The AFL-CIO; C. Baird

Worker Harassment In reality, the decline of the union move ment in the private sector continues unabated, and it has nothing to do with employers harassing workers who want to unionize. The principal reason for the unions' plight is that fewer and fewer workers are interested in organizing. In a recent paper for the National Bureau of Economic Research, Henry Farber and Alan Krueger concluded that the demand for unionization among private-sector work ers has declined and continues to decline. Workers' bargaining power in employment contracts depends on the quantity and quality of alternative employment alternatives they have. Deregulation and globalization of comCharles Baird is a professor of economics and the director of the Smith Center for Private Enterprise Studies at California State University at Hayward. 63 petition have significantly increased those alternatives in both dimensions. In this envi ronment most workers think the costs of unionization-union-imposed initiation fees, fines, assessments and dues, increased strife between workers and management, lost pro ductivity, and lost working time due to strikes-far outweigh the benefits.

The unions' claim that employers prevent unionization by harassment of workers simply doesn't make sense. First, such practices are already illegal; and second, intense competi tion for qualified workers prevents employers from mistreating workers. In a 1998 study of the reasons for the continuing decline of unions in the private sector, the Employment Policy Foundation found that only 0.35 per cent of the decline could be attributed to man agerial opposition activities involving "unfair labor practices" as defined in the National Labor Relations Act. Astute private-sector employers are less likely to harass workers than to try to avoid the burdens of unioniza tion by treating their employees well. New Members The 101,000 additional dues payers cap tured by unions in 1998 were all in the gov ernment sector. In 1998 government employ ee membership increased by 158,000 while private employee membership fell by 57,000.

The unions' market share in government employment rose from 37.2 to 37.5 percent, while in the private sector it fell from 9.7 to 9.4 percent. In terms of market share, govern64 THE FREEMAN/IDEAS ON LIBERTY. NOVEMBER 1999 ment employment has provided the unions with the only good news they have had since 1953. This is easy to explain. Government employers don't resist unionization. In fact they encourage it. They and the unions sit on the same side of the bargaining table. Both seek to pick the pockets of taxpayers. The much ballyhooed February 23 win by the Ser vice Employees International Union of the right to represent 74,000 home-care health workers in Los Angeles is a case in point. Those workers are employees of Los Angeles County, and any union-imposed increases in costs will simply be passed forward to the county's hapless taxpayers. In the competitive private sector, union-imposed cost increases cannot be passed forward because customers go elsewhere.

Union Wage Premium The unions' claim of a 34 percent wage pre mium over union-free workers is overblown. According to the Bureau of Labor Statistics, in 1998 the median weekly wage paid to union-free private-sector workers was 79.6 percent of that paid to comparable workers who were represented by unions. That figure compares wages only. When total compensa tion packages are taken into account the union~free to union ratio is 85 percent. More over, union representation is not the sole source of the apparent union advantage. The BLS explains that "The difference reflects a variety of influences in addition to coverage by a collective bargaining agreement, includ ing variations in the distributions of union members and nonunion employees by occu pation, industry, firm size, or geographic region." In services, union-free wages were 90.1 percent of wages paid to workers repre sented by unions. In finance, insurance, and real estate the figure was 104.3 percent.

Moreover, the ratio of union-free wages to union wages has been steadily increasing. This is another reason for the decline in the demand for unionization. Statistics will usually overstate the effect of unions on wages. The comparison that should be made is wages paid union-represented workers versus wages those same workers would have received without union represen tation. Of course that comparison cannot be made. As a second best, wages paid to union represented workers are compared to wages paid to comparable union-free workers. But this comparison always involves what econo mists call a spillover effect. Unions are able to get above-market wages for workers they rep resent only by restricting the supply of work ers on those jobs. When the workers who are shut out of those jobs seek employment else where, they spill into the union-free market, depressing wages. Unio~s argue that statistics are just as like ly to understate their effects on wages because of what they call the threat effect. Employers may raise union-free wages just to avoid unionization-a form of preventive labor relations. However, there is an upper limit to what an employer is willing to pay for labor.

That limit, called a demand price, is based on labor productivity and the prices that cus tomers are willing to pay for the goods and services produced with those labor services. In a competitive labor market any margins between demand prices and wages actually paid will be very slim. There will be little room for threat-based wage increases. Justice? Clergy and civic leaders ought to pause before they sign on to the unions' agenda. Unions cannot raise living standards for any one except their members. The workers who end up with lower wages because of the spillover effect certainly will not have higher living standards. Clergy and civic leaders also ought to con sider the unions' well-documented history of getting their way through violence and intim idation before they blindly accept the notion that unions foster a "sense of community." Organizations whose survival depends on government-granted rights of coercion rather than their ability to engage others on the basis of voluntary exchange are bereft of merit.

They deserve the scorn of everyone who seeks genuine justice for all rather than spe cial privileges for a few. D December 1999 Ideas 011 Liberty Vol. 49, No. 12 8 Iii 15 20 22 24 28 1 31 35 39 Why Y2K? by Bill O. Reitz Reclassifying a Classic by Daniel T. Oliver States' Rights Revisited by Gene Healy Welcome to Canada by Monte Solberg Freedom and Foreign Investment by James Madison The Poverty of Regulation by Michael J Catanzaro A Lesson in Political Management by George C. Leef The Force of Economics by Ninos P. Malek China's Flirtation with Keynesian Economics by Christopher Lingle The Collectivist Illusion by Tibor R. Machan 4 13 26 33 1 37 43 53 THOUGHTS on FREEDOM-Unfettered Powerful Extremes by Donald J Boudreaux IDEAS and CONSEQUENCES-Government Education Reinvents Government by Lawrence W. Reed POTOMAC PRINCIPLES-Decoding the North Korean Enigma by Doug Bandow PERIPATETICS-Other People's Business by Sheldon Richman ECONOMIC NOTIONS-Politics and Foreign Trade by Dwight R. Lee ECONOMICS on TRIAL-Heilbroner's One-Armed Philosophers by Mark Skousen THE PURSUIT of HAPPINESS-Transforming the Political Marketplace by Russell Roberts 41 46 2 6 Perspective-5,999,999,999 and Counting by Sheldon Richman The Fed Sets Interest Rates? It Just Ain't So! by Richard H Timberlake Capital Letters Book Reviews Individualism in Modern Thought from Adam Smith to Hayek by Lorenzo Infantino, reviewed by Andrew I. Cohen; Freedom and Virtue: The ConservativelLibertarian Debate, edited by George W. Carey, reviewed by Brian Doherty; World Disorders: Troubled Peace in the Post-Cold War Era by Stanley Hoffmann, reviewed by Ivan Eland; The Food & Drink Police-America's Nannies, Busybodies and Petty Tyrants by James T. Bennett and Thomas J. DiLorenzo, reviewed by George C. Leef; The Political Economy of the New Deal by Jim F. Couch and William F. Shughart II, reviewed by Andrew P. Morriss; Toward the Renewal of Civilization: Political Order and CUlture, edited by T. William Boxx and Gary M. Quinlivan, reviewed by Fr. Robert A. Sirico.