The Libertarian Case for Employer-Union Organizing Agreements

Published October 24th, 2013 -  - 10.24.133

In his exchange with Ben, Robert VerBruggen articulates the central libertarian critique of unionism:

To understand how unions coerce workers, imagine you’re a non-union worker who has taken a job on purely voluntary terms — your employer made an offer and you accepted.  Then, a union tries to organize your workplace. You vote against unionization because you don’t want them to negotiate on your behalf and you don’t want dues or fees taken out of your paycheck. Your employer doesn’t want the union, either.  But the union wins the election.

At this point, the union is legally entitled to negotiate the terms of your contract with your employer on your behalf — negotiations that neither you nor the employer want to take place. And once a contract is signed, the union might be legally entitled to collect dues or fees from you. Your only options are to quit your job — which, again, you took on terms that were and remain acceptable to both you and your employer — or to accept the terms of a contract that neither you nor your employer would have signed absent government union policies. I don’t see how this isn’t coercive, both to your employer and to you.

Certainly, it’s true that once a workplace has gone union, any new hires will sign up knowing full well that they will be represented by a union. But even then the range of job options available will have been changed by government coercion (Milton Friedman argued that by raising wages at their own workplaces, unions drive down wages elsewhere, for example), and the system will still coerce the employer, who must continue negotiating with the union for new contracts against his will.

I am sympathetic to this critique to some degree, especially as applied to public sector unions.  But I also think this critique shows in a clean way why libertarians should support organizing agreements of the sort at issue in Mulhall.  VerBruggen emphasizes that he thinks the exclusive bargaining aspects of the Wagner Act regime are coercive (in VerBruggen’s terms) to both employee and employer.  But when exclusive bargaining proceeds pursuant to an organizing agreement, neither the employer nor the employee is coerced, even on VerBruggen’s conception of coercion.

To see why, imagine that the State does not require the employer to bargain exclusively with the union.  But what if the employer wants to bargain exclusively with the union and voluntarily seeks to make the union the exclusive vehicle for employer-employee relations?  An employer might do this to make bargaining more efficient, to get the union to help bring in business, for labor peace, and for reasons.  This situation is obviously not coercive to the employer, who adopts it voluntarily.  But if the employer voluntarily chooses to allow the union to be the exclusive employee representative in the firm, then the union’s status as exclusive bargaining representative is also not coercive to the employee.  This is true even if the employer decides that all of its workers will be represented by the union if a majority of the workers support the union – for that arrangement is simply the employer’s choice about how to organize relations with employees.  Yes, the employee must accept the union as exclusive representative, but that condition results from the voluntary decision of the employer and thus is simply one of a number of take-it-or- leave-it terms of employment that the employer, in its discretion, might impose.  Such conditions are entirely within the employer’s prerogatives about how to organize the firm – prerogatives usually supported by libertarians.

Here is the key point: The above scenario is what organization agreements achieve.  They are voluntary contracts in which employers conditionally accept the union as exclusive bargaining representative (subject to an employee election, usually by card check) in exchange for consideration from the union (such as giving up strikes).  I see no reason why libertarians should not support such contracts.  For they simply involve the employer, in its discretion, deciding that its economic interests are best served by making the union the exclusive bargaining representative for its employees.  It is not materially different from an employer hiring an outside human resources consultant to redesign the system of work organization, and insisting that all employees cooperate with the consultant and be bound by its decisions about reorganization.

To be sure, when an employer voluntarily recognizes a union the exclusive bargaining representative, the State is involved in at least two ways.  First, it enforces the voluntary contract between employer and union, to which libertarians (absent coercion or externalities) should not object.  And second, the State establishes the background legal regime of union representation (including duties of fair representation) in to which the employer voluntarily opts.  But this element of organizing agreements cannot be objectionable from a libertarian perspective.  For one thing, in the absence of labor law, and purely by contract, the employer can set up a regime of exclusive union bargaining representation that entirely mimicked the operation of federal law.  The organizing agreement simplifies the contract by opting into the law instead of writing out the law’s functional terms into the contract.  For another, the employee’s position is improved by the fact that labor law lies in the background of the regime voluntarily adopted by the employer.  Labor law imposes a duty of fair representation on the union, requiring the union to fairly represent all employees in the shop fairly.  In the absence of labor law, the employer could by contract embrace a union as exclusive bargaining representative but could also authorize the union (in the contract) to discriminate against certain employees in its representation.

To summarize: Libertarians believe that a firm should be able to operate in the labor market, and bargain with labor, on whatever terms serve its economic interests.  As VerBruggen makes clear, libertarians worry about exclusive bargaining by unions because the exclusivity is imposed by the State on employers and employees, contrary to the wishes of both.  Both VerBruggen’s analysis and James Sherk’s post also make clear that the central libertarian concern – and this concern runs throughout the conservative anti-union litigation movement – is that the State prevents the employee who rejects the union from bargaining freely with the employer.  But even if one holds these views, the concerns dissipate when the union’s status as exclusive bargaining representative results from the voluntary, contractual decisions of the employer.  For in that situation, the union’s status is simply a condition of employment imposed by the employer acting freely in the labor market.  The putative employee can try to get the employer to breach its contract with the union, or to not renew the union contract after it expires.  But he has no right, legal or moral, to bargain with the employer free from the union intermediary if the employer decides on its own that it wants to operate that way.

I will explain how all of this relates to the organizing agreements in Mulhall in future posts.

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