Laws dating to 1935 pit employees against their bosses, a zero-sum game that hurts everyone.
To a union leader, the question “What’s in it for the employer?” might seem bizarre. The point of organizing is to improve labor’s position against management. But much has changed since Congress passed the National Labor Relations Act in 1935—when workplaces were largely unregulated, the Great Depression had pushed Americans to the brink, and labor unrest was widespread. The NLRA’s objective was not only to empower workers but also to end what Sen. Robert Wagner, its sponsor, called “a procession of bloody and costly strikes, which in some cases swelled almost to the magnitude of national emergencies.”
Today bargaining over employment terms is mostly superfluous. The law already mandates a 40-hour week, paid overtime, a minimum wage, workplace safety standards and employer-sponsored health insurance. The government provides benefits to the elderly, disabled and unemployed. Yet unions still must find something to deliver to members. Thus the prevalence of destructive work rules, grievance procedures and seniority systems.
In 1936, after hundreds of deaths in auto plants, General Motors workers in Flint, Mich., launched their famous sit-down strike. Among their demands: permission to speak in the lunchroom. Seventy years later, GM had converted the strike site into a “rubber room” where laid-off union members earned salaries and benefits for doing nothing.
The NLRA no longer accomplishes its goals. Its adversarial model pits labor against management, winning short-term “gains” for workers while reducing their long-term value. Employees seem to understand this. Since 1953 union membership has fallen from 36% of the private labor force to less than 7%, while workers’ total share of national income has increased to 66.1% from 64.5%.
As its relevance waned, Big Labor mutated into a political force. Of the $2.1 billion spent on federal elections by the 30 largest donors since 1990, unions accounted for more than $1 billion—and directed 97% to Democrats. This has locked the status quo in place: Democrats prize union money, so they shun real reform. Republicans seem content to watch the dysfunctional system wither.
What a missed opportunity. Organized labor is not inherently partisan or economically counterproductive. Under Europe’s “Ghent system,” workers voluntarily join unions independent of their jobs. Denmark and Sweden have no required workplace elections or compulsory dues, yet a majority of workers are in a union. Adapting this model to the U.S. could allow new labor organizations—call them “co-ops”—to do a lot:
• Expand social insurance. In Europe, unions administer systems of voluntary unemployment insurance. Although the vast U.S. labor market may seem dissimilar, most American social insurance is already managed by the states. Co-ops could supplement or supplant these programs.
• Improve job training. Today’s training, run mostly by government agencies and well-meaning nonprofits, is ineffective. Putting co-ops in charge would keep training focused on workers, who measure their investment by the resulting job, not “enrollment” or “graduation.” Co-ops may be better positioned to negotiate with employers over matters like apprenticeships. One example today is the Las Vegas Culinary Union’s academy, created in partnership with the city’s hotels. But such programs remain few, and they come accompanied by the aggressive, oppositional tactics of Big Labor.
• Strengthen civil society. Co-ops could act as mediating institutions for poor and less-educated Americans, helping workers build relationships, access resources and provide mutual aid. Policy makers on the left and right generally agree on the need to rebuild social capital but find few levers. Reforming organized labor is a plausible one.
• Resolve problems with employers. Co-ops could help workers build collaborative relationships with management. Such arrangements exist in many countries as company-specific “works councils.” In Germany they’re present at almost 90% of companies with more than 500 employees.
But works councils are prohibited in the U.S. The NLRA treats them, absent a formal union, as an unfair labor practice. The failure to fix this is another reminder that Big Labor looks after itself first. Unions rightly fear works councils as competition. The late AFL-CIO president Lane Kirkland once called them “sham organizations designed to prevent real worker empowerment.”
• Provide alternatives to government rules. The argument for employment regulation—say, the minimum wage—flows from the premise that individual workers lack the leverage to protect their interests. But co-ops bargaining collectively should be able to accept lower standards if the company offers something compelling in return.
A retail chain might eliminate “on call” scheduling in exchange for lowering overtime pay below time-and-a-half. That could reduce costs while increasing worker satisfaction. Allowing such deals would end zero-sum negotiating, since each side would have something to gain. Imagine an employer dropping an inch-high stack of rules on the table and asking the co-op representative: “What will it take to get rid of this?”
• Support workers in the gig economy. Co-ops could extend employment-like benefits to Uber drivers, contract coders, call-center temps and other nontraditional workers. Here the NLRA delivers the worst of both worlds: The law pushes employers to avoid worker relationships that could trigger collective bargaining, but it offers little to the pseudo-employees this dynamic creates. Co-ops would give structure to otherwise free-floating careers.
How to achieve this vision? The smoothest path would involve four steps. First, amend the NLRA to allow alternative labor groups. The law covers any worker organization whose purpose is “dealing with employers.” That jurisdiction should be narrowed, while leaving current arrangements in place for union members who are satisfied.
Second, formally recognize the “labor co-operative”: a nonprofit controlled by dues-paying members to advance employment and create value, not merely reallocate it.
Third, allow works councils. The law should include checks to ensure councils aren’t dominated by the employer. If workers began to think a council no longer represented their interests, they might have recourse to a snap “vote of no confidence.”
Fourth, let employees designate a co-op or works council as their representative for collective bargaining. Put most employment regulations on the negotiating table to create space for mutually beneficial deals.
It isn’t crazy to think labor groups should focus on delivering benefits to workers instead of campaign contributions to politicians. Or to suggest employees in the modern economy have more to gain from collaboration with their bosses than from conflict. If Democrats and Republicans want robust civil society, competitive markets, widely shared prosperity, and a stronger safety net, they have more than enough reason to give organized labor—in a new form—a fresh look.
This piece originally appeared in The Wall Street Journal
Oren Cass is a senior fellow at the Manhattan Institute. Follow him on Twitter here. This article was adapted from his essay, “More Perfect Unions,” in City Journal’s “The Shape of Work to Come” issue.