Labor Unions: Saviors or Scourges?

• Author: Richard A. Epstein
• Position: Laurence A. Tisch Professor of Law, New York University Law School, the Peter and Kirsten Bedford Senior Fellow, the Hoover Institution, and the James Parker Hall Distinguished Service Professor of Law Emeritus and senior lecturer, the University of Chicago
• Pages: 1-33

LABOR UNIONS: SAVIORS OR SCOURGES?

RICHARD A. EPSTEIN*

I. INTRODUCTION: LABOR RETURNS TO THE SPOTLIGHT

I am most honored to have been invited this past April 13, 2012, to

join the distinguished list of Sullivan lecturers at Capital University Law

School. I am also pleased that the law school invited my long-time friend

and basketball buddy, Craig Becker, to comment on my remarks, which, as

we both know, are not entirely to his liking. The new prominence that

labor law receives today stands in sharp contrast to the widespread public

indifference to the subject a generation ago.1 A dozen years or so ago, I

attended a meeting of the Labor Law Section of the Association of

American Law Schools, only to hear this common complaint: enrollments

in labor law were dropping, and the course was struggling to survive. That

trend has continued so that today union membership in the private sector

stands at about 6.6% of the workforce, down from about 35% in the

1950s.2 At the same time, the percentage of unionized workers in the

public sector rose for much of this period, but it too is now in decline for

two reasons: first, many of the recent austerity layoffs; and second, in

Wisconsin and Indiana in particular, the rapid decline in union members3

Copyright © 2013, Richard A. Epstein.

* Laurence A. Tisch Professor of Law, New York Universit y Law School, the Peter and

Kirsten Bedford Senior Fellow, the Hoover Institution, and the James Parker Hall

Distinguished Service Professor of Law Emeritus and senior lecturer, the University of

Chicago. My thanks to Jordana Haviv, Ben Margo, and Joshua Stanton , New York

University Law School Class of 2014, for their valuable research assistance.

1 Charles Fried, Individual and Collective Rights in Work Relations: Reflections on the

Current State of Labor Law and Its Prospects, 51 U. CHI. L. REV. 1012, 1012 (1984).

2 Steven Greenhouse, Share of the Work Force in a Union Falls to a 97-Year Low,

11.3%, N.Y. TIMES (Jan. 23, 2013), http://www.nytimes.com/2013/01/24/business/union-

membership-drops-despite-job-growth.html?_r=0.

3 Douglas Belkin & Kris Maher, Wisconsin Unions See Ranks Drop Ahead of Recall

Vote, WALL ST. J., May 31, 2012, at A1 (“Wisconsin membership in the American

Federation of State, County and Municipal Employees—the state’s second-largest public

sector union after the National Educati on Association, which represents teachers—fell to

28,745 in February [2012] from 62,818 in March 2011 . . . .”). The overall union

membership rate fell from 13.3% to 11.2% between 2011 and 2012. Union Affiliation of

Employed Wage and Salary Workers by State, DEP’T OF LABOR (Jan. 23, 2013),

http://www.bls.gov/news.release/union2.t05.htm.

2 CAPITAL UNIVERSITY LAW REVIEW [41:1

once legislation stripped unions of the right to direct payment of union

dues from workers’ paychecks.4 Until recently, unions in the public sector

did not generate much by way of legal controversy because of two key

features of public unions’ basic structure.5 First, public unions were

recognized as of right.6 Second, impasses in bargaining were generally

resolved by compulsory arbitration and not by strike (or at least not by

legal strike).7 The real action therefore is in the area of employment

discrimination, with its expanding docket of issues extending to everything

from affirmative action and class actions for disparate impact cases, to

sexual harassment, mandatory retirement, and much more.8

Employment discrimination continues to receive much attention

today,9 but the larger question of the role of unions in both the public and

the private sector has generated massive controversy that has reached the

mainstream press.10 The major struggles in labor law started with the now-

aborted efforts of labor unions to secure passage of the (misnamed)

Employee Free Choice Act,11 which would have done three things: allowed

union recognition to take place by card check; imposed mandatory

arbitration of initial two-year “contracts” if the parties failed to reach an

agreement within 120 days of union recognition; and stiffened penalties for

alleged unfair labor practices committed by employers during the course of

an organizati onal campaign.12 The inability to pass that proposed

legislation did not stop the union pressure for an expansion of their rights.

Instead, the campaign switched to the National Labor Relations Board,

whose chairman is by law a presidential appointee and whose other four

4 The dues provision of 2011 Wisconsin Act 10, the so-called Budget Repair Bill, was

later struck down. Wis. Educ. Ass’n Council v. Walker, 824 F. Supp. 2d 856, 869–70

(W.D. Wis. 2012).

5 See RICHARD A. EPSTEIN, THE CASE AGAINST THE EMPLOYEE FREE CHOIC E ACT 8

(2009).

6 Id. at 8–9.

7 Id. at 9.

8 RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT

DISCRIMINATION LAWS 281–82 (1992).

9 See, e.g., Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).

10 See generally Belkin & Maher, supra note 3; Greenhouse, supra note 2 (both

demonstrating mainstream media coverage).

11 Employee Free Choice Act of 2007, S. 1041, 110th Cong. (2007); Employee Free

Choice Act of 2009, S. 560, 111th Cong. (2009).

12 EPSTEIN, supra note 5, at 4–6.

2013] SAVIORS OR SCOURGES? 3

members are divided equally between Democrats and Republicans.13 The

polarization by party was evident during the Bush Administration on a

wide range of substantive and procedural issues.14 Once Barack Obama

was elected President in 2009, the balance of advantage shifted, but the

deep political di visions did not abate.15 The Republicans mounted a long

and determined campaign to block the confirmation of Craig Becker, who

received a recess appointment by President Obama in March 2010 over

ferocious Republican objections.16 In June, the Supreme Court of the

United States in New Process Steel v. NLRB17 held that the NLRB could

not operate with only two of its five members when the National Labor

Relations Act required a quorum of three members.18 Shortly thereafter,

the NLRB general counsel Lafe Solomon initiated a suit against Boeing

claiming that it unlawfully refused to bargain with its various unions when

it announced that it was going to open a new plant in North Charleston,

South Carolina.19 The dispute was settled privately before the case reached

the Board, but it generated once again a pitched battle over whether unions

should be able to exert that degree of control over major management

decisions.20

At the same time, the status of public unions has become far more

controversial as well. Generous pensions for workers in public unions in

states like California and Illinois have become the most divisive issue in

state politics, with no short-term solution on hand.21 Most dramatically,

13 29 U.S.C. § 153(a) (2006); Richard Epstein, The Tussle over Craig Becker, FORBES

(Nov. 10, 2009, 12:01 AM), http://www.forbes.com/2009/11/09/craig-becker-nlra-nlrb-

john-mccain-nomination-opinions-columnists-richard-a-epstein.html.

14 Epstein, supra note 13.

15 See, e.g., Meredith Shiner, Senate Stops Craig Becker Nomination, POLITICO (Feb. 9,

2010, 5:00 PM), http://www.politico.com/news/stories/0210/32758.html.

16 Id.; Press Release, Office of the Press Sec’y, President Obama Announces Recess

Appointments to Key Administration Positions (Mar. 27, 2010),

http://www.whitehouse.gov/the-press-office/president-obama-announces-recess-

appointments-key-administration-positions.

17 130 S. Ct. 2635 (2010).

18 Id. at 2644.

19 See Steven Greenhouse, Labor Board Case Against Boeing Points to Fights to Come,

N.Y. TIMES, Apr. 23, 2011, at B1.

20 Steven Greenhouse, Labor Board Drops Case Against Boeing After Union Reaches

Accord, N.Y. TIMES, Dec. 10, 2011, at B3.

21 Brian Chappatta & Michael B. Marois, California Beating Illinois Shows Pension-

Gap Cost, BLOOMBERG BUSINESSWEEK (Sept. 4, 2012, 12:01 AM),

(continued)