Right-to-Work Laws Are, Indeed, Libertarian


Every time Right to Work is in the news, a civil war breaks out among libertarians about whether it is consistent with libertarianism or not. On one side are folks like me who think that right-to-work laws are a modest advance for worker freedom because they exempt workers from having to pay mandatory union dues as a condition of employment in unionized companies. On the other is my best friend Sheldon Richman—who has long argued that such laws advance government, not liberty; Gary Chartier—who believes they violate the freedom of contract; Kevin Carson—who declaimed that I was only "half right" when I wrote that a union lawsuit alleging that Indiana's right-to-work law was tantamount to slavery was stupid; and my colleague J.D. Tuccille—who is disappointed that Michigan has "inserted itself into the marketplace to place its thumb on the scale in the never-ending game of playing business and labor off against one another."

But before I go into the points of disagreement between the two camps, let me just briefly note the areas of agreement.

To the best of my knowledge, none of us (with the possible exception of Carson) buys the liberal argument against these laws most recently made by Michael Kinsley that abolishing dues encourages freeloading and prevents the provision of a "collective good." That assumes that there is only one optimal arrangement everywhere and always that maximizes total worker good: a monopoly union representing all workers.

Like Tuccille, I can certainly imagine joining a union under certain conditions (heck, there have been workplaces where I've been tempted to start my own unionization drive). There is absolutely nothing wrong with unions or collective bargaining. But there is also absolutely nothing wrong with the extreme opposite: Individual workers representing themselves and striking their own deals with employers. In fact, virtually all salaried workers do that—even in unionized companies—and, I don't think, it is possible to argue that the sum total of their welfare has been diminished because they don't have the equivalent of the UAW representing them.

One reason is that even in a quasi-free market such as ours there is enough competition for labor that employers do not maximize their profits by low-balling their employees or having them work insane hours in Steinbeckian conditions. In fact, individualized representation allows employers to customize remuneration packages based on individual merit—which redounds to everyone's benefit because it gives all workers an incentive to boost productivity and income. One-size-fits-all contracts with uniform raises and benefits for all conceivably depress the income of excellent workers as much as they raise it for mediocre workers. In any case, if freedom to negotiate individual contracts works for salaried workers, there is no reason to believe that, in principle, it wouldn't work for wage workers.

Nor is there any disagreement among libertarians that the 1935 Wagner Act ­—a.k.a. the National Labor Relations Act—is an abomination, which unduly restricts the contractual freedom of both companies and labor. The act not just severely restricts the means that both sides can deploy to extract the best possible deal from the other—employers are barred from, for example, asking prospective employees to sign yellow-dog contracts promising not to join unions and unions are barred from engaging in secondary boycotts or wild cat strikes. It also mandates a single workplace arrangement whereby only one union has the legal monopoly to represent all workers in negotiations. Once the government certifies this union, workers have to pay dues to it and employers have to negotiate with it in good faith.

Although Wagner affected both sides, it was widely regarded as having given Big Labor undue powers in the workplace—over both employers and workers—leading to all kinds of excesses on the part of union bosses. This prompted the passage of the Taft Hartley Act in 1947, which gave states the option of passing right-to-work laws to limit labor.

But whether states should exercise this option is where the agreement among libertarians breaks down. Richman has pointed out that many major libertarian thinkers such as Milton Friedman and likely Ludwig von Mises opposed right to work laws (although F.A. Hayek regarded closed shops as singularly awful). Why? Because whether Wagner mandates closed shops or right-to-work laws forbid them, either way employers or workers don't call the shots. "A 'union shop' agreement between an employer and a union commits the employer to ensuring that the new hires join the union within a specified period," insists Chartier. "Righ-to-work laws ban union-shop agreements."

So nothing short of scrapping the Wagner Act is any advance for liberty, they claim.

That, however, is not the right way to think about right-to-work laws because—forgive the cliché—it makes the best the enemy of the good. To oppose all reform that does not deliver total freedom in one fell swoop is a recipe for policy paralysis. Right-to-work laws are desirable because, although they are partial, they are still pareto-optimal: By limiting the powers of union bosses, they leave employers no worse off and workers somewhat better off.

As David Henderson has pointed out, there are few employers who would actually choose to create a labor monopoly in the workplace by requiring all employees to join one union—hence any threat to employer freedom under right-to-work is theoretical, not actual. Even Friedman doubted that employers in a competitive labor market would ever find it profitable to offer the closed-shop option. Business might have been willing to go along with such an arrangement in exchange for labor peace at the time of Wagner. Since then, however, Big Labor has used its monopoly privileges to turn auto companies, for example, into giant entitlement enterprises with massive legacy costs that have made it impossible for them to compete without taxpayer largesse. Hence, right-to-work laws prohibit an option that employers are unlikely to exercise in practice.

But in fact right-to-work poses even no theoretical loss of employer freedom. Wagner mandated closed shops and right-to-work laws ban closed shops. At best, employers are equally constrained under both scenarios. However, by making dues payment optional, right-to-work laws vastly increase the freedom of workers, giving them more power to hold union bosses accountable for waste and corruption. This is something that no one ­—libertarian, liberal or conservative—ought to pooh-pooh.

Another reason libertarians oppose right-to-work laws is that by remedying the worst labor excesses spawned by the Wagner Act, they defuse the political pressure to repeal the act. Richman quotes Percy L. Greaves Jr., a Ludwig von Mises student who became an ardent opponent of these laws after initially helping Sen. Robert A. Taft draft them:

If they (right-to-work laws) are passed in a large number of states, they will temporarily relieve the present uneconomic evils that exist in federal labor laws. They will allay the fear among those people who see and comprehend the dire results now flowing from present union activities…Actually, it might be both better economics and better expediency to let present laws go their limit, so that people might soon learn how bad they really are.

In other words, the sooner we go to hell, the faster we can come back. Or, to quote Lenin: "the worse it is, the better it is." That of course under-estimates the capacity of people to put up with hell. It assumes that the worse things get, the more people are motivated to change them. That, however, is far from clear.

In fact, what generally happens is when things are so far gone, people lose their capacity to imagine a different—a better—world. Witness the politics of public schools: In their century-or-more of existence, they have failed in every possible way: they are exorbitant, abysmal and even abusive. Yet even now they have more defenders—indeed, die-hard devotees—than detractors. The only realistic hope for change is not a widespread privatization revolution but the nascent school choice movement that incrementally diverts public school dollars to parents and concretely demonstrates the upside of a freer alternative. (It is no coincidence that many of the same libertarians such as Richman who oppose school choice, also oppose right-to-work laws.) By the same token, there is every reason to believe that by applying the brakes to our journey toward Wagner's unfree hell, right-to-work laws won't consign us to eternal purgatory, as their opponents fear, but shorten the distance to a world of perfect labor freedom.

One last point: While most libertarian thinkers who oppose right-to-work do so because they don't think it sufficiently diminishes Wagner's fundamental unfairness toward business, Carson opposes it because he believes that it will increase the unfairness toward Big Labor. In his view, in our corporatist economy, the fundamental role of the state is to guarantee privilege for an economic ruling class. Hence, Wagner would never have become law if it hadn't served business interest more than labor interest. "Many employers favored the industrial unionism model promoted by Wagner because — in return for a grievance process, seniority and productivity-based wage increases — it secured industrial peace in the workplace, allowing management to deal with a single bargaining agent…" And by taking away the few organizational tools that Wagner put at Big Labor's disposal, right-to-work will presumably tip the scale even more in business' favor.

Carson's work on the whole is hugely salutary for checking what he has dubbed the "vulgar" tendency among libertarians to regard business as the victim—"the persecuted minority"—that is at the mercy of an overzealous state hell-bent on controlling it through onerous regulations and mandates. And I have no doubt that without business' support, Wagner would not have become law. But it doesn't follow therefore that Wagner, passed during the heyday of the labor movement, empowered business more than labor. Indeed, Wagner basically handed labor cartelization rights to consolidate its negotiation power against employers. But employers did not get similar cartelization rights against labor. The UAW, for example, represents all autoworkers during contract talks with Detroit's (formerly) Big Three automakers. But it would be illegal for the automakers to band together and "collude" against the UAW.

I am not a labor historian and hence it is impossible for me to judge the accuracy of the counter-narrative that Carson offers to the conventional one that business had to basically be dragged kicking and screaming to go along with Wagner. But, at least on the surface, that narrative fits the facts better than Carson's.

Editor's Note: This post has been modified for clarity.