Archive for the ‘unions’ Tag

Let’s Declare June 27 as Dues Freedom Day   Leave a comment

The Janis decision was all over the news on my morning commute so I was prepared when the union steward walked into my office and announced it was “union-busting” and practically put a pen in my hand to get me to “opt-in” to paying union dues. I’ve been a union member for about six years — not because I opted to become a member, but because I was not given a choice. It’s not that I object to the retirement fund or the medical insurance, but that I object to the political stances of the union which are almost never in agreement with what I believe about politics.

Image result for image of scotus union decisionI don’t do pressure as a rule. My father was a union organizer and I grew up serving coffee at the meetings, so I know all the tactics this Steward might wield. I also know that “talking shop” during work hours can get you fired. So I thanked him for the info and the card and said “I need to get back to work now.” I think he was honestly surprised that I didn’t weep over the Janis decision.

The card hasn’t hit the circular file yet, because I need to do some homework on the whole thing before I make a rash decision, but I think the Janis decision is a great thing and that we poor union slaves ought to celebrate June 27 as Freedom Day.

I don’t make a lot of secrets that I’m a libertarian. My union advocates for me to vote for the likes of David Guttenberg and Scott Kawasaki — both extreme liberals who are trying to institute an income tax in Alaska … when they aren’t favorably negotiating employee wages and benefits with the union that funded their campaigns.

Yeah, that’s collusion of the sort that, if they were in private business, would get them put in prison.  So, if I wasn’t opposed to voting for them because they want to take a chunk of the income I need to pay my bills with, I would be opposed to voting for them because they’re corrupt and possibly criminals.

But, watch! I’m willing to bet that over the next few months, as that card languishes in my suspense file, that my “brothers in employment” will exert some not-so-subtle pressure on me to comply with something I don’t agree with.

Posted June 28, 2018 by aurorawatcherak in Common sense, Uncategorized

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American Guilds   Leave a comment

When I did my series on the Medieval period a while back, I ran across some articles that were critical of capitalism and advocated for a return to the guild system that operated during the Middle Ages. I found it interesting because the commentators were from both the right and the left. Under this system, each occupation had its own guild and all employees and employers belonged to that guild. The guild regulated business particulars like prices, wages, hours of operation, and product quality. It prevented shops from underselling one another and encouraged cooperation over competition. The result was occupational stability. Everybody had a niche in a given line of work.

Image result for image of a guildThe guild system seems superficially plausible, so it seems attractive to some minds. But, remember, I’m a fan of Bastiat, so I have taken to running every economic proposal through the “seen and unseen” filter.

Consider how a guild system must work in practice. For a guild to work properly, certain people who wish to enter a particular trade are denied entry. If a particular guild happened to have a relatively liberal policy of admitting new producers to its craft, it would insist on a minimum price for all goods sold under the guild’s auspices and/or it would limit the amount of the good that any given master was permitted to produce. Whichever of these three control options (high barriers to entry, fixed minimum prices or fixed production quotas) are employed, the outcome results in higher prices and less production than if free entry into the profession, a free-price system, and unrestricted production were allowed.

Aspects of the guild system have existed in our economy in the past and some continue today, with clearly destructive consequences. Perhaps the most obvious example was the National Recovery Administration, established by the New Deal’s National Industrial Recovery Act in 1933. President Roosevelt believed that business competition had to be restricted in order to tame the alleged problem of “overproduction” and to spread among as many firms as possible what consumer demand existed.

I won’t attempt to explain FDR’s economic reasoning. Biographer John T. Flynn noted that “it is entirely possible that no one knew less about that subject than Roosevelt.” (The Roosevelt Myth, c. 1948 [1998] page 116). Roosevelt’s belief in economic fallacies had terrible consequences. The President’s faulty grasp of what caused the Depression led him to introduce a system similar in operation to the old guild structure, with the explicit intention of reducing competition. FDR borrowed heavily from a system established by Mussolini, by the way.

Under the NRA, each industry was “invited” to establish a production code. This code would set minimum wages, minimum prices, and a variety of other regulations to be observed by the firms in that industry. Note that the code established minimum prices. All sellers would have to sell their products for at least the prescribed minimum. This dramatically reduced intensity of economic competition, since with an established minimum price in effect it was not really possible to undersell one’s competitors.

The great New York Times editorial writer Henry Hazlitt had no illusions about the NRA:

[T]he American consumer is to become the victim of a series of trades and industries which, in the name of “fair competition,” will be in effect monopolies, consisting of units that agree not to make too serious an effort to undersell each other; restricting production, fixing prices—doing everything, in fact, that monopolies are formed to do. . . . Instead of a relatively flexible system with some power of adjustment to fluid world economic conditions we shall have an inadjustable structure constantly attempting—at the cost of stagnant business and employment—to resist these conditions.2

You hear this a lot on social media these days. “Businesses shouldn’t compete. They should cooperate.” It’s held up as some sort of ideal economic arrangement. The NRA gave the force of law to producers’ collusion with regard to minimum prices and wages, hours of operation, amount of output, and still other factors, thereby eliminating competition among producers in exactly the same way the guild system did.

The NRA was a complete disaster in practice. First, although such a system would indeed raise prices, such an outcome obviously defeated the program’s other aim of increasing wages, since a rise in prices must reduce the real value of wages. Increases in prices reduce what wages can buy, so at best increased wages keep even with increased prices, so really aren’t an increase. Second, the program produced such an outcry among sensible people that the U.S. Senate finally managed to force FDR into appointing a commission to investigate the NRA. Its report, issued in 1934, described the agency as “harmful, monopolistic, oppressive, grotesque, invasive, fictitious, ghastly, anomalous, preposterous, irresponsible, savage, wolfish.”3  The act establishing it was declared unconstitutional the following year.

The NRA has been gone for a long time, but a great deal of the guild mentality remains in the U.S. economy. We can observe it in the behavior of such organizations as the American Medical Association, the American Bar Association, and others. These organizations lobby the government to institute stiff requirements to acquire a license to practice, and then places obstacles in the path of anyone else who might want to provide medical, legal, or other services. Milton Friedman suggests what is often really at work in such agitation:

The justification offered is always the same: to protect the consumer. However, the reason is demonstrated by observing who lobbies at the state legislature for the imposition or strengthening of licensure. The lobbyists are invariably representatives of the occupation in question rather than of the customers. True enough, plumbers presumably know better than anyone else what their customers need to be protected against. However, it is hard to regard altruistic concern for their customers as the primary motive behind their determined efforts to get legal power to decide who may be a plumber. (Milton and Rose Friedman, 1979, “Free to Choose: A Personal Statement”, Page 229)

The American Medical Association serves to reduce the number of people who can practice medicine, and thereby increases the cost of medical treatment beyond what it would be in a competitive market. According to Clark Havighurst, Duke University Professor of Law, “Professional licensure laws have long made the provision of most personal health services the exclusive province of physicians. Obviously, such regulation limits consumers’ options by forcing them to use highly trained, expensive personnel when other types might serve quite well.”6

Consider Friedman’s description of the guild’s operations:

One effect of restricting entry into occupations through licensure is to create new disciplines: in medicine, osteopathy and chiropractic are examples. Each of these, in turn, has resorted to licensure to try to restrict its numbers. The AMA has engaged in extensive litigation charging chiropractors and osteopaths with the unlicensed practice of medicine, in an attempt to restrict them to as narrow an area as possible. Chiropractors and osteopaths in turn charge other practitioners with the unlicensed practice of chiropractic and osteopathy.7

Yes, I’m sure most members of the AMA believe that such requirements work to the consumer’s benefit by protecting us from substandard medical care, but truthfully, this highlights how interest groups subconsciously conflate their own interests with those of society as a whole. Mancur Olson cautions people to “note that the examinations are almost always imposed only on entrants. If the limits [on entry into the field] were mainly motivated by the interest of patients, older physicians would also be required to pass periodic qualifying examinations to demonstrate that they have kept their medical knowledge up to date.”8 The fact is, studies find that non-physician providers of medical care, such as midwives, nurses, and chiropractors, “can perform many health and medical services traditionally performed by physicians—with comparable health outcomes, lower costs, and high patient satisfaction.”9

Government regulations on the chiropractic profession, lay midwifery, and on the freedom of nurse practitioners to offer services within their competence, all of which make perfect sense from the point of view of the medical guild that lobbied for them, often make no sense at all from the point of view of consumer wishes or from economic considerations. For example, studies have shown that lay midwives have a much lower mother-infant death rate and a substantially lower delivery complication rate than doctors or nurse-midwives, but they remain outlawed in many states. In many cases, non-physician medical professionals can provide health services far more cheaply than can licensed physicians, but consumers are prevented from making their own decisions regarding their medical care. We shouldn’t be surprised to find that the AMA has put so much effort into undermining its professional opposition.

But if the government doesn’t do it, who will keep us safe from unqualified people practicing medicine? Economist George Reisman explains:

[T]he members of the various state medical licensing boards around the country could constitute themselves into private certification agencies and give or withhold their seal of approval to individual medical practitioners on any basis they wished. They would simply lack the power to make the absence of their particular seal of approval the basis of fining or imprisoning anyone who chose to practice medicine without it. The consumers of medical care, who presently retain the right to judge the qualifications of the state governors and legislators who are responsible for the appointment of the members of the medical licensing boards, would decide for themselves the value of certification by this or that organization. . . . Indeed, if ordinary men and women are to be allowed to vote in elections in which their votes ultimately determine the most complex matters of foreign and domestic policy, and thus where their decisions affect not only their own lives and those of their immediate families but also the lives of everyone else in the country, then surely they are entitled to the responsibility of determining matters pertaining exclusively to their own well-being.10

Reisman further observes that if government regulations allowed only automobiles less than five years old on the roads, there would certainly be an overall increase in the quality of automobiles on the roads. But a great many perfectly serviceable automobiles would thereby become unavailable for use at all. The main victims of such a policy would be the poor.11

The legal profession in the United States is also akin to a guild (or could be called a cartel).  Everyone knows that legal services are expensive, but few realize that the barriers to entry erected by what is in effect a lawyers’ guild bear much of the responsibility for that expense. Thanks to the lobbying of bar associations, the only people who may enter the legal profession are those who possess a license from the state, which is available only to those able to afford the extraordinarily costly path of law school and the bar exam. The outcome is the desired one: fewer lawyers, and therefore higher fees.

As with the medical profession, where costs could be dramatically reduced by allowing medical personnel below the rank of physician to perform routine work, paralegals are more than capable of performing a variety of legal tasks that the guild currently reserves for lawyers only. That means people wind up paying a lot more for basic legal services. In 1987, the chairman of the Legal Services Corporation, W. Clark Durant, made an extraordinary address to the American Bar Association in which he suggested that his agency be abolished and that all barriers to competition in the market be removed. One day later, the president of the ABA was calling for Durant’s resignation.

One paralegal in Portland, Oregon, decided that enough was enough. Robin Smith, who worked for several years in a large law office, had grown tired of lawyers charging exorbitant fees that their clients could barely afford, all for work that she herself had done. She opened her own business, People’s Paralegal, Inc., where she and her colleagues offered basic legal services, such as the drafting of common legal documents, at lower prices. Not surprisingly, the guild went into action. People’s Paralegal found itself on the receiving end of a lawsuit by the Oregon State Bar, accusing the firm of violating Oregon’s prohibition on the “unauthorized practice of law.” People’s Paralegal was shut down, and ordered to pay the legal fees incurred by the Oregon State Bar when litigating them out of business!

The guild mentality results in a privileged few reaping abnormally high salaries while the vast majority are made poorer by higher fees. Should anyone attempt to give consumers an alternative to this kind of exploitation, the guild springs into action to quash the challenge. An entire society organized along these lines is scarcely conceivable, but that is what the guild system amounts to.

Lesser examples abound. During the 1990s, 15-year-old Monique Landers of Kansas opened her own African hair-braiding business. Upon returning from a visit to New York, where she was honored as one of five outstanding high school entrepreneurs, she was informed that the state licensing board of Kansas was shutting her down. No customers had complained, but the guild mentality of already existing establishments didn’t like her competing with them. She was told that she could stay in business if she spent a year at a licensed cosmetology school, but few of them teach the particular skill she already possessed, and none of them would admit her prior to her seventeenth birthday. “The Board won’t let me earn my own money, and won’t let kids like me learn to take care of ourselves,” she said. “I think owning your own business is a way of being free.”15

In The State Against Blacks, Walter Williams provides a lengthy catalog of occupational licensure laws and other barriers whose effect is to place overwhelming obstacles in front of those who wish to enter an industry.

For example, to operate a taxi in New York City, a potential driver needs a medallion from the city, which costs hundreds of thousands of dollars. It is impossible to measure how many jobs are destroyed by this kind of behavior, but we can get a sense of how much higher taxi fares are now that Uber is competing with taxis in some markets.

Agriculture provides perhaps the most disgraceful example of what the guild mentality wrought in reality. The federal government’s assistance to farmers has often amounted to encouraging them to destroy (or not plant in the first place) huge stocks of crops, in order to increase their selling prices. This is what a guild would do, though the guild would more likely keep supplies down and prices up by allowing fewer people entry into the guild in the first place, and/or requiring existing guild members to adhere to a production quota. Government is a substantially less far-sighted than guides were.

The costs and consequences of such an antisocial policy are staggering, and are all the more insidious because the beneficiaries of these policies are clear and visible, while the victims are dispersed and largely unaware that an organized cabal is taking advantage of them. Right, that sounds like Henry Hazlitt’s “Economics in One Lesson”, where he stressed the need to assess the outcome of a given policy — to be aware of the long-term consequences for all groups rather than the short-term gains of one group. How many Americans realize that the price they have to pay for sugar and all foods containing sugar as an ingredient is much higher than necessary as a result of a government program?

For most of the 20th century, the price of sugar to Americans was 500% higher than the world price, thanks to government price supports.17  Sugar producers receive an average of $235,000 a year from the policy, but it costs consumers well over $3 billion per year, and it puts all American industries that use sugar at a competitive disadvantage to foreign producers who are not forced to pay such an inflated price for sugar.18  This latter point is always overlooked by opponents of free trade, who in their zeal to protect jobs in Industry X from foreign competition neglect altogether the destructive effects that their preferential policy for Industry X has for Industries A, B, and C that use X as an input in the production of their own products. Job losses in those industries will rarely be attributed to the tariff or other privileges shown to Industry X. Meanwhile, the government can point with pride to the jobs it has “saved.”

What is seen and what is not seen.

Since 1937, as much as 40% of all oranges grown annually in the U.S. have, by law, been destroyed, fed to livestock, or exported in order to raise domestic prices. Think about that the next time you wince at the price of oranges at the grocery store.

Quotas on peanuts effectively double the price of peanuts and peanut butter.

Every dairy cow in America is subsidized to the tune of $700 per year.

All this inefficiency and destruction of wealth impoverishes society as a whole, and hurts  the poor the most. We will never know the full cost of these policies, since many of their costs include jobs never created and businesses never started.

Still, is this really how we’d like our entire economy to be run?

All of these examples of genuine exploitation amount to one of many reasons that free-market economists hold the beliefs that they do. The greater the scope of state activity, the greater the potential for each pressure group to use the state apparatus for its own enrichment, at the expense of the rest of society. Since the benefits that accrue to such pressure groups from their political agitation are sizable and concentrated, while their costs are dispersed and hidden, the tendency over time is for more and more of this kind of activity to go on at the expense of the ordinary person.

Since guilds operate to restrict competition and price cutting, we must expect that the monopoly power of the guilds will have consequences analogous to those of the government favoritism we have just examined. Through a variety of methods, the federal government has granted special privileges to certain industries. In one way or another, these privileges dramatically limit competition, just as the guild system did and would.

Posted June 24, 2017 by aurorawatcherak in economics, Uncategorized

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Never Let a Crisis Go to Waste   Leave a comment

“Those who tell you of trade-unions bent on raising wages by moral suasion alone are like people who tell you of tigers that live on oranges.”

– Henry George, 1891
Union organization had been around since colonial times and various forms had been tried. In the United States, the workers themselves had rejected the radical ideologies often associated with unions in Europe, so the unions had joined the Progressive Movement to work toward incremental change. All through that era, the government had bolstered unions with helpful legislation and even wartime nationalization of industries that resisted. But during the 1920s, a healthy vibrant economy had convinced most workers that they didn’t need an outside nanny organization to tell them what was best for them.
Image result for image of great depression union violenceIt would be an interesting alternative history to see what might have happened to the labor movement and society in general if the Depression of 1929 had not been meddled with to the point of becoming the Great Depression. That’s the novelist in my wondering about it.
During the Great Depression, Congress enacted a sequence of six major pieces of labor legislation favored by unionists, virtually revolutionizing labor markets:
  • Davis-Bacon (1931)
  • Norris-LaGuardia (1932)
  • National Industrial Recovery Act (1933)
  • Wagner National Labor Relations Act (1935)
  • Walsh-Healey (1936)
  • Fair Labor Standards Act (1938), popularly known as the minimum wage law.
This avalanche of legislation to entrench unions part and parcel with the prevailing doctrine of 1920s business leaders that “high and rising wages were necessary to a full flow of purchasing power and, therefore, to good business,” and its corollary “‘reducing the income of labor is not a remedy for business depression, it is a direct and contributory cause.'”
Understand that the people who actually study economic history say this was ignorant blather that ignores the reality that high wages are an effect of high productivity and prosperity, not a cause of them. If it were otherwise, rather than producing themselves rich, nations could simply declare all good things cheap and all wages high, and thus abolish poverty by fiat.

Davis-Bacon: Passed in 1931 following a sharp decline in construction activity at the beginning of the Great Depression. Construction expenditures went from $11 billion annually to $3 billion, with over half of the reduced activity financed by government. Competition for contracts and jobs was fierce and mobile contractors using migrant labor entered the market to underbid some local contractors. Many contractors and building trade unions welcomed the law to protect themselves from the competition of what one congressman called “carpetbagging sharpie contractors.”

The law requires that workers on federally financed construction be paid wages at “local prevailing rates” for comparable construction work. The clearly stated intent was to protect local workers and contractors from the competition of outsiders. The ambiguity of prevailing wages gave the United States Department of Labor scope to set minimum wage rates at union wages in about half of its wage determinations. Estimates are that has cost taxpayers at least a billion dollars per year in higher construction and administrative costs ever since.

Since 1931, Congress has extended the prevailing wage provision to include most federally assisted construction, whether state, local, or national government is the direct purchaser. Additional amendments in 1964 added fringe benefits to prevailing wage calculations. The effect of the Labor Department’s administration of the law is not to protect local contractors from competitors but to dish out government work to high-cost contractors and the building-trades unions. Davis-Bacon regulates about 20% of all construction. Construction workers are among the highest paid in America, earning twice the hourly rate of employees in retail trade. Most states passed “little Davis-Bacon” Acts to further unionize the construction industry, driving up costs for most construction.

Norris-LaGuardia Anti-Injunction Act: Signed by President Herbert Hoover on March 23, 1932, this bill passed the House 363-13 and the Senate 75-5. It was the culmination of a 50-year union campaign against “government by injunction.”

The threefold purpose of the act was to

  • declare nonunion employment agreements (“yellow-dog contracts”) unenforceable in federal courts (section 3);
  • grant labor organizations immunity from liability for wrongful acts under antitrust law (sections 4 and 5); and
  • give unions immunity from private damage suits and nullify the equity powers (injunctive relief) of federal courts in labor disputes (sections 7–12).

The overriding object of the act was to free organized labor from the constraints that bind businessmen and ordinary citizens, essentially giving them immunity from prosecution when they use aggressive and violent tactics in organizing. The number of strikes suddenly doubled between 1932 and 1933 to 1,695 and then continued climbing to a 1930s peak of 4,740 in 1937. This outburst of strikes occurred during a period of deep depression and massive unemployment, while previous business downturns had always diminished strike activity and caused many unions to disappear.

“We have now reached a state where [unions] have become uniquely privileged institutions to which the general rules of law do not apply.” Frederick Hayek

NIRA: The National Industrial Recovery Act was among the many Roosevelt interventions to boost prices and wage rates on the mistaken theory that falling wages and prices were causing the depression rather than being market-driven adjustments to re-coordinate the economy and restore production and employment. The NIRA — the New Deal fascist system of codes to cartelize both industry and labor markets and push up prices throughout the economy — was struck down by the Supreme Court in the famous Schechter Poultry case of 1935 on the grounds that the act delegated virtually unlimited legislative power to the president. Section 7(a) of the NIRA promoted unions and the practices of collective bargaining. Congress then re-packaged similar labor regulations and new interventions piece by piece in surviving legislation like the Wagner, Walsh-Healey, and Fair Labor Standards Acts.

National Labor Relations Act (NLRA): Otherwise known as the Wagner Act, the NLRA was a rewrite of the NIRA’s section 7a. The act passed the Senate 63-12 and an unrecorded voice vote in the House, and Roosevelt signed it July 5, 1935.

The NLRA remains the overall labor framework in the United States to this day. It declares that the labor policy of the federal government is encouragement of the practice and procedure of collective bargaining, as well as protection of worker designation of representatives to negotiate terms and conditions of employment. It uses federal coercion to make it easier to unionize enterprises and employees in the private sector who otherwise would not participate in unionization and collective bargaining. The main regulatory features of the act were as follows.

  • The creation of a politically appointed board, the National Labor Relations Board, to enforce the act, thereby escaping the too-frequent apolitical (“anti-union”) rulings from courts of law. So now, when unions break the law or businesses seek relief from their violence, they go before a pro-union board rather than a judge who might be neutral.
  • The specification of multiple “unfair labor practices” by enterprises to hamper their resistance to organized labor.
  • NLRB enforcement of majority elections for union representation.
  • NLRB determination of eligibility to vote.
  • NLRB enforcement of exclusive (monopoly) bargaining for all employees in a bargaining “unit” by NLRB-certified unionists only. You might think you have a better way of doing it, but you can’t legally implement those new ideas.
  • NLRB enforcement of union pay rates for all employees represented, whether union members or not.

A lot of Congress had voted for the legislation in fear of Roosevelt (the destroyer of political careers), and hoped that the Supreme Court would overturn the law as unconstitutional (as it clearly was) as they had done with the NIRA, but in April 1937, contrary to expectations, the court declared the Wagner Act constitutional by a 5-4 vote possibly motivated by Roosevelt’s famous threat to pack the court. The Wagner decision marked the judiciary’s general abandonment of constitutional protection against federal encroachment on economic rights and due process.

Years later, public disgust with adversarial unionism and underworld corruption produced federal legislation to modify the Wagner Act — principally the Labor-Management Relations (Taft-Hartley) Act in 1947 and theLabor-Management Reporting and Disclosure (Landrum-Griffin) Act in 1959 — that has been marginally less favorable to unions. Neither law tampered with the basic privileges and immunities previously granted to organized labor. Taft-Hartley was a partial union victory because it maintained the original structure of the statutes, making it more difficult to return to common law. Ah, yes, the power of precedent.

Section 602A)in Landrum-Griffin, although intended to rein in union officials’ abuse of members’ rights, highlights the immunities the state grants to unions:

It shall be unlawful to carry on picketing on or about the premises of any employer for the purpose of, or as part of any conspiracy or in furtherance of any plan or purpose for, the personal profit or enrichment of any individual (except a bona fide increase in wages or other employee benefits) by taking or obtaining any money or other thing of value from such employer against his will or without his consent. [Emphasis added.]

The exclusion in parentheses is remarkable, because such open exceptions (privileges and immunities) for labor unions are necessary to free an organized labor movement from the ordinary constraints of civilization to extract money from employers against their will with the proviso that the loot be mostly paid to union members in wages and benefits.

Public Contract (Walsh-Healey) Act: Passed in 1936, this act tried to accomplish for all unions what Davis-Bacon did for the building-trades unions, but it turned out to be relatively ineffective. Walsh-Healey targeted bureaucratic administration of employment conditions for all government contracts over $10,000. The law allowed the Secretary of Labor to fix minimum wage scales among nearly all businesses contracting with the government. “Responsible” businesses (defined as previously unionized employers) urged that standards be imposed in order to discipline “unscrupulous” (low-cost, nonunion) competitors. The Department of Labor never could settle on a consistent method of determining the “prevailing wage” for such a bewildering array of jobs, individual skills, and pay systems. Thus, you’ve never heard of Walsh-Healey but every business in America knows all about Davis-Bacon.

The Fair Labor Standards Act: Passed in Congress in 1938, this act set a national minimum wage rate of 25 cents per hour. It applied to an estimated 43% of employees in private, non-agricultural work and gradually grew to cover nearly 90%.

Family story here – my mother worked as a dishwasher after school, getting paid $3 a week. When FLSA was passed, she would have been paid $9 a week instead. The diner she worked for closed because they typically only brought in about $30 a day and this new law meant they couldn’t make payroll and buy food to sell to their customers who couldn’t afford a tripling of the cost of eating out. Mom got another job taking care of an old lady for room and board and worked late into the night repairing harnesses for local farmers to pay for high school (no, public high school wasn’t paid for by the taxpayers in those days; students or their families paid tuition).

Image result for image of minimum wage destroying employmentState minimum wage laws today cover most remaining employees. Effective July 24, 2008, the federal minimum was $6.55 per hour and became $7.25 per hour effective July 24, 2009, a 29-fold increase over the first minimum wage in 1938. A 90-day beginners’ minimum of $4.25 per hour applies to workers under age 20. Covered “nonexempt” employees must be paid overtime rates of 150% the regular pay rate for any hours over 40 in a 7-day period. Generally, the minimum wage has fluctuated between 35 and 50% of the average hourly wage in manufacturing.

How does the minimum wage help unions since less than 10% of all wage and salary employees have wage rates low enough to be directly impacted by the minimum wage? Unions benefit by pricing competitors and potential non-union entrants out of business. Many low-skilled young people, women, older people, and members of minority groups such as inner-city blacks find it more difficult to find beginners’ jobs because minimum-wage and union wage rates price them out of the market. Yet accepting a low-paying job for its on-the-job training is no different in principle from paying to go to school. Economic studies show that about half of the training in the US economy occurs on the job rather than in school.Shrunken work opportunities caused by the minimum-wage law have ruined uncounted careers and essentially created the tragedy of our inner cities, impacting blacks to a far greater degree than whites. Instead of being an antipoverty device, the minimum wage is the greatest driver of unemployment in the economy.

Posted September 10, 2016 by aurorawatcherak in History

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Building the Foundation of Unions in US   Leave a comment

“Those who tell you of trade-unions bent on raising wages by moral suasion alone are like people who tell you of tigers that live on oranges.”

– Henry George, 1891

 

Prior to World War I, unionists were still on a relatively short leash. Starting in 1842, unions had the clear legal right to exist, and workers could join such “self-help” organizations, but employers were under no obligation to “bargain” with these unions.

The courts generally restricted union tactics by prosecuting threats of violence, violence itself, mob action, and interference with voluntary trade. Further, the courts tended to make little distinction between business and union “restraints on competition.”

So, for example, in 1908, they ruled that union actions in a boycott organized by the United Hatters of Danbury, CT, against the products of D. E. Loewe and Company were in restraint of trade under the Sherman Anti-Trust Act of 1890, and fined individual union members responsible for the union’s acts. In that era, unions never incorporated lest they be held liable as an organization for damages they caused. Unionists, enraged that they be held ot the same standards as any other American citizen, demanded governmental privilege and mounted persistent and intensive campaigns for favorable legislation.

In 1912, Congress assisted the union movement with the Lloyd-LaFollette Act to compel collective bargaining by the US Post Office, encouraging postal-union membership. In 1914, Congress passed the Clayton Act with provisions to exempt unions from the 1890 Sherman Anti-Trust Act, restrict the use of court injunctions in labor disputes and declare picketing and similar union tactics as legal. Samuel Gompers hailed the Clayton Act as labor’s “magna carta”, but subsequent court interpretations neutered the pro-union provisions.

The “national emergency” of US entry into World War I strengthened cartel-like policies throughout the American government. Unions being a cartel benefited.

“The panoply of procedures developed by the War Labor Board and the War Labor Policies Board provided the basis in later years for a series of enactments culminating in the Wagner National Labor Relations Act of 1935.” Willian E. Leuchtenburg, historian

The Wilson Administration’s nascent deep state set up the conditions that would later be ruled as precedent  for later laws. With World War I’s demands on industry and the government’s interventions on behalf of unionists, union membership skyrocketed, hitting 12% of the labor force.

Image result for image of us unions in 1920sThe War Labor Board and the War Labor Policies Board, modeled on a directive by Franklin D. Roosevelt who represented the United States Navy on the board, proclaimed governmental support of unions and enforced pro-union measures on industry. Among other requirements, the boards ordered establishment of “work councils” composed of employee representatives. When businesses argued against these measures, the US government nationalized them.

The government actually created the Loyal Legion of Loggers and Lumbermen union and forced lumbermen to join in its battle against the radical leftist Industrial Workers of the World (IWW, known as the “Wobblies”). This was my grandfather Joseph’s only foreway into unionism. The Loyal Legion collapsed after the war despite government efforts to keep it alive. Many loggers had already been members of company unions, which had a close relationship with management, while others preferred the independent unoin system that represented workers in a single company. Both these alternative forms of collective bargaining were banned by the 1935 Wagner Act.

The War Labor boards were forerunners to the federal labor boards used to administer Section 7(a) of NIRA and the subsequent National Labor Relations Board (NLRB) created by the National Labor Relations (Wagner) Act of 1935.

The end of the war ended pro-union interventions. By 1924, the union share of the labor force had slipped to 8%, and by 1933 had eroded to the same 6% as thirty years before.

The “roaring” 20s was a time when working your way out of poverty by your own hard work as entirely within the reach of any man, so unionism became less attractive. Peacetime help for unions was not far off.

Image result for image of us unions in 1920sThe first durable help for “private-sector” unionism was the Railway Labor Act of 1926. The labor disputes that erupted periodically on the railroads were highly visible, violent, unpopular, and politically embarrassing. Although the interstate commerce clause of the United States Constitution, as interpreted then, restricted the ability of the national government to intervene in most economic affairs, Congress had the unchallenged power to regulate interstate commerce. Claiming transportation to be a vital national interest, a sequence of federal laws beginning in 1888 regulated railway labor matters, and Congress passed the 1926 law in almost the identical form agreed on by the major railroads and unions. If that sounds like collusion to you, it probably was. The act, amended in 1934, essentially dictated collective bargaining for all interstate railroads and set up machinery for governmental intervention in labor disputes.

This was an obvious example of monopoly intervention on behalf of an industry. The larger railraods were already unionized. They found it comfortable to impose compulsory collective bargaining on all interstate railroads, some of which had resisted union pressure better than others. The Interstate Commerce Commission (ICC), in turn, fixed freight rates for railroads based on “costs,” which were higher because of unions. This eliminated competition, putting the larger railways at an advantage over the smaller, more competitive railways. Thus railroad wage and price determination was transferred from the marketplace to the political arena.

Posted September 9, 2016 by aurorawatcherak in History

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History of Unionism in US Colonial Era   Leave a comment

So, Labor Day convinced me to focus on the American Labor movement for a while.

As I’ve explained before, my father was a union organizer who met my mother on a picket line. She was crossing his picket line so she could remain employed and he tried to convince her to stand with him. He offered to take her to lunch and persuade her or stop picketing her employer. He lost the argument, but got the woman.

Understand that my mother’s employer was not some huge sweatshop whose employees had asked for the union to organize. It was a small-business, four-person cafe in downtown Anchorage Alaska and my mother and her two coworkers were not displeased with their employ there. They weren’t paid in gold bullion, but they made decent tips and they all liked their boss. Dad and his crew had been sent to picket because, having organized the Captain Cook hotel the summer before, the local needed to expand their membership rolls and show some progress to the International.

Mom held out, the union moved down the street to harass some other small business owner who couldn’t afford their demands and life went on.

Growing up, I loved my dad’s stories about organizing for labor and he had some compelling stories that would rightly break your heart and turn you into a unionist. But Dad’s stories left a lot out. He didn’t mention things that didn’t put him and his fellow organizers in the best light. Mom was the one who told me about the Haymarket Riot, for example, because even after she joined the union, she was never a particularly loyal member — at least not enough to ignore history.

I give credit where credit is due and there were many instances where unions were champions for the working people when big business owners were acting wrongly. But let’s take a sane look at the history instead of acting like all that violence was the fault of the companies, when in fact, much of it was perpetrated by the unions.

“Those who tell you of trade-unions are bent on raising wages by moral suasion alone are like people who tell you of tigers that live on oranges.” – Henry George, 1891

Labor unions are collections of working people who try to increase wages and improve working conditions for the members of the collective.
Sounds good. Where do I sign up?
Well, there is the matter of tactics. Exactly how do labor unions increase wages and improve working conditions? As Henry George suggested, trade unionists have a history of violence.

 

Image result for image of american trade unions 1830sContrary to popular belief, trade union groups have been around in North America for almost as long as Europeans have. For a long time, they had a tough go of it because the early settlers were no really steeped in “working-class solidarity” and they were highly suspicious of the unions well-earned reputation for violent and criminal behavior. Some unions were and remain secret societies with strictly enforced oaths and members engaged in intimidation, threats, vandalism and violence, most especially against uncooperative workers, who were called “blacklegs” back in colonial times and “scabs” by men like my father.

At the founding of the America Republic, government-granted monopolies and cartels were not popular. These were a people who were deeply suspicious of government and the concentration of power into only a few hands. They celebrated private property, freedom of contract, competition and freedom of movement among occupations. Let’s just set aside the topics of slavery and indentured servitude for the time being. If you were legally a free man, they thought you should actually be free.

Legal courts didn’t much like union methods and employers, consumers and workers often resisted militancy. Yes, employers resisted unions, but the majority of workers was intensely anti-union too. This was an open society on the edge of a vast frontier, farm-oriented, sprawling and free and wages in North America were frequently double those paid in England because free labor was so scarce here.

Image result for image of american trade unions 1830sSo while unions existed, they accounted for less than 1% of the work force until the 1870s.  If a union declared a strike and then lost, it usually collapsed and withered away. Most unions failed when a depression commenced because unions stubbornly insisted on maintain wage rates even as wage rates fell elsewhere in response to current economic reality. Therefore, nonunion labor became less expensive, causing production costs to fall. Unemployment would fall, usually shortening economic depressions by expanding output and employment. Wage-price flexibility acted like shock absorbers in the economy.

Unil the 1870s and 80s, unions in the American economy were a curiosity confined largely to skilled trades in big cities and on railroads, until political philosophy shifted toward collectivism during the “progressive era”. Then national trade unions gained a real foothold.

Just take a pause here and stop and think. Back in the days when liberty was a valued principle, trade unions were not in demand because ….

Well, it certainly wasn’t because working conditions were incredibly better and benefit programs were flowing to every citizens. Unions existed. Most Americans were aware of them, but they chose not to participate in them because … well, they recognized that limiting your employment choices was a good way to go hungry and they didn’t much like the violence of the unions.

Next article

Posted September 6, 2016 by aurorawatcherak in History, Uncategorized

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Rich Lowry wrong on labor – Fairbanks Daily News-Miner: Letters To Editor   Leave a comment

Rich Lowry wrong on labor – Fairbanks Daily News-Miner: Letters To Editor.

Yes, I’m mining our local press and the opinions of Fairbanksans.

Let me start by saying my dad was a union organizer back in the 1930s and I respect him for that. In those days, a worker had no guarantee at all of safety or even getting paid for work they had already done. An owner could do whatever he wanted and since there was a vast pool of unemployed to replace a worker with, there were no consequences. Unions forced the laws to change and that was a good thing. Employers really do owe workers pay for the work they do and protection from unsafe conditions (within reason). Workers should have the right to organize to pool their resources for health insurance and retirement and if the employer wants to participate in order to keep his workers, then that’s a good practice.

My objection to unions (and I am a union member) is that it is forced. My employer doesn’t have a choice in the matter. I do not have a choice in the matter. My money is used for political causes and candidates I would never support. I can’t work if I’m not a union member — at least not if I want to make a decent living — so it feels an awful lot like slavery. My husband, a trade union member, agrees. He’d love to be able to start his own business, but if he does so, he knows the union he’s  member of will crush him. He knows this because the union has done so to others who have made the mistake of not falling in line like good little socialist sheep.

Sooner or later, things will come a head. The United Auto Workers Union is an example of what happens when low-skilled workers organize and force huge concessions from employers who must operate within the parameters of economic reality. The companies go bankrupt because they can’t jack prices high enough to cover wages and benefits. Bankruptcy forces the unions to return to reality and then they whine their workers are not being treated fairly.

The man who wrote this letter is still unacquainted with reality.

Posted February 26, 2014 by aurorawatcherak in economics

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