How to Improve Life for American Workers

Employment rules appear to help workers. But they don't.


It seems intuitive that a free market would lead to a "race to the bottom." In a global marketplace, profit-chasing employers will cut costs by paying workers less and less, and shipping jobs to China.

It's a reason that progressives say government must step in.

So America now has thousands of rules that outlaw wages below $7.25 an hour, restrict unpaid internships, and compel people to pay union dues. These rules appear to help workers. But they don't.

"Collective bargaining" sounds good. Collective bargaining "rights" even better. Employers are more sophisticated about job negotiations than individual employees, so why shouldn't workers be able to join together to bargain?

They should be. But in 27 states, labor laws force workers to join unions. When CBS offered me a job, I had to join AFTRA, the American Federation of Television and Radio Artists. I didn't want to. I don't consider myself an artist. I didn't want to pay dues to a union that didn't appear to do much. But I had no choice.

Laws that force workers to join unions treat millions of diverse people, most of whom want very different things, as undifferentiated collectives. That means that good workers get punished.

When I was at ABC and CBS, union culture slowed us down. Sometimes a camera crew took five minutes just to get out of the car.

But without a minimum wage or union protection, wouldn't employers abuse workers? In a real free market, no, they can't. Because workers have choices. Employers have an incentive to maintain a good relationship with employees—one that keeps them reasonably loyal—because workers can quit and go work for a rival.

If globalism leads to a "race to the bottom," why do 95 percent of American workers make more than minimum wage? It's not because companies are generous, but because competition forces them to offer higher wages to attract good workers. Companies may move jobs overseas to escape high U.S. wages (or U.S. taxes and regulations), but they clearly prefer to keep jobs here, close to their headquarters, suppliers, and customers.

Unions once helped advance working conditions, but now union rules hurt workers because they stifle growth by making companies less flexible. When I arrived at CBS, I was stunned to discover that I couldn't even watch a video in a tape player without risking a grievance being filed by a union editor, saying I'd encroached on his job. Work ground to a halt while we waited for a union specialist to press the "on" button. ABC and CBS, being private businesses that had to compete, eventually got rid of those rules. But it took years.

Unions eventually hurt union workers because unionized companies atrophy. Non-union Toyota grew, while GM shrank. JetBlue Airlines blossomed, while unionized TWA and Pan Am went out of business. Unions "protect" workers all the way to the unemployment line.

When I criticize compulsory unions and regulations, it's not because I want rich employers to get fat off the labor of workers. It's because I've learned that markets are fluid—and the best way for more workers to find good jobs is to leave everyone free to make any contract they wish.

Outlawing the low-wage job that taught a teenager skills or the internship that gave a kid a foot in the door doesn't insulate people from hardships of the market. It insulates them from knowledge about how to function in an ever-changing economy.

That's not compassion. That's a denial of reality.

Advocates of "kind" central planning overlook the gradual, piecemeal improvement that markets make. Focused on government's promise of once-and-for-all solutions (promises that rarely lead to actual solutions), people miss how free markets gradually help humanity solve problems.

Economic historian Robert Higgs joked that it will always be easier to rally politically inclined people behind unrealistic, revolutionary causes than to rally them around subtle economic progress, because no crowd marches behind a banner proclaiming, "Toward a Marginally Improved Society!"

The best way to help workers is to get the government to butt out and let competitive markets work.

John Stossel (read his Reason archive) is the host of Stossel, which airs Thursdays on the FOX Business Network at 9 pm ET and is rebroadcast on Saturdays and Sundays at 9pm & midnight ET. Go here for more info.

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  1. Collective bargaining will only make a workforce globally competitive if the entire world is unionized. Its only hope of working is if everyone's doing it. It's kind of like Communism that way.

    1. If unions stuck to arguing about wages and pensions, they wouldn't be that much of a problem. It's the work rules that really kill. I knew a guy who'd worked in a steel mill in Pittsburgh. He said the mill could produce 5 heats a day, but only produced 2 due to union rules.

      1. "That's not my job."

        1. My favorite Dilbert ever - "Watch me not care...."

    2. Nah, if the whole world is unionized, we're going back to the stone age. Nothing will get done.

        1. I didn't realize the ridiculousnessicity of unions until as a non-union land surveyor I got to work on a union jobsite. As a land surveyor we couldn't drive a nail without calling a carpenter, dig a hole without having a laborer. Setriously. We spent 1/3 of our time waiting for "specialists" to dig a damned hole. Anytime our productivity lacked so did our companies budget which in turn effected our bonuses. It was frustrating to say the least. I'm glad that was our only run on a union job. If I wouldn't have experienced this I wouldn't believe it. And people wonder why things are so expensive? If you dig holes for a living a normal market wouldn't qualify you to make $15hr. I'm suprised they were allowed to get dirty.

  2. It seems intuitive that a free market would lead to a "race to the bottom."

    Only if you think that "race to profit" = "race to the bottom", and are unacquainted with the concept of "return on investment".

    Now, granted, there are plenty of people this ignorant/stupid.

    1. It's like the comment I hear all the time that you can't trust someone because they are only in it for the money. I always think that that is the guy I trust because I know what his motivations are. It's the guys that aren't in it for the money that freak me the fuck out.

      1. People who might be guided by morality, or justice?

        Yah, worry about them, not the greedy guy who, to save a buck, might dump toxics, in dark of night, in your backyard.

  3. Way to shill for Big Kochporashun, Stossel.

    Now back to my six-figure management job to do some moar Facebooking in my air-conditioned office before leaving early.

    What's the name of that young go-getter over there on Line 27? Simpson, eh....

    /Mr. Burns

  4. You know the more I think about it, America's workers basically elected America's current government.

    So fuck them.

  5. "Toward a Marginally Improved Society!" is totally going on my sign at the next protest I attend.

  6. This is clearly written by someone who has never read a right-to-work law. I encourage Mr. Stossel to do so. What right-to-work laws actually do (as written), is make certain contract clauses in privately-negotiated contracts illegal, such as union security clauses.
    Union contracts don't have to have fair share clauses in them, no matter the law of the state. It's not uncommon, in fact, for news contracts to be written as "open shops" even if the news organization is in a fair share state. Additionally, no business ever has to negotiate a contract that includes this language, but that's the give-and-take of contract negotiations between two parties - the union and the business.
    It seems to me that any law that has the government limiting the contractual rights of two private parties by criminalizing certain business dealings, however noble, is the most anti-libertarian, anti-freedom, anti-free market legislation out there.
    I encourage Mr. Stossel to actually do his research and rebut me.

    1. [What right-to-work laws actually do (as written), is make certain contract clauses in privately-negotiated contracts illegal, such as union security clauses.]

      What right to work laws actually do is allow workers who are otherwise forced to belong to a union to opt out, which is why union membership in Wisconsin is down about 45%.

    2. Do you have a good link that explains this in more detail?

      I prefer academic sources.

  7. My Grandfather worked in middle management for GM from 1940-70. He convinced his one-up to allow him to run the night shift with 60% of the normal staff. He cracked the whip, setting the pace with his own voracious work ethic. In little time their output matched the fully-staffed day shift and his line workers reported higher work satisfaction (imagine that!) Grandpa's union rep payed him a visit, subtly commanding him to cease and desist because their productivity reflected poorly on their union brothers from day shift. Against his will, the experiment ended. --Keep up the good work Stossel, I dvr your show and am even able to occasionally rope my raised-in-France, registered Democrat wife into watching some segments!

  8. Well, a visit from Palin and I missed it. My evening is ruined.

  9. Ugh, and I got here just in time for the audience participation segment.

  10. Sounds like China needs to invade the Middle East.

  11. Pow, Sarah takes it on the chin.

  12. The loser had to attend two Stossel episodes.

  13. "Think about what they have to do to bring us gasoline."

    Yeah, rape Gaia.

  14. So America now has thousands of rules that outlaw wages below $7.25 an hour, restrict unpaid internships, and compel people to pay union dues. These rules appear to help workers. But they don't.

  15. What a wonderful story of your family coming to California and making the place better because you were there.
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  16. Toyota avoids unions in America (and pays its people, on average, 10-20$ less per hour, even as GM sells cheaper cars) but is totally unionized in Japan.

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