Unions have been around since colonial times. In the beginning, it was primarily a skilled workers movement. Shoemakers, carpenters, printers, or tailors banded together and utilized the strategy of striking to defend their trades against dilution and lowered wages. If they all simultaneously refused to work, the supply would dwindle and prices would skyrocket. United, they had the required leverage to demand shorter work hours and better wages.

It was a winning strategy and, throughout the early 1800s, local craft unions proliferated across the United States. They set prices for their goods, forced their employers to only hire union workers, and limited admission into their apprenticeships to keep the supply of labor low and wages high.

As the industrial revolution proceeded and the workforce evolved, harsh conditions among mass production factory workers as well as an ever increasing divide between rich and poor led to the formation of more generic and industry focused (rather than trade focused) unions. Two such unions were the National Labor Union and the Knights of Labor. The Knights of Labor in particular united all workers by industry rather than by trade as was traditional up to that point. Both organizations pushed for an end to child labor, an 8 hour work day, and the graduated income tax. Membership of the Knights of Labor reached a peak of 700,000 before factionalism, disagreements about strategy, and contemporary repression of labor unions led to its dissolution in the 1890s. It wasn’t until the early 1900s when those lofty goals of ending child labor and the 8 hour work day began to be phased in. Around the time Knights of Labor was falling apart, a faction separated off to form the American Federation of Labor (AFL). This group of disaffected members from the Knights of Labor once again organized their union along trade lines rather than industry lines. The leader of the AFL, Samuel Gompers, saw strong trade unionism and collective bargaining as the first steps towards achieving the Marxist dream of Emancipated Labor. But this heavy focus on skilled trades left out the increasing number of low skilled workers pouring into the factories of the burgeoning mass production economy. Fed up with trade-centric unionists preventing the recruitment of these low skilled workers, a splinter group broke off from the AFL to form the Congress of Industrial Organizations (CIO). The CIO organized its union, once again, along industry lines. Throughout the 20th century the AFL and the CIO (later to merge into the AFL-CIO) picked up political power and created the impetus behind a widespread improvement of wages and work conditions among American workers during the 40s, 50s, and 60s. This power began to wane in the 1970s and was all but stamped out during the Milton Friedman inspired Reagan wave of the 1980s.

Unions existed in a state of legal uncertainty for quite some time. Going on strike was seen as a sort of subterfuge, almost terroristic, to block economic productivity for the personal benefit of a particular group. This questionable legality remained until the 1842 Massachusetts Supreme Court case Commonwealth vs Hunt ruled labor coordination legal. This case triggered the beginning of a period of increasing labor legislation which reached a zenith in the 1930s as FDR’s “New Deal” codified several labor reforms into law. Prime amongst these actions was the National Labor Relations Act, also known as the Wagner Act. The Wagner act protected workers from being punished by their employers for trying to unionize. The Wagner Act also created the National Labor Relations Board (NLRB). The purpose of the NLRB was to encourage collective bargaining by providing a legal means of conflict resolution in lieu of a workers strike. Under the Wagner Act, a group of employees has a legally protected right to organize into a union, elect a leader, and have that leader negotiate on their behalf with the employer. The employer, in turn, must be willing to sit and negotiate in good faith. If the employer refuses, the workers are entitled to file an unfair labor practice complaint with the NLRB, and the employer would face fines and penalties.

This law gave unprecedented political power and economic leverage to unions, leading to the creation of certain contractual agreements between companies and unions known as “union security agreements.” These agreements came in three types: closed shops—a contract which states that the company will only hire members of the union, union shops—in which non-union workers can be hired, but must join the union within a certain period of time, and agency shops—in which workers don’t have to join the union, but they have to pay dues to the union. The Wagner Act arguably gave too much power to unions, and after about a decade, congress passed the Labor Management Relations Act, also known as the Taft-Hartley Act. The Taft-Hartley Act dialed back union legal power. First, it prohibited certain types of strikes and boycotts. It also completely prohibited the “closed shop” agreement and restricted the “union shop” agreement by requiring a majority vote. Finally, it gave authority to state legislatures to ban union shops and agency shops altogether. This final authority is known as Right-to-Work legislation. A term that should be familiar to you.

Right-to-Work laws are state legislation which prohibits companies from signing union security agreements. As I write this, the Supreme Court is preparing to make its own determination on whether or not the government version of agency shops are constitutional by taking the case Janus vs AFSCME. If the Supreme Court rules that agency shops are not legal, which is the most likely outcome given the current makeup of the court, then that’s a pretty big blow to right-to-work opponents. Here in Missouri, RTW laws have already been passed, but will be going back up for a state-wide referendum in November (or August, if MOLeg changes their mind).

The pro-labor constituency sees right-to-work as a death knell for unions. By prohibiting agency shops, it allows a free ride for non-union employees who, nonetheless, benefit from the wages, hours, pensions, and OPEBs acquired by the union through collective bargaining. It isn’t apparent why an employee would voluntarily choose to pay union dues if they can keep the same benefits without paying. The reason an employer is obligated to provide benefits to non-union employees as well as union employees is because, as part of unionization, a union will take on what is called “exclusive bargaining representation.” Consider the case where a group of 100 warehouse workers takes a vote about whether or not to unionize. After the vote, 90 workers vote yes and 10 vote no. In the case of exclusive bargaining representation, despite voting no, those 10 workers would still become “compelled riders” of the “bargaining unit” represented by the union’s negotiators. Under agency shop rules, these compelled riders would have to pay dues to the union even though they didn’t want any part of it.

This is where the anti-labor lobby sees a problem. The idea of forcing a working individual to pay money to an organization against their will is complete anathema to their political beliefs. This repulsion is why RTW is so heavily supported by Republicans nationwide.

Right-to-work legislation is seen as a way to increase employment, especially in manufacturing, by making a state more attractive for business relocation. The hollowed out manufacturing districts in states such our own Missouri have made us desperate for a revival. Our leaders are trying to transform us into an attractive destination for business relocation. Some see the destruction of so-called anti-business unions as necessary to attracting industry and creating jobs. However, the effects of RTW legislation on employment are, like all contentious political issues, uncertain. The Economic Policy Institute, an organization funded almost 30% by unions, finds that states with RTW laws have wages 3.2% lower than states without RTW laws. This study from the Journal of Policy Analysis and Management uses a synthetic controls model (a technique we saw used in many minimum wage case studies) to examine the effects of RTW in Oklahoma. It finds that private sector unemployment rate and wages were unaffected while unionization rates decreased. An Idaho case study by the ICPSR looking at the economic status of Idaho before and after RTW found that unionization rates were already declining in Idaho before RTW was passed in 1986 and continued to decline after. Meanwhile, manufacturing employment, while growing before RTW, grew more quickly after the law was passed. This study by the CMEPR, also using a synthetic controls model, looked at the pre- and post-RTW level of income inequality in Idaho, Louisiana, Oklahoma, and Texas. It found no significant impact on income inequality. This study finds that, despite the number of businesses and self-employed being higher in RTW states, employment, wages, and per capita income are all lower. This study determines from the evidence that “the weight of the evidence strongly and increasingly suggests that RTW laws improve economic performance overall.”

I’ll only point out one more study, and this one shows that when comparing RTW states with non-RTW neighbors, the RTW states in total have lower unionization, higher wages, and higher employment. As you can see, there is a wide range of conclusions to be pulled from the literature.

The final study I mentioned points out something which came up in essentially every RTW case study. It’s a problem which I saw when I was studying minimum wage case studies, and a problem I saw when I was studying gun control case studies: It is a perniciously difficult task to discern the effects of a single, acute piece of legislation on a broad and obtuse outcome such as economic expansion or contraction. As Xu points out in that last study, “it quickly becomes clear that states are very different from each other economically.” Idaho and Oklahoma, both RTW states, have had different economic outcomes after RTW legislation (Idaho positive, Oklahoma negative). When using the state of Arizona as a control, 3 states have lower unemployment than Arizona, 2 are RTW and 1 is not. 5 states have higher wages than Arizona, 3 are RTW and 2 are not. Xu draws the conclusion, “whatever the ultimate effects of being right to work are, such policies only account for a small part of the story.”

RTW may not have any effect at all. This 1985 literature review finds that the passage of a RTW law is more correlated with a lack of union support than it is with economic outcomes. If anything, RTW legislation is a symbolic gesture which signals weak or strong union representation in a particular state.

That being said, the strength of unions in a particular state can be used as a marker of the state being either pro-business or anti-business. This was the strategy used in this paper which looks at the proportion of manufacturing employment in RTW (pro-business) states vs non-RTW (anti-business) states. The author remarks that RTW states rank higher than non-RTW states on the Fantus Rating, a measure of business friendliness. He finds that, when looking at border counties across RTW and non-RTW state lines, manufacturing employment is much higher on the pro-business/RTW side. However, this employment disparity only exists meaningfully at the borders. The evidence becomes more mixed and uncertain as you move into the interior of the state. In some cases, manufacturing employment increases in the non-RTW states more than it does in the RTW states as you move further away from the border.

Also pointed out in the paper, most states in the south are RTW and have been since the late 1940s. These states have seen their manufacturing industries drastically improve since then, but you can’t really say that RTW or being pro-business is the impetus behind this improvement. There’s no doubt that some of the improvement does stem from pro-business policies adopted by these southern states. But other factors could also account for this increase. Air-conditioning, more reliance on trucking rather than rail for transportation (which allows industry to relocate away from historic industry clusters and rail conduits), and productivity improvements in the historically agricultural south allowing less workers to be employed in agriculture and more to move over to manufacturing.

Pro-business policies are only one variable in the equation of economic success, and we don’t know exactly how important this variable is, nor exactly what constitutes “pro-business.”

What happened to industry in the US? As Intel founder Andy Grove explains in this Bloomberg piece, many U.S. companies have moved their manufacturing operations overseas to countries such as China. In China, employees will work 80 hours a week for $65. After a long day of painting faces on plastic Smurf dolls without adequate ventilation, they tuck themselves away into cramped, factory dormitories. China is apparently very pro-business. By tapping into this this sort of pseudo-slavery, American companies have seen their profit margins grow substantially. As Vaclav Smil argues in his book, Made in the USA, this process of moving our manufacturing and scaling processes overseas has been devastating to US innovation and our place in the global economy. We here in St. Louis like to pin a lot of hope onto our startup incubators. But, as Smil and Grove see it, much of our American innovation has come from established companies as they compete to scale and become more efficient than their competitors. When these companies outsource their manufacturing processes, this innovation no longer happens in the US. As Grove puts it, “Industry needs an effective ecosystem in which technology knowhow accumulates, experience builds on experience […]. The US lost its lead in batteries 30 years ago when it stopped making consumer electronics devices.” Andy Grove himself was coming from Fairchild Semiconductor when he and two others, already experienced in building integrated circuits, utilized this knowledge to build better memory chips. After the founding of Intel, they were forced to invest in new strategies to scale up their process. This led to the creation innovative manufacturing technologies which gave the US a head start in the vastly important microcomputer revolution. This head start didn’t last, unfortunately. Grove explains, “some years earlier, when Intel’s business consisted of making memory chips, we hesitated to add manufacturing capacity, not being all that sure about the market demand in years to come. Our Japanese competitors didn’t hesitate: They built the plants. When the demand for memory chips exploded, the Japanese roared into the U.S. market and Intel began its descent as a memory chip supplier.”

How many Andy Groves, Intels, and battery industries have we lost by outsourcing manufacturing? Have we already given up our head start in the next great technological revolution?

Industry best thrives in clusters. Here in St. Louis, we have our own clusters. One of them is the bioscience industry. We have historically been home to major bioscience companies such as Mallinckrodt, Pfizer, Monsanto, and Sigma Aldrich. On top of that, we have a world class research institution in Washington University. This history has built in St. Louis a collective base of industry knowledge. We have a strong workforce of scientists, chemists (including myself!), and laboratory analysts who have developed a base of experience by working for these companies. This robust workforce makes it much easier for a bioscience company to grow and succeed in St. Louis than it could in other cities. We saw a prominent example of this last year when St. Louis based Confluence Life Sciences sold in a $100 million deal to a Philadelphia company. It’s no coincidence that Confluence Life Sciences was founded by a former Pfizer researcher, Joseph Monahan. The company is investing that money into more lab space right here in St. Louis City. More lab space means more work for chemists and laboratory workers. This offers employment opportunities and a chance for St. Louis workers to learn and grow. Our competitive edge gets a little more competitive, right here in St. Louis City.

We have a lot of talent here in St. Louis, and this is incredibly important to our success as a region. What if Pfizer or Mallinckrodt had decided to move all of their laboratory work over to China where employees may be willing to accept worse safety standards, work longer hours, and forgo health insurance? If this were the case, it would have been a Chinese version of Joseph Monahan starting a Chinese version of Confluence Life Sciences.

This leads to an interesting question: is it worth accepting poorer labor standards if it means we can keep our industrial clusters in the US? Right now, our labor force is competing in the global marketplace with countries who do not enforce rigorous labor standards. With hyper-competitive labor costs, they have lured industries away from the US, breaking apart valuable industry clusters. Is a race to the bottom our only option? Should we allow the same dearth of workers protection here? Are the peripheral benefits of maintaining industrial clusters in the U.S. worth the cost of abject human misery? If a US company utilizes foreign children in sweatshops working for a nickel per day, we don’t accept that. However, we do accept foreign adults working long hours without rigorous enforcement of safety and environmental standards. Where do we draw the line here?

Let’s not forget that this world has historically been built by slave labor. Yes, even now. I don’t know how else to describe a situation where a person gives up their life for $65 a week. If you’re working 80 hours a week and living in a factory…you are not doing much else with your life. There’s no time for education, personal development, hobbies, or side projects. $65 is just enough to survive. Survival is better than the alternative, but you’re not going to be saving money and investing it into your newest business venture. And let’s just hope you don’t get sick while breathing in all of that Smurf paint, because you definitely won’t be able to afford a doctor, and your spot on the plastic Smurf production line will be replaced by somebody else as soon as you falter.

They say that the most common US job 25 years from now will be home health assistants: Helping elderly people with getting dressed, eating, bathing, and going to the bathroom. This is a $10 per hour job. Meanwhile, venture capitalists in California are hyper funding their startups with hundreds of millions of dollars to spread across the country and operate at a loss while they gobble up industries, moving jobs and capital to California and away from states like Missouri. We argue about making our state pro-business without really understanding what that means. In the process, we find ourselves trapped within a prisoner’s dilemma as cities try to one-up each other by offering ever more lucrative tax incentives in an effort to attract business. Businesses benefit, but those benefits are not shared. We race to the bottom by reducing enforcement of labor and environmental standards while multi-national (or should I say super-national) corporations and the world’s wealthiest families hide their wealth within a dispersed network of shell companies. Cities are dying. People are getting poorer and losing morale. We elect demagogues, construct scapegoats, and are starting to turn upon each other in ways that could be irreversible.

So…how should we vote on Right-to-Work? Honestly, I don’t know the correct answer here. There’s nothing simple about the modern global economy. While people in China work very hard for very little money, China has also seen a dramatic decrease in extreme poverty. I call it pseudo-slavery, but I don’t actually know the Chinese people working those jobs. They might disagree. Looking at comparative labor costs is just one of a vast multitude of variables which have affected our collective economic fortune. Monetary policy, technological changes, and the consolidation of the global economy along value chains also plays a role. In 1980, it took 10 man hours to create a ton of steel. Now it only takes 2. This is where a lot of those jobs have gone, and we can’t really blame China for that. Manufacturing requires far more engineers and technicians now than it does low skilled blue collar workers. The real problem, I believe, is that we are not properly preparing our workforce for the jobs that do exist.

I’m voting against Right-To-Work because, as the son of a union worker, I owe way too much to collective bargaining and unions to do something that could weaken them. But I don’t think the fate of unions will determine whether or not we can escape this macroeconomic mess in which we find ourselves. It will probably require an international solution: Better support and oversight for the World Trade Organization, enforcement of workers rights across the globe, and a change in monetary policy.

Anyhow, for us here in St. Louis, I think our best option is to appreciate what we still have. We have a Biotech industry. We have a Fintech industry. We have logistics and advance manufacturing industries. We have Healthcare industries. We have a startup incubator still building up momentum. We have incredible educational institutions. We still have hope. It’s a place to start. These companies need to realize how important they are to the people in this city. They need to step up and commit to us by investing in infrastructure and training programs here in St. Louis. And on the flip side, could we the people be doing a better job of helping our industrial clusters succeed? Perhaps the people of St. Louis need to realize what these companies are competing against in the global marketplace and get real about what we can expect from them.