Concerned for Liberty

Labor Unions Destroy Businesses

The first organized national labor unions were formed in the 1820s. Initially, the unions provided what many believe to be a positive impact on the work force by banding together to reduce the common 12 hour work day to 10 hours, and later in 1866 further decreasing it to 8 hours. In 1866 the American Federation of Labor (AFL) was formed. The AFL was instrumental in passing the Clayton Act of 1914, which allowed workers to use boycotts, strikes, and picketing for negotiations. Consequently, the Clayton Act paved the way for unions to increase their member base to strengthen and rule the industries they represent with no regard to the well being of the companies. Although the original intentions of the unions is said to have been necessary to protect the workers from being abused, it is debatable and many would argue it was not necessary. As a libertarian, I support the notion that unions were not necessary, which is the intention of this post. Government intervention always results in the reduction of individual liberty.

Many years have passed since the inception of labor unions and the government has implemented an abundance of regulations to ensure workers are treated fairly and receive just compensation in the workplace. Today, discrimination laws, Equal Employment Opportunity, The Americans with Disabilities Act, Fair Pay Act, a minimum wage and many other laws exist to supposedly protect workers. Therefore, I believe it is fair to say that unions are no longer necessary in the workplace. One can only imagine how many more federal laws will be created in the future with or without the support of unions.

Labor unions have no concern for the best interests of the businesses which employ them; their loyalty is strictly to the union and its leadership. The undeniable consequence of such behavior is the financial ruin of companies with labor unions. A recent example was the bailout of General Motors and Chrysler, had it not been for the federal government coming to their rescue one could safely assume that both companies would have filed bankruptcy and liquidated their assets. This would have permitted other automakers to compete for GM and Chrysler’s customers and provide an opportunity for new businesses to enter the industry. Prior to the government’s hostile takeover, GM and Chrysler made numerous unsuccessful attempts to broker deals with the United Auto Workers (UAW). This was a slap in the face to the American taxpayers. The audacity the UAW leadership had, to risk every single members’ job during a time when the likelihood of failure was eminent, in hope of receiving aid from the federal government. Or was it eminent at all? It is possible one could assume, that the union leadership had already been promised the government would bail them out. Either scenario unveils the fact that no concern for the businesses’ well being was ever considered.

Labor unions have become the heart of the democratic party. Promises are made by the politicians to support the labor union’s demands in exchange for votes. Currently, the unions are pressuring Congress to pass the Employee Free Choice Act, which would eliminate employees rights to private-ballot elections. This will inevitably result in peer pressure and coercion from the unions and pro-union employers. Essentially, fear mongering along with threats and in some cases physical violence are the tactics used to target those who oppose unions from forming. These tactics have already been used against scabs (workers who fill union jobs during strikes) during union strikes.

Labor unions pose a serious threat to businesses and the economy as a whole. They operate as a self-destructive force, capable of bankrupting any company no matter how big or small. The same holds true in the public sector in which government employees are permitted to join unions. What is so startling is that the unions do not seem to understand that their demands can in fact bankrupt the employer. It is as if they are not aware of how the private sector operates and the vital role profits play in the longevity and success of a company. The similarity of unions and politicians in regard to their lack of understanding of how the free market operates is startling. Just as politicians continue to spend money and pass legislation on an infinite basis, unions operate in a similar manner, placing contractual demands on employers with a seemingly delusional perception of the destructive consequences of their demands.

In conclusion, unions will eventually bankrupt every company they represent. This is a bold statement, yet one that will prove true in the future if the current expansion attempts succeed and most assuredly if the Employee Free Choice Act passes. Numerous industries have already been affected in the past, and many more are currently on the verge of collapse. As revenues continue to decline during the current recession, and unions refuse to agree to sensible negotiations, something will have to give eventually.