[COLUMN] Depression-era Labor Laws Harmful in Modern Global Economy

Chalk up another “victory” for unions as American Airlines filed for Chapter 11 bankruptcy protection Tuesday. The reason? High labor costs compared to its competitors.

It seems the unions were demanding things such as a 10 percent signing bonus followed by 7 percent raises in each of the next three years for pilots. Seven percent raises?! Even in a great economy, a demand for 7 percent raises for three straight years combined with a 10 percent signing bonus would be ludicrous. It is a downright criminal demand in this miserable economy when the company was failing to make a profit.

And what was American offering that was so horrible that the unions would rather destroy the company than accept?

American offered job protection, signing bonuses, and pay raises to the tune of a 3.21 percent raise in the first year followed by three annual increases of 1 percent each. In turn, American asked for changes to pension benefits and increased productivity.

With each passing day I grow more disgusted with labor unions. The sheer stupidity of driving your employer into the ground shows a complete disregard for anything beyond selfish greed and thirst for power coupled with total ignorance of how economies work. Oh, and a love of Marxism to boot.

In theory, I have no problem with unions. The right of workers to band together to bargain with employers is a great example of the freedom of association, a fundamental human right.

Unfortunately, the labor scheme we have today is far afield from simple freedom of association thanks to a large body of outdated statutory law.

Take, for example, the un-American Norris-LaGuardia Act of 1932. The act prohibits union-free contracts, what the union thugs pejoratively call “yellow-dog” contracts. Yet, if we were to accept the notion that workers have the freedom to associate, should not other workers, those who rightfully reject unionism, have the freedom to contract with an employer free of unions?

Of course. Only an anti-freedom, un-American thug would say otherwise.

The act also gives unions special legal immunity under antitrust laws. Whatever labor unions do, even if violence is involved, cannot be enjoined as an illegal restraint of trade. That means that strike targets, their suppliers, their customers, and replacement workers may be prevented from exercising their fundamental right to voluntary trading and exchange.

While antitrust laws themselves should not exist, because they serve as an un-American restraint on trade, the idea that any group should get a special exemption under the law makes it even worse.

The National Labor Relations Act of 1935 further eroded the idea of free association when it gave federal protection to the idea of exclusive representation. That means that during a certification election, if a majority of workers wish to be represented by a union, then all the workers are forced to be represented by that union. That is not free association by any stretch of the imagination. To be free, the association must also be voluntary.

Also, the act outlaws company unions or their modern-day equivalent, labor-management cooperation committees, also known as “quality circles” or “employee involvement teams.”

Another federal pro-union law is the Davis-Bacon Act of 1931, which costs federal taxpayers about $8.6 billion a year by preventing the federal government from using more efficient, nonunion workers through its requirement that all federal contractors and subcontractors pay a “prevailing wage,” which really means an inflated union wage.

It is patently silly that our dynamic modern economy is being hampered by laws that made little sense 75 and 80 years ago and make even less sense today. This is true even if you buy into the myth that unions were somehow once needed and were responsible for needed labor reform.

American Airlines is but the latest example of how unions work. They drain a company of its lifeblood through exorbitant salaries and benefits, driving up the cost of everything because companies have to pass that cost onto their customers. Or, even worse, force companies to relocate overseas where the labor market is more reasonable. These contracts also prevent companies from hiring more workers.

In the end, unions hurt the middle class the most, the very segment of the population they claim to be helping through higher costs and fewer jobs.

Just look at the auto industry. Many middle class families cannot afford a new automobile because of unions. Union labor contracts add thousands of dollars to the cost of a new car. Then, when the money ran out, the government came in with bailout money, which actually prevented the auto companies from becoming more efficient through the bankruptcy process and maintained those economically inefficient but golden labor contracts.

If we are to avoid future bailouts and bankruptcies, we need to put an end to all these ridiculous federal laws that give unions special protection.

Charles W. Baird, professor emeritus of economics at California State University, East Bay, outlined a plan in a June paper for the Cato Institute (http://tho.lu/3n6).

Among his wise recommendations were the elimination of exclusive representation or, barring that, at least passing a national right-to-work law. Other suggestions included repealing Davis-Bacon rules, allowing company unions, protecting replacement workers, allow nonhiring of union organizers, and requiring greater union financial transparency (unions hide their money by placing it in various trust funds, which President George W. Bush tried to fix, but President Barack Obama is turning back those reforms).

It is past time that the Congress put some sanity back into our labor market and begin to undo the damage from these Depression-era labor laws.

Cross posted at Think Free.

Read more at Light of Liberty