Fact Sheet: Trust The American Worker to Know What Is Best

Trust Workers to Support Unions Voluntarily if They Are Beneficial

It Is Preposterous to Assume Monopolistic Unionism Makes All Workers Better Off Economically

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What is the impact on your compensation of handing a union monopoly power to deal with your employer on matters concerning your pay, benefits, and work rules?

A quick look at unionstats.com — a website more formally referred to as Union Membership, Coverage and Earnings from the CPS Database — shows that in present-day America, at least, there is no clear, simple connection between unionization and higher pay, and there may be none at all.

For example, according to unionstats.com, a compilation of federal data from the monthly household Current Population Survey (CPS) constructed by economists Barry Hirsch, David Macpherson, and William Even, the mean hourly pay in 2023 for union- free workers with private-sector manufacturing jobs was $39.46. That’s 26% higher than the average for private-sector factory workers who are union members.

Moreover, among the 18.1 million U.S. workers with front-line jobs in the wholesale and retail trade sector, the man hourly pay in 2023 for those who are union- free was $27.84, or 12.3% higher than the mean for those who belong to a unionⁱ.

Union ‘Wage Compression’ Typically Means Lower Pay For the Most Productive

Of course, it is at least theoretically possible that low average educational attainment and experience for union members, and/or other demographic factors influencing compensation, are sufficient or even more than sufficient to account for their substantially lower mean hourly pay in the private-sector manufacturing and trade sectors. In fact, that is what Hirsch, Macpherson and Even assert.

But unionized manufacturing workers who know they are earning eight dollars an hour less than the mean for union-free manufacturing workers will understandably be skeptical if told they are better off because Big Labor bosses have monopoly power to “negotiate” their terms and conditions of employment.

Even in cases where the overall net impact of unionization is to increase the share of business revenues that go into wages for production employees, some or many of those workers may still end up worse off.

Among the types of workers whose paychecks are often smaller because they are subject to so-called union “exclusivity” are those who are especially talented and/or hardworking. In fact, over the years a number of academic apologists for Big Labor have made no bones about the fact that workers whose productivity is above average typically get paid less when they are unionizedⁱⁱ.

Take, for example, Richard Rothstein, now a distinguished fellow with the union boss-foundedⁱⁱⁱ Economic Policy Institute. In a brief survey^iv of union- friendly academic literature on the impact of “exclusive” union bargaining on employees with diverse levels of skill and industriousness, Rothstein has written:
In [unionized] firms, wages of lower-paid workers are raised above the market rate, with the increase offset . . . [in part] by reducing pay of the most productive workers. If firms with this practice are rare, competitors will be able to bid away their best workers.

When union officials do actually secure across- the-board higher pay for workers than employers
acting purely on their own initiative would offer, there are almost invariably consequences that may be detrimental to those same workers’ economic interests over time.

Wage Gains That Reduce Returns For Shareholders Ultimately Also Hurt Workers

In a scholarly article^v analyzing Organized Labor’s overall impact on private companies’ economic performance, the aforementioned Barry Hirsch has observed that wage gains extracted from employers by union negotiators are rarely if ever fully compensated for by higher productivity. Normally unionized businesses have to compete with other firms on price as well as quality and therefore cannot simply raise their prices to offset the cost of the pay increases to which they acquiesce. Instead, union boss-secured pay gains typically result in lower earnings for the company, lower returns on investment for shareholders, and lower stock prices.

Especially when the unionized business faces stiff competition and must deal with unforeseen changes in consumer demand, Big Labor “victories” in contract negotiations can even lead to bankruptcy and unemployment for production workers.

A recent poignant example is the downfall of San Francisco’s Anchor Brewing Company, a firm long beloved by beer drinkers across the U.S.A. that had been in business since the late 19th Century. In March 2019, union militants, acting with ample assistance from the virulently anti-free market Democratic Socialists of America (DSA)^vi, secured monopoly-bargaining privileges over workers at Anchor^vii, which just two years earlier had been bought out by Sapporo, the oldest brand of beer in Japan.

At the end of 2019, officers of International Longshore Workers Union (ILWU) Local No 6 won ratification of a three-year contract^viii that standardized pay rates and raised wages by 20% to 25% as of January 2021.

Even After COVID Lockdowns Finally Ended, Anchor Kept Losing Millions of Dollars

This turned out to be more than the company could afford at a time when mid-sized craft brewers like Anchor are facing, as Reason magazine’s Eric Boehm observed last year, “competitive pressures from larger breweries but are increasingly losing market share on the local side too, as smaller craft breweries continue to proliferate and attract new customers.”^ix

Anchor lost millions of dollars in 2020, primarily because of COVID-19 and related government-ordered lockdowns that shut down bars and restaurants in California and elsewhere. But even in 2022, after America had learned to live with COVID-19 and the lockdowns had ended, the brewery still lost roughly $10 million^x.

In July 2023, Sapporo announced that, despite its efforts to save the company by releasing new products and making brand investments, business had failed to turn around, and consequently Anchor would be shutting down for good.

Subsequently, local ILWU officials purported for a time to be making a serious bid to save Anchor workers’ jobs by buying the bankrupt company’s brand assets in partnership with other bidders, but in January 2024 they acknowledged having withdrawn from the process.^xi That meant all Anchor production workers had lost their jobs.

Billionaire Hamdi Ulukaya, the founder and CEO of Chobani yogurt, bought the bankrupt company^xii at the end of May and indicated he planned to reopen the brewery, but roughly seven months later there is still no public timeline for when, if ever, Anchor will be back in business.

‘Practically Impossible’ to Assess if Unionization Is a Net Benefit For a Particular Employee

Over the course of five years, it seems, Anchor unionization turned out to be a much better financial proposition for union organizer and DSA member Brace Belden than it was for Anchor’s rank-and-file employees. Belden’s organizing success greatly raised the profile of his TrueAnon podcast, which according to a summer 2023 New York Post article now rakes in “more than $1.2 million a year from Patreon subscribers alone”^xiii!

Pay and job security are just two of many ways in which unionization potentially affects an employee’s working life. In many cases, it may be difficult if not impossible to place a dollar value on the change, but for many employees the nonquantitative consequences of Big Labor’s monopoly power are the most important. That’s one important reason why determining “whether the long-term benefits to a particular employee are greater than the burdens and risks of union membership is practically impossible,”^xiv as the late Clyde Summers, a Pennsylvania law professor and arguably America’s preeminent 20th Century authority on Organized Labor, once observed.

Take the case of Ben Branch, now a finance professor emeritus at the Isenberg School of Management of the University of Massachusetts. From 2014 to 2019, he was one of a five plaintiffs in a state court case^xv
challenging the constitutionality of union “exclusivity” in the government sector. As a 2018 brief filed in this case by National Right to Work Legal Defense Foundation attorney Bruce Cameron documented, none of the plaintiffs wished to be subject to “exclusive” union representation regarding key terms and conditions of his or her employment^xvi.

The principal reason put forward by Branch was not directly about his pay or job security. Rather, he
charged that the Massachusetts Teachers Association (MTA/NEA) union officials who are entitled to speak for all UMass professors make it harder to “weed out ineffective and unproductive faculty.” He further charged that the MTA hierarchy “places additional burdens on the most effective and productive faculty” by favoring and protecting “the least productive and effective faculty.”

You Know More About Your Own Life Than Anyone Else

In subsequently rejecting the plea by Branch and his fellow plaintiffs to allow them to represent themselves with regard to important workplace matters, rather than be forced to accept the “representation” of an unwanted union, the Massachusetts Supreme Court did not contest their contentions that they were worse off as a consequence of being subject to union monopoly control.
Rather, relying on private-sector precedents such as Ford Motor Co. v. Huffman,^xvii the court found that the “mere” fact some workers are harmed by Big Labor rules while others are helped does not mean union officials have violated their very limited obligations under the so-called “duty of fair representation.” This “duty” stems from their privilege to bargain on behalf of union members and nonmembers alike in contract negotiations. As long as the contract provisions that help some employees at others’ “expense” are “reasonable” and “negotiated in good faith,” concluded the court, they are statutorily and constitutionally permissible.

In short, CPS data, scholarly analyses of how union monopoly bargaining works in practice, the personal experience of ordinary employees such as the former staff members of Anchor Brewing in San Francisco, and judicial cases such as Branch v. Commonwealth

Employee Relations Board all show that the individual worker can undeniably be hurt by unionization.
It is brazenly presumptuous of union bosses, and Big Labor politicians and academics, to claim, explicitly or tacitly, that they know better than any worker does whether unionization constitutes a net benefit for him or her. In the words of the great 19th Century political theorist John Stewart Mill, “with respect to [his or her] own . . . circumstances, the most ordinary man or woman has means of knowledge immeasurably surpassing those that can be possessed by anyone else.^xviii

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Stan Greer is the National Institute for Labor Relations Research’s senior research associate. He may be reached by e-mail at stg@nrtw.org or by phone at 703-321-9606. Nothing here is to be construed as an attempt to aid or hinder the passage of any bill before Congress or any state legislature.

Endnotes
i. See the unionstats.com website.
ii. See, e.g., Sheldon Leader, Freedom of Association: A Study in Labor Law and Political Theory, Yale University Press, 1992, pp. 175-176.
iii. See Paul Taylor, “Analyzing Alternatives in Labor’s Think Tank: Liberal Economists Study Government’s Role,” Washington Post, February 19, 1987.
iv. “Productivity Forever,” American Prospect, Summer 1993, pp. 36-37.
v. “What Do Unions Do For Economic Performance?” This article appears on pp. 193-237 of the paperback edition of What Do Unions Do? A Twenty-Year Perspective, edited by James T. Bennett and Bruce E. Kaufman, Transaction Publishers, 2007.
vi. See Brace Belden, Brendan Kierans, and Evan Mclauhlin, “Anchor Steamed: How DSA Worked to Unionize an Iconic Craft Brewery,” Democratic Left (Democratic Socialists of America), Fall 2019.
vii. Joe Eskenazi, “‘I Am F—ing Ecstatic,’ Anchory Brewery Workers Overwhelmingly Vote to Unionize,” Mission Local, March 13, 2019.
viii. Dave Infante and Jiaqi Wang, “Anchor Brewery: One Year In: Lessons Learned at the Legendary Brewery,” VinePair, February 1, 2021.
ix. “RIP Anchor Steam, the San Francisco Brew That Saved Craft Beer in America,” Reason online, July 15, 2023.
x. Noah Goldberg, Camryn Brewer, “S.F.’s Anchor Brewing Survived Quakes, Fires and Prohibition. Now It Could Close For Good,” Los Angeles Times, July 12, 2023.
xi. “Anchor Union Withdraws From Bidding on Anchor Beer,” Who Owns My Beer blog, January 31, 2024.
xii. Jordan Valinsky, “Anchor Brewing Gets New Lease on Lifer After It Finds an Unexpected Buyer,” CNN, June 3, 2024.
xiii. Mary Kay Linge, “San Fran Socialists Killed Historic Anchor Brewing, Critics Say,” July 15, 2023.
xiv. See Summers’ review of Sheldon Leader’s Freedom of Association, supra, Comparative Labor Law Journal, Winter 1995,
pp. 262-272.
xv. Branch v. Commonwealth Employment Relations Board (2019).
xvi. See “Lawmakers Urged to Liberate Civil Servants,” National Right to Work Newsletter, March 2019 edition, pp. 1-2, for a summary of the brief.
xvii. 345 U.S. 330 (1953).
xviii. On Liberty, Chapter Four (1859).