More Self-Interested Union Altruism

Before the midterm elections, union-backed Democrats worried about a November rout began pushing a proposal for a 32-hour standard work week in hopes of buying votes. No such rout occurred, and now the proposal is back.

Rep. Mark Takano (D-CA) reintroduced the “Thirty-Two Hour Workweek Act” in the House in March, a “second try” to shorten the work week for hourly workers to 32 hours, and require time-and-a-half overtime beyond that. It wouldn’t directly change the rules for salaried workers, but Rep. Takano reportedly hopes “it would contribute to a culture shift across all industries” in the future.

Takano starts, however, from an often-repeated false premise: “For decades, workers have been working longer hours while productivity has skyrocketed — yet, in that same period, wages have remained stagnant.” Craig Duddy, after a useful discussion of several of the reasons why, summarized it very differently: “Thus, after accounting for as many relevant factors as possible, there exists little to no gap between total compensation and productivity.” And a false premise cannot logically justify what might follow if it were true. 

That doesn’t stop the proposal’s supporters, however. They simply echo the false premise, then conclude, as did Rep. Pramila Jayapal (D-WA), a co-sponsor who is Chair of the Congressional Progressive Caucus, that it conclusively demonstrates that “For too long, our country has prioritized corporate profits over working people and Americans have been forced to work longer hours, sacrificing time with loved ones.” 

Such a conclusion, however, ignores the fact that compensation for increased productivity can be taken as either higher income or increased leisure, and workers are already free to seek whichever combination of hours and pay they value more. No legal coercion is necessary. All that is necessary is mutual agreement between employer and employee. 

Some companies have tested a four-day workweek and have decided to switch, which supporters overgeneralize to imply that all workers would gain from mandating it. But those firms which have chosen to try it were not a random sample. They were those that faced circumstances where it was most likely to work well. So the generalization does not follow, because if employers and employees thought they would benefit from a 32-hour work week, there is no law preventing them from advancing their interests by doing so. If they do not choose that option, they reveal that they believe it would worsen their circumstances. 

As with every union-backed public policy, this proposal is promoted as altruistically helping all workers. Very little of unions’ political efforts, however, cannot be better explained as advancing their interests, than as altruism. 

How can we see that? To begin, one must only remember that union producers are substitutes for non-union producers. The proposed laws would raise, often substantially, the cost of production for non-union employers. That will decrease the quantity of non-union producers’ output demanded by the public. Those negative effects on non-union employers and workers would leave many worse off. The resulting higher prices for non-union producers’ output will increase the demand for union producers’ output as an alternative. Such an increase in demand for their services will unambiguously increase the incomes of union workers, union employers, and unions themselves.

That is especially the case when we note that union employers would be exempt from the proposal, because they would benefit without bearing any of the imposed costs. 

By raising the costs of non-union workers relative to union workers, the bill could also increase the number of employers who might hope to find a less-bad deal through unionization, which would also add to union coffers and power. 

Such self-interested “altruism” also follows a well-established union script, as illustrated by unions’ support for higher minimum wages and “living” wages. 

Unions and their members benefit from raising the minimum wage because it will increase the cost of low-skilled labor, which is a substitute for union labor. If the minimum wage, for example, were $10, and the union wage were $50, employers would be giving up five hours of low-skilled work for every union worker-hour utilized. But if the minimum hourly wage were increased to $12.50, employers would only forgo four hours of low-skilled work for every union worker-hour employed.

Because all those substitutes for minimum-wage workers would see increased incomes as a result, so would others along their whole supply chains. They, too, would find it in their own self-interest to support increases, and local boosters and politicians would also gain from joining the bandwagon. All those groups whose self-interest aligns with supporting higher minimum wages could also publicly signal being pro-worker and compassionate without it costing them a cent.

The same mechanism has long been at work in the depression-era Davis-Bacon Act, still in force. It required the payment of “prevailing wages” on any project receiving federal money. But its genesis was explicitly racist, intended to exclude lower-cost southern firms employing black workers from underbidding local white union workers for construction projects, by forcing them to pay their workers more, often the union scale. State prevailing wage laws do much the same for state and local government projects.

In fact, as Walter Williams demonstrated, there is a striking similarity between what unions now support and what white unions supported in apartheid-era South Africa. White labor unions backed “equal pay” laws for blacks and whites, supposedly in an altruistic effort to help black workers. But what it really did was raise the price of hiring blacks (who had less education and fewer skills on average, as well as being discriminated against) relative to the price of hiring whites. Whites gained, but black unemployment jumped from that “compassion” on their behalf.

Government-mandated project labor agreements, also reflect self-interested altruism. Project Labor Agreements are typically drafted by construction unions, without input from non-union contractors, which all bidders are forced to accept (explaining the opposition of non-union groups). Typical terms include union representation and mandatory membership or union fees for all workers (including those working for non-union employers), following union work classifications and rules (including getting all workers from union hiring halls and all apprentices from union apprenticeship programs), and contributing to union benefit and multi-employer pension plans that few non-union members will get a penny from.

The PRO Act at the federal level, and the California FAST Act to impose union control on the fast-food industry in California are just some of the latest, and among the most egregious, examples of this self-interested altruism. 

The prevalence of self-interest thinly disguised as altruism so frequently illustrated by union supported policies also suggests a useful test to apply to every such allegedly “altruistic” proposal: whenever someone claims an altruistic reason to support a policy, but it clearly advances their narrow self-interest, the latter effect can explain such support, regardless of whether it helps or even hurts the supposed beneficiaries. Therefore, a great deal of “altruistic” cynicism is justified if we really wished to help rather than harm those who are the supposed objects of such beneficence. 

The post More Self-Interested Union Altruism was first published by the American Institute for Economic Research (AIER), and is republished here with permission. Please support their efforts.