Union Monopolies: Government-sanctioned, Mob-approved July 26, 2006Posted by federalist in Economic Policy, Government 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?