Threats of strikes at two major Minnesota employers raise issues about the role of labor unions and work stoppages in an economy. Qwest settled with its union on a new three-year contract, but the outcome of Northwest Airlines’ dispute with its mechanics is still uncertain.
For an economist in his 50s, one salient point is just how rare strikes have become. Most people under age 40 cannot recall an age when strikes were relatively commonplace in the United States, as they were for the first six decades of the 20th century. Both the number of strikes and total workdays involved dropped sharply over the past 30 years.
We are in a labor environment today where strikes that barely would have made the front page in local newspapers 50 years ago now are national news. This has varied effects on society. Whether these results are good or bad depends on the values of the beholder. What is clear is that the “rules of the game” have changed substantially, and these changes play a role in the decline in strikes.
Economic activity occurs in a legal and cultural context. Even conservative economists who favor letting market forces determine most decision-making agree that setting and enforcing the rules of the game is one of government’s most important tasks. Just what the rules should be is where the rub comes.
Conservatives favor few laws about how employers and workers interact. They generally oppose allowing unions to link union membership to employment or to picket in ways that restrict the movement of anyone else.
Liberals usually favor more regulation of what employers can and cannot do and laws that facilitate union activity including organizing and strikes.
While organizing and strikes go back a long time, the history of modern labor unions begins largely after the Civil War. From the 1870s to the 1930s, rules of the labor market game generally favored employers. Legislation and court decisions limited organizing and strikes.
Indeed, the orientation of many judges was so strong that the Sherman Anti-Trust Act, passed in 1890, turned out to be more of an anti-union instrument than an anti-monopoly measure. Only after the Clayton Act was passed 20 years later — which explicitly stated that “the labor of a human being is not a commodity or article of commerce” — were anti-trust laws primarily applied to monopolies or price-fixing cartels rather than unions.
Despite a generally hostile legal environment, union organizing was active and strikes were common throughout this era. Greater legal protection of union activity was an important element on “progressive” agendas.
The Great Depression tipped the scales. The 1935 National Labor Relations Act explicitly recognized the legitimacy of labor unions and generally favored union-organizing activities. It also established a National Labor Relations Board, which still functions. Labor unionists held important appointed positions and had great clout in President Franklin Roosevelt’s administration.
The 1935-1965 period was in many ways the golden age of U.S. trade unionism. The proportion of the labor force in unions was more than three times as high then as now, and virtually all the important national industries — mining, steel, chemicals, autos, telecommunications, railroads and airlines — were unionized.
Some argue that prosperity in the 1950s and 1960s was harder on unions than economic adversity would have been. Low unemployment and rising earnings fostered complacency. Other issues such as the Vietnam War and school desegregation drove a wedge into the traditionally tight relationship between unions and the Democratic Party.
Even though a majority of blue-collar union members voted for President Ronald Reagan in 1980, the Reagan administration moved federal policy away from favoring union activity. Presidents appoint members of the NLRB, which oversees how labor laws are applied. Republicans have held the White House for 16 of the last 24 years, and the NLRB has been increasingly less favorable to unions in its decisions.
Deregulation of industries and the erosion of monopoly power through greater international trade probably are more important factors in the decline of union power. When railroads, airlines and telephone companies were regulated monopolies, managers could be blasé about granting higher wages. The costs could easily be passed to consumers, and there was little effect on profits. That no longer is true in any major U.S. economic sector.
Whether you think erosion of union strength is good or bad depends largely on your party affiliation. In general, comparisons between countries and over time show that economies where union power is limited tend to have somewhat faster economic growth. Such economies also tend to have more unequal income distribution and harsher working conditions. Again, how you value this apparent trade-off depends on your political views.
© 2005 Edward Lotterman
Chanarambie Consulting, Inc.