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Improving Life for Workers

Comment

It seems intuitive that a free market would lead to a "race to the bottom." In a global marketplace, profit-chasing employers will cut costs by paying workers less and less, and shipping jobs to China.

It's a reason that progressives say government must step in.

So America now has thousands of rules that outlaw wages below $7.25 an hour, restrict unpaid internships and compel people to pay union dues. These rules appear to help workers. But they don't.

"Collective bargaining" sounds good. Collective bargaining "rights" even better. Employers are more sophisticated about job negotiations than individual employees, so why shouldn't workers be able to join together to bargain?

They should be. But in 27 states, labor laws force workers to join unions. When CBS offered me a job, I had to join AFTRA, the American Federation of Television and Radio Artists. I didn't want to. I don't consider myself an artist. I didn't want to pay dues to a union that didn't appear to do much. But I had no choice.

Laws that force workers to join unions treat millions of diverse people, most of whom want very different things, as undifferentiated collectives. That means that good workers get punished.

When I was at ABC and CBS, union culture slowed us down. Sometimes a camera crew took five minutes just to get out of the car.

But without a minimum wage or union protection, wouldn't employers abuse workers? In a real free market, no, they can't. Because workers have choices. Employers have an incentive to maintain a good relationship with employees — one that keeps them reasonably loyal — because workers can quit and go work for a rival.

If globalism leads to a "race to the bottom," why do 95 percent of American workers make more than minimum wage? It's not because companies are generous, but because competition forces them to offer higher wages to attract good workers. Companies may move jobs overseas to escape high U.S. wages (or U.S. taxes and regulations), but they clearly prefer to keep jobs here, close to their headquarters, suppliers and customers.

Unions once helped advance working conditions, but now union rules hurt workers because they stifle growth by making companies less flexible.

When I arrived at CBS, I was stunned to discover that I couldn't even watch a video in a tape player without risking a grievance being filed by a union editor, saying I'd encroached on his job. Work ground to a halt while we waited for a union specialist to press the "on" button. ABC and CBS, being private businesses that had to compete, eventually got rid of those rules. But it took years.

Unions eventually hurt union workers because unionized companies atrophy. Non-union Toyota grew, while GM shrank. JetBlue Airlines blossomed, while unionized TWA and Pan Am went out of business. Unions "protect" workers all the way to the unemployment line.

When I criticize compulsory unions and regulations, it's not because I want rich employers to get fat off the labor of workers. It's because I've learned that markets are fluid — and the best way for more workers to find good jobs is to leave everyone free to make any contract they wish.

Outlawing the low-wage job that taught a teenager skills or the internship that gave a kid a foot in the door doesn't insulate people from hardships of the market. It insulates them from knowledge about how to function in an ever-changing economy.

That's not compassion. That's a denial of reality.

Advocates of "kind" central planning overlook the gradual, piecemeal improvement that markets make. Focused on government's promise of once-and-for-all solutions (promises that rarely lead to actual solutions), people miss how free markets gradually help humanity solve problems.

Economic historian Robert Higgs joked that it will always be easier to rally politically inclined people behind unrealistic, revolutionary causes than to rally them around subtle economic progress, because no crowd marches behind a banner proclaiming, "Toward a Marginally Improved Society!"

The best way to help workers is to get the government to butt out and let competitive markets work.

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and of "Myth, Lies, and Downright Stupidity." To find out more about John Stossel, visit his site at <a href="http://www.johnstossel.com" <http://www.johnstossel.com>>johnstossel.com</a>. To read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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Comments

4 Comments | Post Comment
<blockquote>But without a minimum wage or union protection, wouldn't employers abuse workers? In a real free market, no, they can't. Because workers have choices. Employers have an incentive to maintain a good relationship with employees — one that keeps them reasonably loyal — because workers can quit and go work for a rival. </blockquote>
John Stossel claims this argument as factual but it would only be true once the pool of 'abused workers' were exhausted, and then only if all employers didn't 'Rico' themselves, and then only if businesses weren't smart enough to avail themselves of their own McCarran–Ferguson Act, and then only if it was really, really, really difficult to buy/lobby protective legislation for business, and then only....
Comment: #1
Posted by: Sob Pol
Tue May 29, 2012 7:25 PM
I agree with you, John, except on the part about workers having options. Most corporations today try to limt even that with signing bonuses and the Non-Compete Clauses. I left a job in publishing and was locked out from the industry for 18 months because of the CNC I was FORCED to sign. When I was hired I didn't have to sign it, but after I'd moved to take the job and we restructured, I had to sign the agreement or get released.

In theory you're right, but companies today can fire you for things you say on Facebook, or keep you from signing with a rival with CNCs.

I don't like unions, but corporations are no better.
Comment: #2
Posted by: Former Lib
Wed May 30, 2012 8:59 AM
Mr. Stossel,
I seldom if ever have anything negative to say bout your writings. If I only had the stage you have to spread freedom. But for once I have to slightly disagree.
You state
"It seems intuitive that a free market would lead to a "race to the bottom." In a global marketplace, profit-chasing employers will cut costs by paying workers less and less, and shipping jobs to China."
Actually my intuition screams otherwise. I know that most folks, when not battered by your classless and fear mongering sycophantic peers feel the same. I see that most people are simply aping what is being told. So the intuition part is really off base. Other than that I would say "Stossel for president" But alas, I am an Anarcho-capitalist.
Comment: #3
Posted by: Lex Parsimoniae
Wed May 30, 2012 9:32 AM
Dear John,

I manage a small business and must agree with you. I pay my employees as well as I can afford in order to keep them in the fold. I also spend time and money on training and education to improve their skills. Even if I make them all sign a non-compete contract it can only be enforced within a narrow field and only for a short period.

The best way to stay in business is to invest in your people, pay them well and treat them like adults (as we do). Some of my competitors have taken a different approach and as a result I ended up with some of their talent added to my team.
Comment: #4
Posted by: Berner
Wed May 30, 2012 10:46 AM
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