How Unions Work

From Gary North:

The Violence of Chicago’s Teachers

by Gary North
Tea Party Economist

Recently by Gary North: Stung by a Scorpion, Then by a Hospital. This Could Happen to You.

In my previous report, “How to Break the Chicago Teachers Strike in Seven Days,” I discussed the economics of the teachers union. You can read the report here.

The American Federation of Teachers is a paper tiger. The organization bases its bargaining ability on what is now a legislated restraint, namely, the shortage of teachers. There is no shortage of teachers at the wage scale that is imposed by the American Federation of Teachers on local school boards.

Any school board that will publish a “help wanted” ad that is based on the prevailing annual salary of any teacher in the district, including the lowest-paid teacher, will find that it has a glut of applications.

Never say “shortage.” Always say “shortage at a government-mandated price ceiling.” Never say “glut.” Always say “glut at a government-mandated price floor.”

This means that the power of the teachers union is based entirely on legislation that grants to the teachers union the legal authority to strike. The threat of the strike, or the threat of intervention by the National Labor Relations Board, is what prevents any school board from reducing salaries by at least 25% across the board, and doubling the size of the classrooms.

There is not a school district in the United States that could not cut its overall expenses by at least 50% in one year by taking three steps: (1) cut the total budget allocated to administration to 20% of the total budget; (2) double the number of students in each classroom, and (3) drop next term’s salary levels by 25%.

If any public school teacher does not understand this, that teacher is completely out of touch with economic reality. Any school district that does not understand this is also out of touch with economic reality. With something in the range of 500,000 unemployed or marginally employed teachers in the United States, who are fully certified to teach, any district that pays today’s level of salaries to its teachers is simply flushing the taxpayers’ money down the drain.


A fundamental right of a free society is this: the right to bid. Anyone who meets the requirements of a job should have a legal right to bid. Anyone who offers a job should have a legal right to accept a bid. This is the essence of freedom. It is the essence of capitalism.

It is the essence of government-protected unions to violate this principle.

The key element in all of this in Chicago’s public schools today is government coercion. The government establishes the terms of exchange, thereby negating the right to bid by anyone who is not a member of a union. It also negates the right to accept the bid by anyone who is offering employment. The trade union movement is based on someone with a badge and a gun who sticks the gun in the belly of the person who is willing to accept the bid.

The trade union movement has never been in favor of the common laborer. The trade union movement has always been in favor of a minority of workers who have joined a union, whose union then meets the federal government’s legal requirements to establish itself as a monopoly for labor services. A vote of 50% plus 1 of today’s employees can keep out all future employees who do not join the union. The union is then given the right to call in someone with a badge and a gun, who then sticks the gun in the belly of someone who is offering to hire a worker.

The essence of the trade union movement is the use of violence, or the threat of violence, or both, in order to establish a monopoly of a privileged group of workers, who hold their position of privilege on the basis of political power.

The essence of the claim of the privileged union worker is this: he has a legal right to exclude anybody from competing against him who has not joined a privileged band of workers, who in turn are the beneficiaries of political favoritism.

He then makes the claim that he has ownership of his job. He says that an employer who offers to hire someone does not possess ownership of the job, for the employer is not allowed by the government to hire someone who is qualified for the job, and who is willing to work for a lower wage, or was willing to work longer hours, than the privileged holder of the monopoly job.

The worker is implicitly claiming ownership of his job. If he walks off the job, thereby ending the contract between him and the employer, he insists that he still possesses the right to that job. He insists that the employer must not be allowed to offer to hire somebody else, despite the fact that the privileged worker has walked off the job and refuses to work.

This civil law imposes financial loss on the person who wants to hire somebody else for the job. The union calls on the man with a badge and a gun, who then sticks the gun into the belly of the person who wants to hire somebody else, and tells that person: “You do not have the legal authority to offer employment to anybody who is not a member of the politically privileged group. The job is not yours to offer.”

When the employer first hired someone to work for him, he had the legal authority to make the offer. His company had not yet been unionized. But, after a majority of the workers who are presently employed get together and vote in the union, they can exclude all future workers who do not belong to the organization from legal access to the job. They do so on the basis of bringing in a man with a badge and a gun, and having that man threaten violence to the owner of the business. There is no other basis for union wages, which are above-market wages, meaning voluntary wages.

This arrangement of political privilege excludes nonunionized workers from that segment of the market which is represented by the company which is presently employing workers. The excluded nonunion workers cannot get access to these jobs, because the employer is legally prevented from hiring them. Continue reading…


Comments are closed.