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Union Monopolies: Government-sanctioned, Mob-approved July 26, 2006

Posted by federalist in Economic Policy, Regulation, Unions.

Unions in principle sound reasonable: If the capital behind production can organize itself into corporations for collective risk-taking, presumably the labor involved in that production should also have the right to “incorporate” to collectively bargain for security.

The problem is that in practice every union turns into a mafia seeking above-market rents on its monopoly.

WSJ recently reported on the longshoremen unions.

The longshoremen’s unions — the International Longshoremen’s Association on the East and Gulf coasts and the International Longshore and Warehouse Union on the West Coast — have expanded their power. That is partly because the unions aggressively guard their position at the chokepoint of global trade. They have also shrewdly turned technological change to their advantage and formed powerful alliances with affiliated unions, such as the truckers who carry goods to and from docks.

What’s this?  Collusion to restrain competition?  Before we read any further, we had better brush up on United States Antitrust laws:

Sherman Antitrust Act
This Act expresses our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers. This Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids, and allocate customers, which usually are punishable as criminal felonies.

The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct.

Now, let’s go back to that WSJ report and see what these unions are getting away with:

Shippers that sign master contracts with the longshoremen aren’t allowed to use nonunion workers without obtaining clearance from the union.

Wow, sounds pretty anticompetitive!  But maybe this is all just for the protection of the workers.  Is this union conduct resulting in higher prices?

According to the Pacific Maritime Association, average earnings for full-time longshoremen working 2,000 hours a year are $123,464. Foremen make about $192,463. By comparison, the Center for Automotive Research estimates the average United Auto Workers member at one of the Big Three earns about $74,500 a year, based on 2,000 hours of work.

The WSJ goes on to note that these wages are often four times higher than wages for comparable blue-collar jobs in the area.

Applicants — even college graduates — are clamoring for these longshore jobs. When the Port of Los Angeles needed to fill 3,000 jobs in August 2004, more than 300,000 people applied for the positions, which were awarded via lottery. 

Indeed: A lottery in which we, the consumers and shareholders, are buying the tickets, but union members are collecting the payouts.  Oh, and you think the mob might like a situation like this?

The ILA is being threatened with possible federal oversight because of alleged affiliation with organized crime.

Big surprise there.  So where’s the Justice Department Antitrust Division when you need it?



1. federalist - January 21, 2007

Good source of more information is the National Right to Work Legal Defense Foundation.

2. federalist - January 31, 2007

Latest developments c/o WSJ editorial board:

The Labor Department reported last week that U.S. union membership keeps shrinking, which helps explain why unions have made easing the rules for organizing one of their top political priorities. And in some places, they’ve got a good chance to succeed.

Unions lost 326,000 members in 2006 and the percentage of working Americans who belong to a union dipped to 12%, continuing to fall from the high of 34% in the 1950s. Today only one in 13 private-sector workers is a member of a labor union, while four times as many Americans own stock as belong to a union.

Big Labor’s response has been to redouble efforts to rig the rules to make union organizing much easier. So in Congress the number one AFL-CIO priority is “card check” legislation, which would end secret ballots for organizing elections at worksites. Union reps would know which workers voted “no” and thus be able to exert enormous peer pressure to conform. Given union history, this would surely include threats and other intimidation. Democrats on Capitol Hill are likely to bring “card check” up for a vote on very short notice — the better to prevent business from mobilizing against it.

Meanwhile, at the state level, unions are trying to exploit their legislative victories in November by overturning right-to-work laws. These laws prohibit employers from requiring workers to join a union as a condition of employment. They also protect workers from having to pay union dues whether they belong to the union or not — dues that often go to political causes that workers don’t support.

Iowa is emerging as the first test of this effort, thanks to Democratic control of the Governorship and both legislative houses for the first time in 40 years. Iowa has been a right-to-work state for 60 years, which is one reason the state has been able to hold on to some of its manufacturing base. Though neither new Governor Chet Culver nor legislators campaigned against right-to-work, unions are now demanding a vote to gut the popular law.

The proposed law wouldn’t require workers to join a union, but it would mandate that all workers pay union dues whether they join or not. The unions call this a “fair play law” because all shop employees have to pay equally for union activities. But this is a strange definition of “fair” because it allows unions to dun workers without their consent.

If the Iowa legislature wanted to chase jobs and employers out of the state, they couldn’t come up with a better plan than underming right to work. Leo Troy, an economist at Rutgers University, has studied the issue and found that “right-to-work laws are strongly correlated with faster growth in jobs and personal income.”

Many international and domestic companies won’t consider locating a plant in a non-right-to-work state. Most of the new auto plants owned by Mercedes, Nissan, BMW and Honda are located in Alabama, South Carolina, Texas and other right-to-work locales. A recent survey by the National Right to Work Institute found that, between 1986 and 2006, 11 right-to-work states have added 104,000 auto manufacturing jobs, a 63% increase. The non-right-to-work states lost 130,000 auto jobs, or 15% over the same period.

Iowa has one of America’s older populations, and the state’s politicians have been fretting for years about the difficulty of keeping their young people from fleeing for better economic opportunities in other states. If Iowa Democrats placate Big Labor and join New Jersey, New York, Michigan and Ohio in all but forcing workers to join unions, they can expect an accelerating exit to warmer economic climes.

3. federalist - June 15, 2007

WSJ May 17 issue details the latest shenanigans in Washington state to gut “paycheck protection” — the laws that prohibit unions from using the obligatory dues of nonmembers for political activities without their consent.

4. federalist - June 17, 2007

Holman Jenkins in WSJ 23 May elaborates on the damage unions have done to U.S. auto brands.

With the collapse of the DaimlerChrysler experiment, it might be useful to stop referring to “domestic” and “foreign” auto makers. The important distinction is between auto makers bound by UAW contracts and those that aren’t.

5. federalist - August 5, 2007

John Mackey, the controversial CEO of Whole Foods Markets, is worth quoting on the subject of worker unions:

The union is like having herpes. It doesn’t kill you, but it’s unpleasant and inconvenient.

The choice is not ‘Work for WFM on our terms or starve,’ but rather ‘Work for us on the terms we offer, or work for . . . other employers on the terms they offer.'”

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