How many different restaurants do you patronize? In my household the number is in double digits ranging from fast food to fine dining.
Now suppose a bare majority of the eateries in your town forces all the others into a dues-imposing “restaurant association” that fixes prices, hours and terms of service for all of them.
In this example, it is illegal for customers to negotiate with a restaurant without first going through the association. Moreover, all new restaurants must join the association, pay its dues and abide by its rules.
Economists call such an arrangement a cartel. The industry is monopolized by its trade association. Some members and the organizers are better off; customers and those members who do not wish to be subject to the cartel’s control are worse off.
Substitute workers for restaurants, employers for customers and labor unions for the restaurant association and the framework outlined above describes U.S. labor policy since the Wagner Act. Despite soaring rhetoric to the contrary industrial labor unions are simply labor cartels. (Craft unions can be somewhat different.)
Continue the narrative by allowing the restaurant association to roam from town to town trying to set up local restaurant associations. In some places they garner the necessary 50 percent plus and in others they don’t.
But now let’s add the following rule: a 50 percent majority can force the minority into the cartel but it can’t force the minority to pay dues for representation they do not want.
This proviso is right-to-work legislation. Right-to-work does two things: It partially offsets the injustice of forced association and makes the gains to the cartel organizers less than what they would otherwise be.
If State No. 1 had no right-to-work law we expect to see a higher proportion of its labor force cartelized (unionized) than in State No. 2 where a right-to-work law was in place. However, all other things equal, we would expect to see better deals for businesses in State No. 2, which would of course attract more businesses.
All content copyright ©2013 The Tribune, a division of Home News Enterprises unless otherwise noted.