for a parallel legislation to the Sherman Act that outlaws monopolies of labor unions, making the face off between empoyer and labor local rather than economy wide. The principles are the same - facilitate fair trade in labor just as the Sherman Act targets fair trade in commerce.
Thank-you for sharing your thinking on this. At first glance, it would seem optimal to have some congruence in the 'unitization' of the negotiating parties. Just as a corporate conglomerate might naturally exploit competition between individual shops of organized workers, a 'union of unions' would seem to wield a similar cudgel over independent operators.
As usual, reality is more complicated than Econ 101. Interested third or fourth year econ majors taking, say 'Econ 340 - Topics in Labour Relations', will explore the concept of _sectoral bargaining_. They will come to appreciate that, even in the absence of formal, Sherman-grade monopolies (on either side), the very notion of 'industrial sectors' arises because of natural commonalities across similar types of enterprise.
Investopedia is a place to start: https://www.investopedia.com/sectoral-bargaining-6745367
The upshot is that both owners and workers can benefit from sector-wide, coordinated baseline of standards and expectations. Consider it as a short-cut to the equilibrium we might otherwise reach only after decades of sub-optimal workforce churn within and between enterprises.
In your example, you weren't negotiating w/ Hargrove in a vacuum. The UAW was able to offer both it's members _and you_ the stability of a local agreement that had some assurance of being stable with regard to both current _and future_ arrangements reached among enterprises in competition with each other, if not for business, at least for labour.
In theory, sectoral bargaining is subtle form of collusion that, in effect, unites the joint interests of owners and workers in a segment of the economy against the interests of the _consumers_ of those products and services. But the resulting elevation of both working conditions/wages and prices achieves larger social goals stemming from a productive function that operates as it tends to do in in places like NA and Europe, as opposed to the endless races-to-the-bottom that plague standards-free economies like China's.
It is certainly time to rethink this. The Teamsters and UAW broke UPS and the “Big 3” Ultimately the unions have driven prices much higher and for automakers it was not competitive to build everything here due to ultra high wages/benefits. Mexico is packed full of auto parts plants and assembly plants. The unions absolutely had an enormous impact on working conditions and wages generally all good. But too much of a good thing can ultimately be bad.