Washington Post Unfair?

I've only worked in Washington DC for a little over six months, and already I've seen three labor disputes in the area. To be honest, there wasn't much difference between the three disputes. From Commerce Bank to Boston Properties to the Washington Post, all the complainants had the same gripe: their wages were "unfair." The one dispute that offered the most information was WashingtonPostUnfair.com. Of course I write the website because they claim that the "real story" is there (check it out for yourself).

The claim is that the Post production workers are being treated "unfairly" while executives pad their pockets at the workers' expense. Workers haven't gotten a pay raise in five years, and now the Post wants to control the workers' pension funds. Now, I would love to read something that will give me both sides of the story. Unfortunately, I was unable to find any. As with so many things in this world, there are several perspectives and viewpoints to one situation. I have a few questions, how long was the last collective bargaining contract good for? The answer to this may offer perspective on why they haven't gotten a pay raise in five years. If they haven't gotten a pay raise in five years, why are they complaining now? Why can't each worker negotiate a pay raise on their own? These banners that adorn the Metro stations leave more questions than answers, and the website gives only one side to the "real story."

These questions all lead to my main gripes with labor unions: Price Controls and Collective Bargaining. Both of which help a few at the expense of many. They are the main reasons why I believe their labor to be inefficient and the cause of so many people spending their days protesting, rathering than working. At this time I must apologize in advance because this blog may be slightly longer than others that I've written. The length is required though to expose why labor unions, guilds and other collective labor groups are so bad for any economy. They suffocate so much productivity to benefit so relatively few. Economic reasoning must be applied to understand these inefficiencies.

First, it must be remembered that labor economics is not that much different than any other economics. Labor itself is subject to the laws of supply and demand. Wages are no different than what we commonly see as price and the quantity supplied is simply the participation in the labor force. The same rules apply, as price falls demand increases and as demand increases, so too must supply. What labor unions are allowed to do, with the blessing (and therefore the enforcement) of the government, is to implement price controls on labor. These are done through collective bargaining agreements, where labor and management bargain for a set wage (other non-monetary benefits included) for a set amount of time. On the face of this, there are problems. First, as with any other commodity, a price freeze is inherently inefficient. This is because no one can tell the future, no matter how much they say they can. No one can foresee shocks in the economy that will expose the previous price freeze as either too high or too low. The free market in labor is not allowed to work and therefore there is inefficieny. At this point, you may say, so what if there's inefficiency? As long as you see the dirty faces of workers and hear their sad stories, you may be more inclined to allow inefficiency so that these workers can feed their families. What you may not see are the hundreds, if not thousands of potential workers who are never hired because the labor union has set the wage too high to hire others. This inefficiency means that these unemployed workers cannot work. What some may see as a boring graph represents those who do not work. Labor unions contribute more to poverty than anyone can imagine.

The second issue, collective bargaining, exposes even another inefficiency and goes back to WashingtonPostUnfair.com. As a member of a labor union, you relinquish the right to negotiate your own wages. Even those with absolutely no economic knowledge can see the problem with this. If you cannot be trusted to negotiate the best wages for yourself, then what makes the labor unions so qualified? Collective bargaining takes away an individual's right to accomodate their own preferences. When a collective bargaining agreement is met, can you really say that all individuals in the union are having their preferences realized? Since we are all individuals with individual preferences, by definition it is impossible. Only the individual can realize his or her own preference. That is why a "fair" wage is so subjective; what's fair to me may not be fair to you and vice versa. That is why it is literally impossible for the Washington Post to give its workers a "fair" wage without negotiating with each worker. A collective bargaining agreement will only be "fair" to the portion of the collective that believes it's fair. The term "fair" is so subjective and undefinable; perhaps that is why the term is used so often. Fairness, like beauty, is in the eye of the beholder.

I know I haven't even begun to discuss unions is full, but I hope this was at least a beginning. Always watch out for those who speak in vague terms, such as fair. Terms like this leave much to be desired, and are said to gain favor with an ignorant mass to the union's "plight." Just remember, get the information and find out what is really happening below the surface