Dmitri Mehlhorn is a Democratic donor and activist. His legal publications include A Requiem for Blockbusting and The Fettered Liberty to Integrate. He is a partner with the investment network Vidinovo.
Before responding to his points, it’s worth noting our areas of agreement: organized labor can enhance the bargaining power of low-skilled workers vis-à-vis customers and capital; organized labor can increase the relative position of even non-unionized working poor by promoting living wages; living wage laws can promote economic growth and civil society. Professor Rosenfeld and I thus agree with pragmatic and fact-based economists such as Nobel Prize winner Joseph Stiglitz and venture capitalists such as Nick Hanauer, while parting company with laissez-faire ideologues.
Our disagreement centers on public sector unions: (1) technically, how much do compulsory dues translate into political dollars; (2) have public sector unions harmed the interests of the working poor; and (3) specifically, have public sector unions hurt the labor movement?
Start with the technical dispute of whether compulsory public union dues “translate into many tens of millions of dollars in political contributions to Democrats.” Professor Rosenfeld points out that fair share fees from compulsory dues cannot legally be used directly for politics, per the Supreme Court’s 1977 decision Abood v. Detroit Board of Education. In practice, this legal distinction has not worked perfectly. As the Supreme Court wrote in Harris v. Quinn, “The Abood Court . . . failed to appreciate . . . the conceptual difficulty [and] administrative problems that would result in attempting to classify union expenditures . . . .” The “administrative problems” are illustrated by examples such as IBEW Local 18, which has spent months blocking attempts by the Los Angeles City Controller and City Attorney to review financial records of how IBEW-controlled trusts spent $40 million allocated from the city. The “conceptual difficulty” is the partial fungibility of quasi-political expenditures such as staff salaries, sponsorships, member communications, live events, and public policy research. By spending billions of dollars on such activities, which amount to membership building and brand marketing, unions build social capital that can be used to raise hard political cash. My estimate–that ~1% of compulsory dues translate into political dollars–is likely to be low rather than high. This is why Harris has generated such partisan attention.
A more interesting question is whether public sector unions hurt the overall interests of the working poor. Here, Professor Rosenfeld ignores my main points, which are grounded in both labor history and simple economics. The labor icons of the early twentieth century opposed public unions precisely to preserve the functioning of government. Collective bargaining enhances workers’ power vis-à-vis owners and consumers. In the public sector, those consumers are often vulnerable or poor Americans. When BART employees strike for higher salaries, rigid work rules, and ballooning pensions, they make public transit less accessible and more expensive for workers who need it, while simultaneously consuming taxpayer dollars that could have been used for other services such as early childhood education. Multiplied across every public sector union for decades, you see collapsing state and municipal budgets and services. Additionally, Professor Rosenfeld does not dispute that public sector unions are responsible for policies such as Three Strikes in corrections, or Last-in First-Out in K-12 education, which most neutral observers agree have harmed poor Americans.
The final question is whether public sector unions bear some responsibility for the decline of organized labor. Professor Rosenfeld argues that labor has declined under attack, but this argument does too little. From the Progressive Era through the 1930s, labor was under attack by goon squads, police, military units, and strikebreakers such as the American Protective League. From the 1930s through the 1960s, labor was under attack by anti-communists, laws such as the Taft-Hartley Act, and firms such as Labor Relations Associates. Despite these attacks, unions made enormous gains.
So then what is Professor Rosenfeld’s explanation for why labor collapsed from the 1960s onwards? In his recent book What Unions No Longer Do, Professor Rosenfeld reviews various theories and proposes some interesting ideas of his own. All of these stories, however, are narratively derived and admittedly incomplete. Professor Rosenfeld himself would admit that there is no consensus answer among labor academics.
All of which requires consideration of my original–and still unrebutted–points. Almost every union invests disproportionately in public sector workers, because they are easier and more lucrative to organize. Private sector unions lose organizing talent as a result. Meanwhile, public workers are grouped into industrial-style unions rather than the professional guilds that would better support their status. Laws such as Three Strikes and Last-In, First-Out are increasingly unpopular, but hard to overturn given the power of public sector unions in state capitols. Strikes such as the BART strike use the monopoly power of the government to extract rents from taxpayers at the expense of the overall economy and the poor especially. The cumulative effect of all this, over decades, has left states and municipalities in terrible condition, and has left labor in a free fall. America’s working poor and middle class deserve better.