Freedom and American Labor Relations Law: 1946-1996

MAY 01, 1996 by CHARLES W. BAIRD

Dr. Baird, a contributing editor of The Freeman, is a professor of economics and the director of The Smith Center for Private Enterprise Studies at California State University, Hayward.

At the close of World War II, large segments of the American economy were in the iron grip of forced unionism. The Norris-LaGuardia Act (1932) together with the National Labor Relations Act (NLRA, 1935) had effectively exempted labor unions from the ordinary rule of law to which all individuals and other institutions were subject. John L. Lewis, the notorious leader of the United Mine Workers, actually was allowed to endanger the war effort in 1943 by a massive strike in the coal mines. Only the passage of the War Labor Disputes Act of that year, over President Roosevelt’s veto, stopped the strike.[1] That Act expired after the war, and there followed an “unprecedented wave of strikes that were to almost overwhelm the nation during the winter of 1945 and the first half of 1946.”[2] Accordng to Congressman Fred Hartley, the co-sponsor of the 1947 Taft-Hartley Act, labor racketeering was so pervasive that the press almost ignored it as commonplace.[3]

Largely because of union-based chaos, terror, and corruption, and the widespread perception that the Democratic party was in thrall to union bosses, Republicans gained control of both houses of Congress in the off-year elections of 1946 (as they did again in 1994). The 80th Congress, which was seated in January 1947, immediately entered into a battle with President Truman on the issue of taming the unions. The result was the Taft-Hartley Act which became law on June 23, 1947, by a congressional override of Truman’s veto.

This essay first outlines some basic principles of the common law of contract, property, and tort and explains what Norris-LaGuardia and the NLRA substituted for it. It then explains the ineffectiveness of the Taft-Hartley to ameliorate the worst excesses of Norris-LaGuardia and the NLRA despite its authors’ hopes. The third section discusses the phenomenon of government-sector unionism and why it is the only form of unionism that is prospering in 1996. In conclusion, on the horizon may be changes in American labor relations law that are consistent with the principles of a free society articulated by FEE in the past fifty years.

Common Law, Norris-LaGuardia, and the NLRA

Common Law and Voluntary Exchange

The definitive common law critique of American labor relations law is Richard Epstein’s “A Common Law for Labor Relations: A Critique of the New Deal Labor Legislation.”[4] Prior to the 1930s, the employment relationship was simply one of voluntary exchange contract between a willing employer and a willing employee. The proper role of government was “to prevent the private use of force and violence and to enforce promises, except when those promises are induced by duress or misrepresentation, or made by persons of manifest incompetence such as infants and insane persons.”[5]

The common law develops over time as successive judges discover the moral and logical implications of the principles of voluntary exchange in many different kinds of disputes in many different kinds of circumstances. Voluntary exchange contracts meet four criteria:

1. Entitlement. All parties to the contract must either own that which they offer to exchange, or they must be acting as the authorized agent of the owner(s). In employment contracts, workers own their labor and employers own the job (in the sense that they own or lease the plant and equipment and site at which the job is done). Workers and employers are free to hire or not hire agents to represent them in the labor market.

2. Consent. All parties to the contract must agree to enter into the contracting relationship—i.e., to bargain with each other—and to the terms at which any actual exchange takes place—i.e., the final outcome of the bargaining. No forced bargaining can result in a voluntary exchange contract.

3. Escape. All negotiating parties must be able to turn down any offers they do not like and walk away from the bargaining process without losing anything to which they are entitled. There is no requirement that bargaining continue until a satisfactory deal is made or that either side must make concessions.

4. No misrepresentation. No party to the contracting may defraud any other parties. That is, no one can tell a lie. This leaves room for honest error. Someone can make a claim that he believes to be true when made, even if it turns out later to be incorrect. Moreover, this criterion does not require the parties to tell all they know. It merely proscribes any person saying something he knows to be false.

Employers’ Common Law Rights

Prior to Norris-LaGuardia and the NLRA, an employer had a common law right to resist the unionization of his firm. For example, as part of a job description, he was free to include a requirement that a prospective employee refrain from union-related activity. An employee who accepted a job offer that included that union-free (or so-called “yellow dog”) requirement was bound by his promise. A union that subsequently tried to get the employee to join a union and also to continue the employment relationship would be guilty of the tort of inducement of breach of contract.[6] Note, the union-free agreement did not prevent workers from joining unions. They simply required that if a worker chose to join a union he had to sever the employment relationship. Prior to 1932 government enforced these union-free contracts like any other contracts.[7] In 1932, Norris-LaGuardia made them unenforceable, and three years later the NLRA made them illegal.

Another way that an employer could legally resist unionization under the common law was to hold meetings with employees, on his time and premises, to try to convince them, without misrepresentation, that unions were a bad choice for employees. The NLRA imposed a gag order on employers. The NLRA forced employers to remain silent on the question of unionization. It was none of their business. It was up to the employees and the unions, without intervention from the employers, to decide the issue of unionization. Section 8(1) made it an “unfair labor practice” for an employer “to interfere with” the employee’s decision to unionize. While interference by means of force or fraud are properly enjoined, “interference” in the form of honest expressions of opinion to the effect that unions are bad for workers are not.

Another way an employer could legally resist unionization under the common law was to refuse to hire a worker who was known to want to unionize his firm. Workers in unionized firms are faced with conflicting demands for loyalty. If I run a union-free shop my employees will be more loyal to the firm than if they are unionized. As an ordinary measure of self defense, the common law would allow me to refuse to hire anyone who would reduce the loyalty of my employees to my firm. Section 8(1) of the NLRA made it an unfair labor practice for an employer to discriminate for or against a worker based on his membership or nonmembership in a union.

Employers also had a common law right to choose to promote unionism. For example, an employer was free to agree with a union to hire only workers who had chosen to be its members. So long as the employer and the union were not forced to bargain over the issue, and so long as both consented to the arrangement without coercion or misrepresentation, it was a voluntary exchange contract which the government was supposed to enforce. The NLRA forced employers to bargain with unions to set up such “closed shops.” Moreover, the unions with which the employers were forced to bargain were not made up of voluntary members. The NLRA forced all individual workers to be represented by the union that was “selected” by a majority of workers.

Employers had a common law right to set up their own unions. These were called company unions, and they were very common during the 1920s. They were programs by which employers sought to bring employees into some decision-making. They were early examples of what today are called worker-management cooperation schemes. They were also used by some employers to deflect the organizing efforts of independent unions. The NLRA made company unions illegal.

Other Special Privileges for Unions

The common law of property entitles an owner to “possess, use, and dispose” of that which he owns as he sees fit so long as in so doing he does not engage any other person in any involuntary exchange. Jones who seeks to enter, remain on, or use the property of Smith may do so only with Smith’s permission. Absent that permission, Jones is guilty of trespass. Moreover, if Jones blocks access of others to Smith’s property, through force or threat of force, Jones is guilty of trespass. What then of union organizers, strikes, and picketing?

As we saw above, Section 8(1) of the NLRA made it an unfair labor practice for an employer “to interfere with” an employee’s decision to unionize. In addition to restrictions on employer speech, this was interpreted to prevent an employer from denying union organizers access to his plant. Suppose my employees are interested in signing up for computer instruction. A representative of a computer training firm shows up at my door asking to speak to my employees. I have a common law right to prevent that representative from entering my plant at any time and talking with my employees during working hours. But, under the NLRA, if a union organizer showed up at my door asking to speak with my employees, I could not keep him out of the plant. I could prevent him from talking with my employees while they were working, but I could not prevent him from talking with them, on my premises, during breaks.

A strike is more than just a collective withholding of labor by workers who each regard the employer’s offer of compensation (or some other proposal) to be inadequate. A strike is that, but it is also, through picket lines, an attempt to prevent replacement workers, suppliers, and customers from doing business with the struck firm. Mass picketing, even if it is peaceful, is intimidating. It is an implicit (and most often an explicit) threat of harm to anyone who crosses the line. As such, picketing is trespass against the common law property right of the strike target to do business with willing replacement workers, suppliers, and customers. The U.S. Supreme Court upheld that common law right in American Steel Foundries v. Tri-City Central Trades Council (257 U.S. 184 [1921]). The Court limited pickets to one per entrance, and stated that all pickets had to be actual employees of the firm being picketed. Strangers, nonstrikers bussed in by the union to create formidable picket lines, were forbidden to picket in strikes. The Court allowed one picket per entrance on free speech grounds, but disallowed mass picketing and any picketing by strangers on grounds of the common law of property and trespass. Norris-LaGuardia repealed the Court’s Tri-City decision. It permitted mass picketing, including picketing by strangers.

Worse than that, it allowed violent picketing to prevent replacement workers, suppliers, and customers from crossing the line. Norris-LaGuardia prohibited federal judges from issuing injunctions against picketing, or other strike activity, even if violence was involved. (It was left to the usually outnumbered local police officials to keep the peace.) Specifically, Section 7(c) of Norris-LaGuardia said no strike activity could be enjoined by a federal court unless testimony, subject to cross examination and accompanied by rebuttal testimony, had been taken which leads the judge to think “that as to each item of relief granted greater injury will be inflicted upon complainant [the employer seeking the injunction] by the denial of relief than will be inflicted upon defendants [the violent union picketers] by the granting of relief.” Suppose a gang is raiding an office building. If Section 7(c) of Norris-LaGuardia applied, a judge could not enjoin the raid unless competing testimony led him to think that the damage to the building owner if the raid continues would be greater than the damage to the gang if the raid were stopped.

There is a common-law proscription of “combinations in restraint of trade.” The 1890 Sherman Antitrust Act and the 1914 Clayton Act were codifications of that common law proscription. Prior to Norris-LaGuardia, labor unions were subject to the antitrust laws. Some secondary strikes (e.g., a strike of the employees of firm A against firm B that is a customer or a supplier of firm A) were enjoined as impermissible restraints of trade. Violent primary strikes were also sometimes enjoined on antitrust grounds. But Norris-LaGuardia gave unions immunity to the antitrust laws.[8] Strikes, even violent strikes, and even secondary strikes, could not be enjoined on any grounds, whether trespass or antitrust, in federal courts.

The common law includes the doctrine of respondeat superior, or vicarious responsibility. If I am driving a delivery truck for my employer and I hit a pedestrian, I am liable for damages, and so, too, is my employer. As a driver for him, I am his agent. He is responsible for any damages I create. Under the common law, the same rule would apply to labor unions. Under the NLRA, if I am walking a picket line at the behest of a union, and I hit a replacement worker over the head with a hammer, I am liable for damages (and even criminal prosecution by local authorities), but the union that placed me on that picket line is not. Norris-LaGuardia gave unions complete freedom from vicarious responsibility. No union can be prosecuted for any of the acts of its strikers, no matter how violent or even if union bosses order the violence.

The heinous results of the special privileges granted to unions by Norris-LaGuardia are well illustrated in the case of Apex Hosiery Co. v. Leader (310 U.S. 409 [1940]). The employer was operating on an open-shop basis. The union wanted to force all 2,500 employees to unionize. Eight employees who were union members, joined by members of the same union who were employed by other firms (i.e., strangers to Apex), undertook a sitdown strike. In other words, they occupied the premises of the employer, prevented willing employees from working, and proceeded to destroy machinery on the shop floor. The company applied for an injunction against the union on Sherman Act grounds of a violent combination in restraint of trade including trespass on private property. In the end the U.S. Supreme Court denied the company any relief by claiming that Norris-LaGuardia protected unions from any antitrust prosecution. In the words of the Court, “Restraints not in the [Sherman] Act when achieved by peaceful means, are not brought within its sweep merely because, without other differences, they are attended by violence.” So much for the basic responsibility of government “to prevent the private use of force and violence” and maintain the peace.

Workers’ Common Law Rights

Workers also had a common law right to resist unionization. This was part of their freedom of association as guaranteed by the Bill of Rights in the U.S. Constitution. Each individual worker could decide for himself, notwithstanding what a majority of his colleagues might choose, whether to be represented by a union in the sale of his labor. A worker who wanted such representation joined the union and paid its dues. A worker who wanted to speak for himself in the sale of his labor neither joined a union nor paid its dues.

The NLRA destroyed the freedom of association of individual workers who wanted to remain union-free although a majority of their colleagues wanted to unionize. Specifically, Section 9(a) states that, “Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment.” Individuals are forbidden to represent themselves. They are forbidden to enter individual contracts with their employers.

Unionists excuse this tyranny of the majority on the grounds that it is democratic. But “democracy” is a form of government designed to give the governed some say over what the government does. Democracy is an institution originally conceived as a way of preventing government from trespassing on the protected private domain of human action. The Founders of the American republic never intended that the will of a majority should control anything except their short list of constitutionally authorized governmental activities. The sale of a private citizen’s labor is not a governmental matter. It is a private matter. Under common law, government’s only legitimate role in the employment relationship is to enforce voluntary exchange contracts.

Moreover, the “selection” made by a majority in Section 9(a) was not really democratic. The National Labor Relations Board (NLRB) was given the authority to determine what a majority wants. There was no mandatory secret ballot election. Union “organizers,” could solicit signatures of workers on an eyeball-to-eyeball basis. Workers who refused to sign often did so at their own risk. The NLRB could order an election, but it didn’t have to. Inasmuch as members of the NLRB were selected from the ranks of union sympathizers, they usually certified exclusive bargaining agents without benefit of a vote.

The scheme was undemocratic in yet another respect. The NLRA did not require any regularly scheduled re-elections. Once certified as an exclusive bargaining agent, a union was presumed to continue to have majority support forever, even if all the workers that originally “selected” it left the firm and were replaced with new workers. The new workers never had any kind of say in the question.

To make matters worse, the NLRA forced employers to bargain with unions over whether to force all the employees represented by an exclusive bargaining agent to be, or become, dues-paying union members. Section 8(3) of the NLRA makes it an unfair labor practice for an employer “to encourage or discourage membership in any labor organization: Provided, that nothing in this Act . . . shall preclude an employer from making an agreement with a labor organization . . . to require as a condition of employment membership therein” [emphasis in original]. Note the duplicity: An employer cannot encourage or discourage membership in a union, he can only require it.

Forced union membership is called “union security.” Unions were granted security against workers who want to be union-free. Thus workers who didn’t want to associate with unions were coerced in two ways. They were forced to have a union “selected” by a majority of their colleagues represent them, and they were forced to pay tribute (dues) to those unions as a condition of continuing their employment relationship with their employers.

Unions defended their union security (forced membership) schemes on the grounds that since Section 9(a) forced unions “selected” by a majority to represent all workers, it was only fair for all workers to be members. Otherwise a minority would be “free-riders.” They would get the benefits of union representation for free. Of course, if unions represented only their voluntary members, only those who individually wanted union representation, there could be no free-riders. Unions, and the politicians in their thrall, were not embarrassed by the fact that they fought long and hard to get the privilege of exclusive representation and then claimed that exclusive representation “forced” them to represent all workers who therefore must be forced to join and pay dues.

The common law, as we have seen, is based on voluntary exchange contracting between individuals. The preambles of both Norris-LaGuardia and the NLRA asserted that workers do not have “actual liberty of contract,” thus the common law was inadequate to protect the rights of workers. Employees were, the preamble to the NLRA asserted, on the short end of an “inequality of bargaining power,” with employers. This idea that workers on their own are helpless in the labor market so they need unions for self-defense is a hoary myth. As W. H. Hutt[9] and, later, Morgan Reynolds[10] have demonstrated, data falsify the myth. In the nineteenth century, long before the existence of significant unionization in the United States, real wages were on a strong upward trend, and worker-initiated job switching was frequent and became increasingly common. Contrary to the view that says large-scale employers exploited unorganized workers, large firms paid workers more than small firms. Contrary to the claim that employers had unfair bargaining power because unorganized workers could not afford to turn down even poor job offers, workers with savings weren’t able to bargain for better wages than workers without. Finally, contrary to the conventional wisdom that unions were necessary to offset employer combinations designed to keep wages low, most employer associations were formed in self-defense against unions that had already been formed to attempt to take wages out of competition.

The question of bargaining power in voluntary exchange contracting is one of alternatives. The labor market is like any other market. Buyers (employers) compete with other buyers, and sellers (employees) compete with other sellers. When a buyer and seller come together to bargain on a mutually beneficial exchange, their bargaining power depends on those two types of competition. Other things being equal, the employee has more bargaining power when there is strong competition among employers to hire his type of labor and when there is weak competition among other workers trying to sell his type of labor. Other things equal, the employer has more bargaining power when there is weak competition among employers seeking to hire similar labor and strong competition among workers seeking to sell similar labor. Obviously, insofar as a worker is not responsible for denying an employer access to other workers selling similar labor, there are no moral grounds for government to favor the employer over the worker. Why then, insofar as an employer is not responsible for denying a worker access to alternative employment opportunities, should government favor the worker over the employer? The Fourteenth Amendment to the U.S. Constitution is supposed to guarantee the employer and the employee “equal protection of the laws.”

The Taft-Hartley Act

The Taft-Hartley Act is named after its principal sponsors: Senator Robert A. Taft and Representative Fred A. Hartley, Jr. The purpose of the legislation was to “restore some balance” between unions and employers, by curbing the power of unions. Whereas the preamble of the NLRA blamed employers for the ills the legislation was supposed to cure, the preamble of Taft- Hartley assigned equal blame to unions and employers. Whereas the announced intent of the NLRA was to promote and assist unions, the announced intent of Taft-Hartley was to protect the rights of workers, unions, and employers. Whereas under the NLRA the official job of the NLRB was to get workers into unions, under Taft-Hartley its official job was to be a neutral umpire in labor disputes.[11] Whereas the NLRA assured the right of workers to unionize, Taft-Hartley added a right of workers to refrain from organizing. Whereas the NLRA listed only employer unfair labor practices, Taft-Hartley added a list of union unfair labor practices. There is no doubt that Taft-Hartley did tip the scales toward more balance. However, it fell far short of achieving that balance.

The union movement labeled Taft-Hartley the “Slave Labor Bill” when it tried, unsuccessfully, to defeat it in Congress in 1947. The union movement referred to Taft-Hartley as the “Slave Labor Act” in its successful attempt to re-elect President Truman and restore both houses of Congress to the Democrats in the elections of November 1948.[12] Notwithstanding that victory, the union movement failed subsequently to repeal Taft-Hartley. It is still the law of the land. Far from a slave labor act, I think it is better labeled the “Continued Forced Unionism Act of 1947.”

First, Taft-Hartley didn’t reach many of the points raised in the previous section at all. Union-free (or “yellow dog”) contracts are still illegal. Employers are still not free to refuse to hire union sympathizers. Employers are still not free to form company unions and offer them to their employees as alternatives to independent unions. In fact, in 1992 the NLRB ruled that a worker-management cooperation program in a nonunion firm was an illegal company union and was used by the employer in an illegal way to discourage unionization.[13] Now, it seems, labor-management cooperation that is not union-management cooperation is illegal. Mass picketing by strangers is still legal. Unions are still immune to the antitrust laws. They are still exempt from the common-law principle of vicarious responsibility; and, in primary strikes, they are still immune to injunctions against any, including violent, strike activity. In United States v. Enmons (410 U.S. 396 [1973]) the Supreme Court explicitly granted unions immunity to the Hobbs Anti-Extortion Act.[14] As long as their activities are related to their legitimate purposes in a primary strike, they can be as violent as they like. Individual perpetrators of violence are liable to prosecution by local authorities, but the unions themselves are not. Taft-Hartley did affect some points raised in the first section, but inadequately. It restricted union secondary strikes, but the NLRB found ways around the restrictions, so in 1959 the Congress had to strengthen those restrictions in Title VII of the Landrum-Griffin Act. The restrictions are still inadequate.

Taft-Hartley did not directly affect the access of union organizers to employers’ property, but it did so indirectly. In 1956 the Supreme Court, in NLRB v. Babcock & Wilcox (351 U.S. 105), apparently inspired by the intent of Taft-Hartley to restore balance, made a distinction between union organizers who are already employees and those who are not. The former were granted unrestricted access, the latter were granted access if they had no other means of communicating with the workers they sought to organize. This was called the principle of accommodation. In 1992, the Court, in Lechmere v. NLRB (502 U.S. 527), the first majority opinion written by Justice Clarence Thomas, greatly restricted this principle of accommodation to those (very few) cases of worker isolation such as in residential logging camps.

The authors of Taft-Hartley tried to address the issue of employer free speech. Section 8(c) of the Act states that “The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under and of the provisions of this Act, if such expression contains no threat of reprisal or force or promise of benefit.” It is supposed to apply equally to unions and to employers, but, in practice, it does not. For example, employers are forbidden to promise a pay raise in exchange for a worker’s vote against a union in a certification (or representation) election. But unions can promise a pay raise to a worker in exchange for a vote in favor of a union in the same election. The fig leaf that covers that unequal protection of the law is that unlike the employer, the union doesn’t promise the pay raise out of its own pocket. Worse, in NLRB v. Gissel Packing Co. (395 U.S. 575 [1969]) the Supreme Court said that the employer was guilty of an unfair labor practice because, during a certification election, the employer claimed that it was not financially strong so that if the union were certified and then called a strike the plant may have to be closed. The Court said that an employer may express general views about unions, but any predictions of consequences of any specific unionization must be limited to consequence beyond the employer’s control. So much for meaningful free speech.

While the NLRA imposed a duty on employers to bargain with certified unions, the unions had no such duty; they could refuse to bargain with impunity. Taft-Hartley imposed a duty to bargain on unions as well as employers. Moreover the bargaining had to be in “good faith.” In practice this means that employers (and, to a smaller extent, unions) have to grant concessions during the bargaining. For example, in NLRB v. General Electric Co. (418 F. (2d) 736 [1969]), the employer was found guilty of an unfair labor practice because its representative placed a proposal before the union negotiators and, in effect, said take it or leave it. The employer refused to grant concessions. Note that this, too, is a restriction on employer free speech. In this case the employer arrived at his offer by polling the workers to see what they would consider reasonable. The employer was chastised for dealing with the union through the employees rather than, as Taft-Hartley requires, dealing with the employees through the union.

Taft-Hartley did make some significant changes with regard to the “selection” of unions to be exclusive bargaining agents. First, it mandates secret ballot elections unless the employer agrees to waive an election. The employer cannot recognize a union as the exclusive bargaining agent unless the union has majority support. Most of the time employers insist on an election as the only way a union can demonstrate that majority support. Sometimes, however, an employer will recognize a union on the basis of signed authorization cards. If a union gets at least 30 percent of the workers it seeks to unionize to sign authorization cards, it can petition the NLRB to hold a secret ballot certification election.

Taft-Hartley also added a decertification election process to the law. Once certified, a union is still presumed to have majority support indefinitely, even if all the workers that voted for the union are no longer employed by the firm; but disgruntled employees may attempt to decertify the union. Employers must keep hands off the process, but if individual employees are able to collect the signatures of at least 30 percent of the relevant workers on a petition requesting a decertification election, the NLRB will order such an election. It is as if a member of Congress could hold his office indefinitely unless some voters in his district got at least 30 percent of the eligible voters in his district to sign a petition requesting a recall election.

More importantly, Taft-Hartley did nothing to exclusive representation itself. It is still true that if a majority of workers who vote in a certification election vote in favor of a union, that union is the exclusive bargaining agent for all workers in the unit. It represents the workers who voted for it, the workers who voted for another union, the workers who voted to be union-free, and the workers who didn’t vote. It still is a winner-take-all system subject to the same objections raised in the first section of this essay.

Taft-Hartley also made some significant changes with regard to union security. It outlawed the closed shop, but put the union shop and the agency shop in its place. In the former, a worker doesn’t have to be a union member to be hired, but after a probationary period he must join the union as a condition of continued employment. The British call the union shop a post-entry closed shop. In the agency shop version of union security, workers don’t have to join unions to keep their jobs; they just have to pay union dues. It is still the case that employers are forbidden to encourage or discourage workers from affiliating with unions, they can only compel workers to do so. However, Section 14(b) of Taft-Hartley does affect union security in a significant way. It allows the individual state governments to pass right to work laws within their own jurisdictions. Twenty-one states have done so. In those states, unions and employers are forbidden to include any union security clauses in their collective bargaining agreements. In the 29 states that have failed to pass right-to-work laws, the objections raised to union security in the first part of this essay still apply.

Congress is currently debating a National Right to Work Bill, which would make all union security schemes in the private sector illegal, but President Clinton is sure to veto it. It is likely that there are insufficient votes to override the veto.

Government-Sector Unionism

Government employees were exempted from coverage under both the NLRA and Taft-Hartley. Until 1962 government employee unionism was widely regarded as unthinkable, even by union-friendly politicians such as Franklin Roosevelt and Harry Truman. However, in that year President Kennedy issued Executive Order 10988 which authorized limited, but mandatory, collective bargaining by unions representing federal employees. In Title VII of the Civil Service Reform Act of 1978, the principle of exclusive representation was imposed on federal employees, but they were spared the principle of union security. There is still a limited scope of collective bargaining. For example, federal employee unions cannot bargain over wages. Nevertheless, in 1993 President Clinton appointed the National Partnership Council whose charge it is to promote the imposition of the full burdens of private sector unionism on federal employees. With the present (104th) Congress, there is little likelihood that will happen.

After President Kennedy’s executive order, state after state imposed the full burdens of private-sector unionism on state and local government employees. At present 24 states have done so. In 1994 President Clinton appointed the Task Force on Excellence in State and Local Government through Labor-Management Cooperation to study the possibility of enacting a national government employees labor relations law to force all states to adopt Taft-Hartley-style unionism for their state and local government employees. Again, the 104th Congress is unlikely to cooperate.

However, the government sector is the only place where unionism flourishes today. In the private sector only 10 percent of the labor force are unionized. In the government sector, 39 percent are.[15] The peak year of private-sector density was 1953, when it was 36 percent. In that year figures on government-sector density weren’t even collected. Government-sector unionism was almost nonexistent, and where it did exist it was not officially recognized.

According to Leo Troy, private-sector density will be below seven percent in the year 2000, about where it was in 1900, before Norris-LaGuardia and the NLRA. Troy calls this the symmetry of history.[16] The primary reasons for the decline of private-sector unionism are the globalization of economic competition and technological changes. Competitive pressures have made it virtually impossible for employers to pass union-based cost increases forward to consumers so the employers are more resistant to unionism than they were in the past. Advances in technology have greatly decreased the market shares of blue-collar industries in which private-sector unionism had its strength. Private-sector unionism is declining in all major industrial countries.

The real threat of unionism to freedom is now in the government sector. The new president of the AFL-CIO is John Sweeney, the erstwhile president of the Service Employees International Union, which consists primarily of government employees. There are three reasons that government-sector unionism is flourishing. First, government agencies are usually monopoly providers of their products and services so it is easy for government employers to pass union-based cost increases on to customers (taxpayers). Second, government unions and government agencies that employ government workers are actually on the same side of the bargaining table. It is in the interest of both groups to pick the pockets of taxpayers and to have their budgets and responsibilities grow. Troy calls government-sector unionism the “new socialism.” It is primarily an attempt to redistribute more and more of the national income to government. Third, to a large extent the government-sector unions have organized the already organized. Union organizers, aided by favorable legislation, merely converted already established public-employee associations into unions.

Government-sector unionism is inherently anti-democracy.[17] Unionists have long argued that employment in the government sector is the same as employment in the private sector. If we allow unionism in the latter, we must do so in the former. But this argument doesn’t work. Think how collective bargaining is done in the private sector. First, the employer is forced to bargain in good faith with a certified union. The employer must make concessions to the union. Second, the employer is forbidden to deal with workers directly. The union’s approval is necessary before the employer decides anything that comes under the scope of collective bargaining. Third, the bargaining is done behind closed doors with both sides legally bound to keep the negotiation confidential until either an impasse or an agreement is reached. In sum, the employer is forced to share decision-making power with the union, and the general public is excluded from the process.

Now, wages and salaries and other terms and conditions of employment in the government sector are matters of public policy. Collective bargaining in government, on the private-sector model, means that government is forced to share its making of public policy with a private organization, on an exclusive basis. The general public is forbidden to participate in the process. The Constitution established three branches of government: the executive, the legislature, and the judiciary. There is no fourth branch of government called unions of government employees. Government employee unions don’t just lobby government on matters of public policy like other special interest groups, the Sierra Club, for example. They actually co-determine public policy with the government. This is the model from Mussolini’s Italy.

Government workers are citizens like any other citizens. Therefore, they should have the same influence on public policy as any other group of citizens. But they shouldn’t be given the disproportionate influence that mandatory, closed-door bargaining with exclusive bargaining agents in the government sector gives them. It is undemocratic for government employees to conspire with government agencies, in rooms from which taxpayers are excluded, on the size of the government budget.

In the private sector the optimal amount of unionism is whatever would emerge under neutral legislation. Government should neither support nor inhibit private-sector unionism. However, the optimal amount of unionism in the government sector is zero. It amounts to taxation of the people, by the unions, for the unions.

In Conclusion

The fiftieth anniversary year of the Foundation for Economic Education could be a watershed year in labor relations law. If the 105th Congress, which will be elected this November, is a bit more sympathetic to individual liberty than the incumbent 104th Congress (especially the Senate), and if the office of the President is filled by a similarly inclined person, all existing labor relations law could be scrapped.

Abolishing exclusive representation would protect the right of each individual to select representatives “of his own choosing.” If unions bargained for their voluntary members and no one else, union security would be moot. Moreover, returning to the common law of contract would mean making collective bargaining voluntary instead of compulsory, and restoring the right of workers and employers to resist unionization. We could return to the common law of property, by allowing owners themselves, rather than the NLRB, to decide who has access to their property. In sum, the only “unfair labor practices” would be those that are inconsistent with the principles of voluntary exchange. 

1.   Fred A. Hartley, Jr., Our New National Labor Policy (New York: Funk & Wagnalls Co., 1948), p. 16.

2.   Ibid., p. 18.

3.   Ibid., p. 41.

4.   Richard A. Epstein, “A Common Law for Labor Relations: A Critique of the New Deal Labor Legislation,” The Yale Law Journal, Volume 92, Number 8, July 1983, pp. 1357-1408.

5.   Ibid., p. 1359.

6.   Ibid., p. 1374.

7.   See, for example, Hitchman Coal & Coke Co. v. Mitchell, 245 U.S. 229 (1917). Interestingly, Morgan Reynolds, Power and Privilege, (New York: Universe Books, 1984), pp. 98-100, showed that at least in this case the union-free agreements were initiated by employees to inhibit the United Mine Workers Union organizers.

8.   Many free-market economists say that there should be no antitrust laws at all. D. T. Armentano says they have been misused to protect specific competitors rather than the process of competition. My view is that if we have antitrust laws they ought to be applied equally to employers and to unions.

9.   W. H. Hutt, The Strike Threat System (New Rochelle, N.Y.: Arlington House, 1973), Chapter 16.

10.   Morgan O. Reynolds, Power and Privilege: Labor Unions in America, op. cit., Chapter 3.

11.   R. Alton Lee, Truman and Taft-Hartley (Lexington, Ky.: University of Kentucky Press, 1966), p. 184.

12.   Ibid., Chapters 4-7.

13.   Charles W. Baird, “Are Quality Circles Illegal? Global Competition Meets the New Deal,” Cato Briefing Papers No. 18, The Cato Institute, Washington, D.C., February 10, 1993. The case was Electromation 309 NLRB No. 163.

14.   For an exhaustive record of union violence from 1947 through 1983, see Armand J. Thieblot, Jr., and Thomas R. Haggard, Union Violence: The Record and the Response by Courts, Legislatures, and the NLRB, The Wharton School, Industrial Research Unit, University of Pennsylvania, 1983.

15.   Leo Troy, “Private-Sector Unionism Weakens,” The Wall Street Journal, September 1, 1995, op-ed page.

16.   For an excellent discussion of the history and prospects of government-sector unionism and the decline of private-sector unionism, see Leo Troy, The New Unionism in the New Society (Fairfax, Va.: George Mason University Press, 1994).

17.   Robert S. Summers, Collective Bargaining and Public Benefit Conferral: A Jurisprudential Critique (Ithaca, N.Y.: Institute of Public Employment, Cornell University, 1976).


May 1996



Charles Baird is a professor of economics emeritus at California State University at East Bay.

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