With their threat to strike, railroad unions are holding a gun to the heads of American consumers to force railroads to pay employees more. Unions asked for fifteen paid sick days, but the railroads have offered one personal day. More than 400 groups recently called on Congress to intervene, fearing a strike would idle shipments of food and fuel while inflicting billions of dollars of economic damage.
According to Reuters, “A rail traffic stoppage could freeze almost 30% of U.S. cargo shipments by weight, stoke inflation and cost the American economy as much as $2 billion per day by unleashing a cascade of transport woes affecting U.S. energy, agriculture, manufacturing, healthcare and retail sectors.” Unions and railroads have until Dec. 9 to resolve differences.
While not all support the strike, most Americans support unions because they hold to the myth that unions caused the increases in standards of living in this country over the past century and a half by forcing businesses to pay workers more than the market wage. However, the actual history of how U.S. workers attained one the highest standards of living in the world credits capitalism. In the Gilded age, before unions became powerful, the wages and standard of living of American workers soared at rates rarely seen since, even as the nation absorbed a tsunami of poor immigrants looking for jobs. How?
High profits encouraged massive investment in U.S. industries and forced companies to compete for workers with higher wages, better working conditions and more leisure time. Investment in better tools increased worker productivity. Child labor ended in the same way. Laws against it appeared when the practice had nearly vanished because rising standards of living made child labor unnecessary for a family’s survival.
The truth is that union members take their higher wages from other workers. As any introduction to economics class will teach, wages higher than the market rate cause unemployment. Unions cause it among their own workers because companies must shed some employees to pay for the higher wages of those who remain, much as happens with minimum wage laws.
Companies pass on some of the union wage increases through higher prices to consumers, who must buy less of other goods so they can pay the higher prices demanded by union-made products. Less demand for non-union goods means lower revenues and wages for workers who make them.
Also, unionized companies squeeze suppliers by reducing what they pay for supplies. Suppliers then must cut back on the number of workers they hire or reduce wages. Finally, union wages force companies that compete in the international market to send jobs overseas in search of lower wages. All these methods of compensating for higher union wages cause greater unemployment, meaning union workers extract their higher wages from non-union laborers.
Union workers tend to strike against their employers when profits rise as they have lately, hoping to carve out for themselves a larger slice of the profit pie. But those same workers refuse to take pay cuts when profits fall, or their employers suffer losses.
Biblically, union workers violate the just price doctrine distilled by theologians over centuries. Theologians had debated what constitutes a just price, including wages, for centuries when during the Reformation they concluded that a just price can be found only in a free market without either side in the negotiations being coerced. Jesus endorsed freely negotiated wages as a just price in his parable about the vineyard workers.
Finally, unions violate the Biblical right to property (Thou shalt not steal) held by the owners of companies because ownership exists only when the owner can dispense with his property in a free market without coercion.
A union worker might be upset if a waiter held a gun to his head and demanded a higher tip. He might even consider it theft.
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