Milton Friedman, Right to Work, and Free Riders
APRIL 09, 2013 by CHARLES W. BAIRD
On December 11, 2012, Rick Snyder, governor of Michigan, signed a bill that made the state—home of the United Auto Workers (UAW)—the twenty-fourth right-to-work (RTW) state. A RTW law prohibits unions from forcing workers to pay union dues and fees as a condition of continued employment.
The UAW and other unions reacted with predictable wrath and violence, even going so far as to tear down a large Americans for Prosperity tent with several pro-RTW people in it. Not to be outdone, state representative Douglas Geiss, a reliable union crony, threatened that blood would be spilled in reaction to the new law.
Earlier that year neighboring Indiana had become the twenty-third RTW state. People in the old Rust Belt, it seems, are beginning to renounce their long-time allegiances to coercive unionism. Unions and their apologists are desperate to quash the emerging consensus that unionism is legitimate if and only if it is voluntary. Only voluntary unionism is consistent with workers’ freedom of association.
One of the arguments used by union apologists in their reaction to the Michigan story is the observation that Milton Friedman, whom they call conservative but who was actually a classical liberal, was opposed to RTW laws. Thus, they argue, conservatives who support RTW are hypocrites.
Here is how Martin Fridson put it in Forbes magazine on December 14:
The NLRA imposes forced association on workers through “exclusive representation,” which is more appropriately called monopoly bargaining privileges for unions. Once a union is certified (by the National Labor Relations Board) as an exclusive bargaining agent for employees in a firm, all such employees must accept such representation whether they, as individuals, want it or not. Individuals are even forbidden to represent themselves.
Friedman is clear that such monopoly should not be permitted. In his view, getting rid of the monopoly is better than relying on RTW laws to ameliorate the malign consequences of the monopoly. I agree. Repealing the NLRA would eliminate the labor monopoly in question. Under those circumstances RTW laws would be illicit.
However, in my view, if we cannot get rid of the monopoly, RTW laws are an acceptable means by which some modicum of workers’ freedom of association can be protected. I don’t know whether Friedman would agree with this point.
All union apologists use the free-rider problem as justification for forcing workers they represent to pay union dues and fees as a condition of continued employment. They argue that inasmuch as unions, under the NLRA, must bargain for all workers, not just their voluntary members, all workers will benefit. Any dissenting worker who didn’t pay the union for those benefits would get them for free. He would be a free-rider. He wouldn’t pay his “fair share.”
This hoary argument is wrong for at least four reasons.
- Most of the time, if the union represented only its voluntary members no one except union members would get union-generated benefits. The only exception would be union-bargained improvements in the job environment such as improved safety. Exclusive representation creates the possibility of free riding. If unions want to get rid of free riders, they should advocate repeal of exclusive representation.
- The free-rider idea is based on the assumption that a dissenting worker gets a net positive gain from union representation. However, this gain is never demonstrable. Costs and benefits are subjective. Suppose a union bargains for and gets increased safety on the job. Say a dissenting worker values that increased safety by the same amount he values $100, but he values the forced association with the union by the same amount he values losing $300. On the dissenting worker’s value scale there is a net loss of $200. If he is forced to pay dues, he would be a forced rider.
- This forced-rider argument applies to all the alleged benefits of being represented by a union. Moreover, even in wages, salaries, and pensions there is no evidence that a union-represented worker is better off than a union-free one. Private sector unions are now admitting that the terms they can get are severely constrained by competitive market (even global) competition.
- Consider market dynamics. For example, a union-impaired employer is more likely to lose market share than a union-free one. Over time, union rules reduce productivity growth and even reduce the level of productivity. If union-impaired employers shrink relative to union-free ones, employees of the former have less job security than employees of the latter. In this case, union representation hurts workers. Forcing them to pay for the hurt is like forcing victims of assault to reward the perpetrators.
If more and more states adopt RTW laws, the union movement will become so anemic that perhaps even its crony politicians might summon the courage to repeal the NLRA.No, I am not an incurable optimist. I just like to dream.