Labor unions negotiate benefits on behalf of all employees of a collective bargaining unit, not just their own members, unions say. Since non-members receive the benefits, they should be compelled to pay the union for negotiating them.
Because right-to-work laws forbid non-union employees from being compelled as a condition of employment to pay any portion of their wages to a labor union or a union’s third party affiliate, they turn non-members into freeloaders, unions say.
At a public hearing on Wednesday, opponents of House Bill 238, this year’s right-to-work bill, made liberal use of this freeloader fallacy.
The freeloader argument has three parts.
- Unions are required by federal law to represent non-members.
- Non-members benefit from union representation itself.
- Non-members benefit from the results of union representation.
Piling fallacy atop fallacy
Several speakers at Wednesday’s hearing used the American Automobile Association (AAA) as an analogy.
Imagine that a driver who never joined AAA gets in an accident, then calls AAA for roadside assistance. AAA would rightly refuse the request. Right-to-work laws do the equivalent of making AAA provide assistance to non-members, they claimed.
In defending one fallacy, these speakers committed another, the false equivalence fallacy.
First, AAA is nothing like a union. If AAA worked like a union, instead of sending you a tow truck, it would send you a lawyer to negotiate with a towing company.
Further, under federal law, if a majority of a bargaining unit’s employees vote to form a union, that union represents all employees. (Which is what unions want.)
AAA enjoys no such monopoly status. It sells memberships in the open marketplace.
There are two ways the AAA analogy could work.
AAA could make these five changes:
- Unionize licensed drivers.
- Obtain federal certification as the only provider allowed to negotiate benefits for all drivers.
- Secure agreements with a third party to provide those benefits.
- Let only members vote on the benefits packages the third party will offer.
- Obtain authorization to charge non-members for these negotiation services.
The other option is for unions to operate like AAA. They could do this in three steps:
- Forego federal certification, thus opening their workplaces to other unions.
- Provide benefits (such as insurance, paid leave, etc.) to their members, rather than negotiating for employers to provide them.
- Compete against other unions on price and quality to attract more members.
Tellingly, unions do not want option two.
Who benefits from the benefits?
Unions claim that right-to-work is unfair because all employees enjoy the benefits of union representation.
These benefits fall into two categories: 1. The compensation packages unions negotiate, and 2. Union representation itself.
Representation
Putting your workplace negotiations in the hands of a third party involves a great deal of trust. It also means sacrificing your autonomy as an employee. Your compensation is no longer dependent on your performance, but on your group status.
That tradeoff can make one better off. Or it can backfire. Union representation isn’t always in the best interests of a union’s own members, much less non-members.
In 2009, Gov. John Lynch had to cut $25 million in labor costs from the state budget. He offered rotating furloughs to workers so no one would have to be fired. The State Employees Association said no, choosing layoffs instead. The governor laid off 250 state employees. They clearly were made worse off by the union leadership’s inept negotiations.
Union contracts that favor seniority over merit disadvantage young, ambitious workers, making it harder for them to advance up the career ladder.
Benefits
Even if workers don’t like the idea of being represented in this way, unions say they are made better off by the compensation packages negotiated on their behalf, so they still must pay for the representation they don’t want. But that argument also fails on closer examination.
During Wednesday’s hearing, Rep. Daniel LeClerc, D-Amherst, made the case that unions negotiate better benefits for employees. His own union benefits include no employee share for health insurance, he said. Because his employer covers the entire expense, he gets health insurance at no cost to him.
That might be a great deal for Rep. LeClerc. But of course he does pay for that insurance coverage. Instead of higher wages, he receives a larger portion of his compensation in the form of health insurance coverage.
Health benefits aren’t bonus compensation. They’re a trade of cash for coverage. Employees pay for benefits by receiving lower wages than they otherwise would receive.
In the United States, private sector employees on average receive 70% of their compensation in wages and 30% in benefits, according to the Bureau of Labor Statistics.
In manufacturing, the breakdown is 66.5% wages and 35.5% benefits.
The government classifies all of this as compensation. So do employers.
Union-negotiated compensation packages are not “freebies” given to employees by a union. They are compensation packages negotiated between union representatives and employers. And those packages favor some employees over others.
Benefits preferences vary by age, marital status, sex and other factors. Those preferences can be highly personal.
A 2024 Ford Motor Co. survey found that only 33% of American Baby Boomers would take a 20% pay cut in exchange for a better quality of life, but 60% of Millennials would.
A young employee who would gladly exchange a lower wage for more flexible hours is made worse off by a union contract that makes the opposite trade.
When union leaders, who tend to be older, negotiate a package heavy on pension contributions that require a decade to vest, younger workers who intend to stay for fewer than 10 years are harmed.
Gen. Z Americans stay in a job for about 1/4 as long as Baby Boomers do.
Because federal law gives a certified union monopoly status as the exclusive bargaining agent for employees, the individual employee is stuck with whatever package the union leadership negotiated.
Unions suggest that the choice is between benefits and no benefits. It’s not. It’s between one discrete package vs. any number of other possible packages.
Many employees who give up their autonomy to a union might well be better off in the long run. But not all of them will be. In a free country, no one should be made to trade his workplace autonomy for collective representation.
Forced representation
That tradeoff is the issue. Unions claim that they make all workers better off. This is demonstrably untrue. Some workers are made worse off by losing their workplace autonomy.
Unions say they are required by federal law to represent non-members. But they sought that law. And it applies only if they pursue and accept National Labor Relations Board certification as the exclusive collective bargaining representative for a bargaining unit. That is, only if they seek and accept government designation as a monopoly provider.
Unions could request decertification and represent only their members. They could further seek to change federal law if they see it as such a burden.
But that would put an end to collecting fees from non-members who would stop paying those fees if given the choice.
Far from creating freeloaders, right-to-work laws restore a measure of financial autonomy to workers. Unions in right-to-work states can no longer behave as monopoly providers, but must convince non-members to join. That changes their behavior and makes them more responsive to the needs and preferences of all members of a bargaining unit.
Introducing this market incentive is the only way to improve the percentage of workers who will actually benefit from union representation.