Saturday, December 15, 2012

"Right to Work" is no Misnomer

Half Right

Did Not Volunteer For This

As previously explained on this blog, so-called "right to work" laws ban collective bargaining agreements that require all employees, under threat of termination, either to join a union or, in the alternative, pay union dues pursuant to so-called "agency security agreements."  The 1947 Taft-Hartley empowered states to pass such bans, thereby repealing that portion of the 1935 National Labor Relations Act that had empowered firms and unions to negotiate so-called closed shop agreements that required individuals to join a union as a condition of employment at the firm governed by the collective bargaining agreement.   As discussed earlier this week, Michigan recently joined Indiana as a "right to work" state.

Over at the Washington Post, Ezra Klein takes issue with the term "right-to-work," claiming that laws like those recently passed in Michigan protect no such thing.  As Klein points out, employers impose all sorts of contractual requirements on employees, including dress codes, bans on employees working for a competitor, and even regulations governing what employees may or may not tweet.  If an employee violates these terms, Klein says, a firm can fire the offending employee, and no one would claim that such termination violates the employee's "right to work."  After all, Klein says, the employee agreed to such terms when she accepted employment.  If he or she does not like them she can exercise her "right to work" elsewhere.  In the same way, Klein says, closed shop or agency shop agreements are simply contractual terms to which individuals have agreed by going to work for a unionized firm.  Thus, he concludes, the term "right to work" is a misnomer; no one has a "right to work" at a firm while ignoring contractually-imposed working conditions.

On the one hand, Klein's argument contains a refreshing articulation and defense of the right to enter and enforce contracts in a free society.   He is absolutely right that society should generally respect and enforce agreements between employers and employees over the terms of employment.  He is also right to point out that terminating an employee for breaching such a freely-entered contractual provision does not offend the employee's "right to work."  Individuals hold "rights" against the government, and not against other private individuals or firms to whom they have made voluntary contractual promises.   In the same way, an individual who voluntarily agrees not to criticize his employer as a condition of employment cannot invoke the First Amendment (the "right to speak") when fired for tweeting disparaging comments.   Ditto for an employee who voluntarily works for a firm that does not provide the exact form of health insurance the individual desires.  Those who argue to the contrary confuse "freedom" with "power."   The "right to work" or "freedom" does not grant an individual the power force employers to hire an employee on the latter's unilateral terms.

Klein goes astray, however, when he analogizes garden variety contractual provisions such as dress codes to closed shop and agency shop agreements.  This analogy fails for two independent reasons.

First, while firms impose and enforce dress codes and similar provisions voluntarily, the same cannot be said for collective bargaining agreements.  Many firms have no desire to enter such agreements in the first place, but federal law gives them no choice.  In particular, the National Labor Relations Act, mentioned above, requires firms to retain employees who join or seek to organize unions, whether the firm wants to or not.  Moreover, the Act also bans so-called "yellow dog contracts," that is, agreements whereby an employee agrees not to join a union.  The Supreme Court held that the NLRA is within Congress's Commerce power, even when applied to manufacturing, in NLRB v. Jones and Laughlin Steel, 301 U.S. 1 (1937).   As a result, the institution of collective bargaining very often infringes upon the very freedom of contract that Klein invokes.  Thus, closed shop and agency shop agreements are often the result of State-amplified union power, which impells firms to enter them, and not voluntary contractual agreement.  Such provisions do not amount to the sort of labor-instigated violence dramatized in films such as "On the Waterfront," which called attention to the plight of American workers victimized by their own union.  Nonetheless, such provisions function as a State-imposed tax on the "right" of an employee to choose for whom to work, indistinguishable from a tax on a decision to publish a book, attend a church or write a blog post.  While employees do "volunteer" to abide by dress codes, they do not volunteer to enter agency shop "agreements," any more than Terry Malloy, played by Marlon Brando, volunteered for (much worse) physical abuse at the hands of Johnny Friendly and his thugs.

To be sure, some firms might wish to enter collective bargaining agreements, regardless of federal coercion to do so.  Ironically, however, the mandatory nature of the NLRA makes it impossible to distinguish  (potentially) voluntary from involuntary agreements.

Second, unlike dress codes, collective bargaining agreements impact third parties who are not privy to the agreements.  In particular, such agreements, like other cartel agreements, reduce the output of labor below the competitive level and thus distort the allocation of resources, reducing society's overall output.  Any benefits that union members derive from such agreements are more than offset by the harm that such agreements impose on the rest of society.   Thus, to the extent that agency security agreements, for instance, pad union coffers, the ability to impose such contracts via collective bargaining agreements will increase the payoff from unionization and thus encourage the formation of more cartels.