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Do Unions Really Raise Wages?
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Economics in One Lesson
him? And as long as this situation exists, there will be a tendency for
employers to bid workers up to their full economic worth.
All this does not mean that unions can serve no useful or legiti-
mate function. The central function they can serve is to assure that all
of their members get the true market value of their services.
For the competition of workers for jobs, and of employers for
workers, does not work perfectly. Neither individual workers nor indi-
vidual employers are likely to be fully informed concerning the condi-
tions of the labor market. An individual worker, without the help of a
union or a knowledge of “union rates,” may not know the true market
value of his services to an employer. And he is, individually, in a much
weaker bargaining position. Mistakes of judgment are far more costly
to him than to an employer. If an employer mistakenly refuses to hire
a man from whose services he might have profited, he merely loses the
net profit he might have made from employing that one man; and he
may employ a hundred or a thousand men. But if a worker mistakenly
refuses a job in the belief that he can easily get another that will pay
him more, the error may cost him dearly. His whole means of liveli-
hood is involved. Not only may he fail promptly to find another job
offering more; he may fail for a time to find another job offering
remotely as much. And time may be the essence of his problem,
because he and his family must eat. So he may be tempted to take a
wage that he knows to be below his “real worth” rather than face these
risks. When an employer’s workers deal with him as a body, however,
and set a known “standard wage” for a given class of work, they may
help to equalize bargaining power and the risks involved in mistakes.
But it is easy, as experience has proved, for unions, particularly
with the help of one-sided labor legislation which puts compulsions
solely on employers, to go beyond their legitimate functions, to act
irresponsibly, and to embrace shortsighted and antisocial policies.
They do this, for example, whenever they seek to fix the wages of
their members above their real market worth. Such an attempt always
brings about unemployment. The arrangement can be made to stick,
in fact, only by some form of intimidation or coercion.
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One device consists in restricting the membership of the union on
some other basis than that of proved competence or skill. This restric-
tion may take many forms: it may consist in charging new workers
excessive initiation fees; in arbitrary membership qualifications; in dis-
crimination, open or concealed, on grounds of religion, race, or sex;
in some absolute limitation on the number of members; or in exclu-
sion, by force if necessary, not only of the products of nonunion
labor, but of the products even of affiliated unions in other States or
cities.
The most obvious case in which intimidation and force are used to
put or keep the wages of a particular union above the real market
worth of its members’ services is that of a strike. A peaceful strike is
possible. To the extent that it remains peaceful, it is a legitimate labor
weapon, even though it is one that should be used rarely and as a last
resort. If his workers as a body withhold their labor, they may bring a
stubborn employer, who has been underpaying them, to his senses. He
may find that he is unable to replace these workers by workers equally
good who are willing to accept the wage that the former have now
rejected. But the moment workers have to use intimidation or violence
to enforce their demands—the moment they use pickets to prevent
any of the old workers from continuing at their jobs, or to prevent the
employer from hiring new permanent workers to take their places—
their case becomes questionable. For the pickets are really being used,
not primarily against the employer, but against other workers. These
other workers are willing to take the jobs that the old employees have
vacated, and at the wages that the old employees now reject. The fact
proves that the other alternatives open to the new workers are not as
good as those that the old employees have refused. If, therefore, the
old employees succeed by force in preventing new workers from tak-
ing their place, they prevent these new workers from choosing the best
alternative open to them, and force them to take something worse. The
strikers are therefore insisting on a position of privilege, and are using
force to maintain this privileged position against other workers.
If the foregoing analysis is correct, the indiscriminate hatred of the
“strikebreaker” is not justified. If the strikebreakers consist merely of
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