Opposition to trade unions

Opposition to trade unions

Opposition to trade unions comes from a variety of groups in society, and there are many different types of argument on which this opposition is based.


Strategic strikes and social disruption

Trade unions are sometimes accused of holding society ransom by taking strike actions that result in the disruption of public services[1][2] – perhaps historically most vividly demonstrated in the British Winter of Discontent. However, where applicable, this may be logically inferred to be the very purpose of strike action per se.[3][4]

Economic effects


Milton Friedman, Nobel Prize winning economist and advocate of laissez-faire capitalism, provided evidence that unionization frequently produces higher wages at the expense of fewer jobs, and that, if some industries are unionized while others are not, wages will decline in non-unionized industries.[5]

By raising the price of labour, the wage rate, above the equilibrium price, unemployment rises. This is because it is no longer worthwhile for businesses to employ those laborers whose work is worth less than the minimum wage rate set by the unions.[6] As such, Governments may seek to reduce union powers in order to reduce unemployment.

Trade unions often benefit insider workers, those having a secure job and high productivity, at the cost of outsider workers, consumers of the goods or services produced, and the shareholders of the unionized business. The ones who are likely to lose the most from a trade union are those who are unemployed or at the risk of unemployment or who are not able to get the job that they want in a particular field.[7]

Where closed shops or union shops have been established, unions can become monopolies, where the worker is not allowed to choose not to belong and the company is not allowed to hire non-union workers.[1] This can result in the same problems faced by any other monopoly. By charging higher prices than the equilibrium rate, unions promote deadweight loss.

Harm to ununionized labor

Advocates of unions claim that the higher wages that unions demand can be paid for through company profits. However, as Milton Friedman pointed out, profits are only very rarely high enough. 80% of national income is wages, and only about 6% is profits after tax, providing very little room for higher wages, even if profits could be totally used up. Moreover, profits are invested leading to an increase in capital: which raises the value of labor, increasing wages. If profits were totally removed, this source of wage increase would be removed.[8]

One 1951 study found that instead of harming profits, unions increase the wages of about 10–15% of workers by reducing the wages of the remaining 85–90% of workers.[9][10]


The effect of union activities to influence pricing is potentially very harmful, making the market system ineffective.[11] Because the price of labour is raised above the market rate, deadweight loss is created. Additional non-monetary benefits exacerbate the problem.

Cost-push inflation

There can be little doubt that union activities lead to continuous and progressive inflation.[11]

F. A. Hayek, the Constitution of Liberty

By causing wage increases above the market rate, unions increase the cost to businesses, causing them to raise their prices, leading to a general increase in the price level.[11] Austrian economists such as Robert P. Murphy, however, dispute this, arguing that the increase in the cost of labour simply means that less of other goods can be bought. He writes:

If unions succeed in wage hikes, and employers raise the prices they charge consumers to maintain their own profit margins, and the supply of money remains the same, then something else has to "give." Either the prices of goods and services in nonunion sectors have to fall and offset the union sector hikes, or people's cash balances need to fall, in terms of their purchasing power.[12]

Effects partly depend on how competitive the market is. If there are many sellers, perfect knowledge, and few barriers to market entry, (competitive markets) then the firms will not be earning any supernormal profits, so the price increases will have to be paid by consumers or through reduction in output. When there are few other sellers, imperfect knowledge, and legal or resource barriers to market entry and firms making supernormal profits, the cost increases would be passed on to consumers (marginal costs will rise, increasing the price). Cost increases may or may not be fully passed on, depending on market structure.

Imperfect wealth redistribution

Regressivity of wealth redistribution

Since unionized workers' principal economic weapon is a strike, and since—in the United States at least—employers may permanently replace striking workers, the benefits of unionism increase in proportion to the difficulty and cost to an employer of finding replacement workers. As a result, skilled workers benefit substantially more in both absolute and relative terms from organizing than unskilled workers do.

For example, it is much easier to replace a truck driver than to replace the quarterback of a professional football team or the writer for a hit comedy show, so the returns to a strike by professional athletes or writers are likely to be much greater than the returns to a strike by truck drivers. Accordingly, those who benefit most are highly skilled workers—individuals who would normally not be the beneficiaries of social wealth redistribution schema.

This argument is only valid against craft unions, which organize workers by skill. Industrial unions organize all workers in an industry, regardless of skill.

General Response to Economic Arguments

The argument that unionized workers raise their own wages above their natural rate at the expense of their businesses or other workers assumes that unions never raise productivity to compensate for higher wages. Unions are capable of raising productivity by reducing turnover, by increasing coordination between workers and management, and by increasing workers' motivation.[13][14][15] Many unions raise the productivity of their workers, and some even raise it enough to make up for wage increases.[13] That some unions fail to match wage increases with improved productivity is at worst an argument against those specific unions, and not against unionization in general.

Another argument raised by union supporters is that unionized workers will spend their higher wages, driving economic growth and creating new jobs.[16] Union opponents respond that this is an example of the broken window fallacy; union supporters assume that money is more valuable in the hands of unionized workers than in the hands of whoever else would obtain it in the union's absence. Union supporters counter that unions, if organized without violence or government help, are part of the free market; if unions can win higher wages for their workers without coercion, those wages are legitimate.[17]

Finally, any libertarian critique of unions must acknowledge that the current economy is not a free market.[18] While wages may very well track workers' productivity under free market conditions, government distortion of the market can strengthen the hand of big business, making it harder for workers to demand their rightful compensation.[19] Government distortions that strengthen corporate owners and management at the expense of workers and consumers include, but are not limited to, patents, tariffs, banking restrictions, capitalization requirements, transportation and communication subsidies, property subsidies, cartelizing regulations, and land monopoly.[20][21][22][23][24][25] Unions may serve the practical purpose of leveling the playing-field between workers and powerful oligopolies.

Challenges from affirmative action perspectives

Racist policies in the past

A consequence of unions' zeal to guard their special interests is that some unions have actively lobbied for racist and anti-immigration policies. An example is the creation of the notorious Asiatic Exclusion League, which was composed mainly of the various labor unions. The Pictorial History of American Labor observes,

The early A.F. of L. did not draw the color line, but expressed an "ideal of solidarity irrespective of race." Before long, however, the feeling changed. Whether a tendency to exclude black workers from craft unions was based more on fear of competition or racial prejudice carried over from slave days, it is difficult to decide. But the developing exclusion of the Negro worker from many neighbor unions brought with it serious problems—not just for the black worker seeking job security, but for the white worker seeking the same end...

The record shows that black workers...have been used to break strikes. This availability has usually ended when the black worker has been shown that the union is open to black as well as white.[26]

However, in a study called The Black Worker, Spero and Harris observe that more strikes [in American labor history] have been broken by white workers than by black workers.[26] Most blacks were barred from membership in the AFL not because of their skin color, but because they never had a chance to learn a skill, and "most A.F. of L. unions did not admit unskilled mass-production workers."[27] While the AFL-CIO is the modern version of the AFL, it is much more open to membership by women, immigrants, and different nationalities. Other unions, such as the Industrial Workers of the World and the International Longshore and Warehouse Union, were created without regard to race from the very start.[28]

Present challenges

Trade unions have been said to still have ineffective policies on racism and sexism in the present day, such that a union is justified in not supporting a member taking action against another member. This was demonstrated by the 1987 judgement in the Weaver v NATFEH case in the UK – in which a black Muslim woman brought a complaint of workplace racist harassment against a co-trade unionist. The finding was that in the event of the union offering assistance to the complainant it would be in violation of the union’s duty to protect the tenure of the accused member and the judgement still sets the precedent for cases of this kind that union members who make complaints to the employer of racist or sexist harassment against member(s) of the same union cannot obtain union advice or assistance; this applies irrespective of the merit of the complaint.[29]


Illegal union firing increased during the Reagan administration and has continued since.[30]

Specific countries, especially countries run by Communist parties, while still having unions in name, do not allow for independent trade unions, just as they rarely allow for independent businesses. These state-run trade unions do not function in the same way as independent trade unions and generally do not hold any kind of collective bargaining power, acting to ensure the smooth running of Government industry.[citation needed]

Attempts to reduce the effects of trade unions may include union busting activities by private companies or state action including governments of authoritarian regimes such as in Adolf Hitler's Nazi Germany[31][32][33][34] and Burma's military dictator, Ne Win. Many democratic governments have also attempted to limit the effects of unions, although success has been mixed.

It has been argued, particularly by market anarchists, that government intervention in the economy has been decidedly anti-union, even in economies like the United States or the European Union. Kevin Carson maintains that the most effective union tactics are either criminalized or displaced by state policy in most countries. Trade unions established themselves through sitdown strikes, sympathy strikes, secondary boycotts, and hot cargo agreements; these tactics are all illegal in most industrialized countries. Similarly, the original unions doubled as social welfare organization, using union funds to provide healthcare and pensions to workers and welfare to the unemployed. By adopting various welfare-state measures, governments made the populace less dependent on unions.[17]

Left critiques of trade unionism

An anarcho-syndicalist flyer exhorting workers to "Give Union Bosses the Flick!".

The political left is often associated with support for trade unionism. However, some groups and individuals have taken a less positive view. In the nineteenth century, a belief in the iron law of wages led some socialists to reject trade unionism and strike action as ineffective. In this view, any increase in wages would lead manufacturers to raise prices leaving workers no better off in real terms. Karl Marx wrote a pamphlet, Wages, Price and Profit, to counter this idea, which had been put forward in the International Workingmen's Association by a follower of Robert Owen.

Some early Social Democrats were also skeptical of trade unionism. Usual criticisms were that unions split workers into sections rather than organising them as a class; that they were dominated by relatively privileged skilled workers who were mainly concerned to defend their sectional interests; and that industrial action and organisation were incapable of bringing about fundamental social change. H. M. Hyndman of the Social Democratic Federation summed up some of these views when he wrote in The Historical Basis of Socialism in England (1883):

Trade Unions ... constitute an aristocracy of labour who ... a hindrance to that complete organisation of the proletariat which alone can obtain for the workers their proper control over their own labour ... Being also ... unsectarian and unpolitical, they prevent any organised attempt being made by the workers as a class to form a definite party of their own, apart from existing factions, with a view to dominate the social conditions – a victory which ... can only be gained by resolute political action.

Hyndman went on to urge workers to devote "the Trade Union funds wasted on strikes or petty funds" instead to the building up of a strong Socialist Party on the German model. Other social democrats however were more convinced than Hyndman of the utility of Trade Union action.

Trade unionism is criticised by those of council communist and left communist tendencies.[35] Here, trade unionism is seen as being more useful to capitalists than to workers, and as a kind of "safety-valve" that helps to keep working-class discontent within reformist channels and prevent it from evolving into revolutionary action. They think the government to be the ultimate union to where all workers in the country belong; private unions can go against that. In contrast to other left critiques of trade unionism, these tendencies do not accept that the problems they identify could be remedied by changing the structure, leadership or objectives of trade unions. Instead, they argue that trade unionism is inherently reformist and that revolutionary action is possible only if workers act outside trade unionism through workers' councils or other channels.

There is also a philosophical difference between the craft unionism of many AFL-type unions, and the industrial unionism of organizations such as the Industrial Workers of the World. Industrial unionists decry a practice that they call "union scabbing," in which craft unionists are required by the no-strike clause in their contracts to cross the picket lines of other unions.[36]

There is also the left critique of the tendencies of some labor unions to become bureaucratic and for the union leaders and staff to become detached from the needs and interests of the rank and file union members, in contrast to the practices of union democracy. The Labor Notes, in the United States, is an example of an organization that attempts to fight this bureaucratic tendency.

See also


  • Union violence
  • United States v. Enmons
  • Freedom from Union Violence Act
  • Wagner Act



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  2. ^ "Critique of SC's ruling on the right to strike, from Volume 2, Issue 6, of Combat Law". Indiatogether.org. http://www.indiatogether.org/combatlaw/vol2/issue6/strike.htm. Retrieved 18 October 2011. 
  3. ^ "Furlough negotiations: $50M ransom offered, but unions balk at releasing hostages > Hawaii Free Press > Articles Main". Hawaii Free Press. http://hawaiifreepress.com/main/ArticlesMain/tabid/56/articleType/ArticleView/articleId/1360/Furlough-negotiations-50M-ransom-offered-but-unions-balk-at-releasing-hostages.aspx. Retrieved 18 October 2011. 
  4. ^ http://www.independent.ie/opinion/letters/unions-will-hold-us-all-to-ransom-1820400.html
  5. ^ Milton & Rose Friedman, Free to Choose. Chicago Press, 1979
  6. ^ Alain Anderton, Economics, Fourth edition
  7. ^ Economics, 16th edition, Samuelson Nordhaus
  8. ^ Milton & Rose Friedman, Free to Choose, 1979
  9. ^ David McCord Wright, The Impact of the union (New Work: Harcourt Brace, 1951) pp204-34
  10. ^ H. G. Lewis, Unionism and Relative wages in the United States (Chicago: University of Chicago Press, 1963) p5
  11. ^ a b c F. A. Hayek, The Constitution of Liberty, 1960 Routledge Classics
  12. ^ Robert P. Murphy. "Can Unions Cause Price Inflation? – Robert P. Murphy – Mises Institute". Mises.org. http://www.mises.org/story/2839. Retrieved 18 October 2011. 
  13. ^ a b http://cep.lse.ac.uk/people/vanreenen/lecture_notes/handbook_metcalf.pdf
  14. ^ "Unions Are Good for Business, Productivity and the Economy". Aflcio.org. http://www.aflcio.org/joinaunion/why/uniondifference/uniondiff8.cfm. Retrieved 18 October 2011. 
  15. ^ "Union productivity effects | Monthly Labor Review". Find Articles. http://findarticles.com/p/articles/mi_m1153/is_v108/ai_3579390/. Retrieved 18 October 2011. 
  16. ^ http://www.americanprogressaction.org/issues/2009/02/efca_factsheets.html
  17. ^ a b http://c4ss.org/wp-content/uploads/2010/09/C4SS-Labor.pdf
  18. ^ "Mutualist Blog: Free Market Anti-Capitalism: Vulgar Libertarianism Watch, Part 1". Mutualist.blogspot.com. 11 January 2005. http://mutualist.blogspot.com/2005/01/vulgar-libertarianism-watch-part-1.html. Retrieved 18 October 2011. 
  19. ^ "Growing Productivity, Stagnating Compensation | Angry Bear – Financial and Economic Commentary". Angrybearblog.com. 16 March 2011. http://www.angrybearblog.com/2011/03/growing-productivity-stagnating.html. Retrieved 18 October 2011. 
  20. ^ http://members.tripod.com/kevin_carson/sitebuildercontent/sitebuilderfiles/Chapter3.pdf
  21. ^ "The Distorting Effects of Transportation Subsidies | The Freeman | Ideas On Liberty". Thefreemanonline.org. http://www.thefreemanonline.org/featured/the-distorting-effects-of-transportation-subsidies/. Retrieved 18 October 2011. 
  22. ^ http://c4ss.org/wp-content/uploads/2009/05/intellectual-property-a-libertarian-critique.pdf
  23. ^ http://c4ss.org/wp-content/uploads/2010/12/Political-Economy-of-Waste.pdf
  24. ^ "Anarcho-”Capitalism” is impossible". C4ss.org. 19 September 2010. http://c4ss.org/content/4043. Retrieved 18 October 2011. 
  25. ^ Tucker, Benjamin (22 February 1999). "State Socialism and Anarchism". Fair-use.org. http://fair-use.org/benjamin-tucker/instead-of-a-book/state-socialism-and-anarchism. Retrieved 18 October 2011. 
  26. ^ a b A Pictorial History of American Labor, William Cahn, 1972, page 160.
  27. ^ A Pictorial History of American Labor, William Cahn, 1972, page 231.
  28. ^ Solidarity Forever—An oral history of the IWW, Stewart Bird, Dan Georgakas, Deborah Shaffer, 1985, page 140.
  29. ^ "The Legal Ferret.net" http://www.legalferret.net retrieved on 22 December 2008
  30. ^ Why America Needs Unions, BusinessWeek
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  32. ^ "::Mussolini::". Historylearningsite.co.uk. http://www.historylearningsite.co.uk/mussolini_dictatorship.htm. Retrieved 18 October 2011. 
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  35. ^ Unions Against the Working Class, International Communist Current http://en.internationalism.org/pamphlets/unions.htm
  36. ^ Roughneck: The Life and Times of Big Bill Haywood, Peter Carlson, 1983, pp. 80.

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