Do Labor Unions Have to abide by Anti-Trust Laws

[bitbuckit]

I don't actually know the answer to this so this is a question to everyone.

If I start a factory that makes widgets and everybody wants one and nobody else can create such a factory, I have a Monopoly on widgets. The Government will force me to split under anti-trust laws (if I understand it correctly). So my company is split into two companies that make widgets.

Now if my workers create a union "the widget workers of America union" don't they now have a monopoly on widget labor? Shouldn't the Federal Government sue them and force a split? That way there would be two competing sources of labor for widget makers?

 

[joko104]

I don't actually know the answer to this so this is a question to everyone.

If I start a factory that makes widgets and everybody wants one and nobody else can create such a factory, I have a Monopoly on widgets. The Government will force me to split under anti-trust laws (if I understand it correctly). So my company is split into two companies that make widgets.

Now if my workers create a union "the widget workers of America union" don't they now have a monopoly on widget labor? Shouldn't the Federal Government sue them and force a split? That way there would be two competing sources of labor for widget makers?

That's a very valid question actually.

 

[Aderleth]

I don't actually know the answer to this so this is a question to everyone.

If I start a factory that makes widgets and everybody wants one and nobody else can create such a factory, I have a Monopoly on widgets. The Government will force me to split under anti-trust laws (if I understand it correctly). So my company is split into two companies that make widgets.

Now if my workers create a union "the widget workers of America union" don't they now have a monopoly on widget labor? Shouldn't the Federal Government sue them and force a split? That way there would be two competing sources of labor for widget makers?

That's not really how anti-trust laws work for a couple of reasons.

First, anti-trust laws don't completely ban monopolies, they punish attempts to either maintain or create a monopoly via anti-competitive practices. Companies that acquire and/or maintain a monopoly via legitimately competitive activities aren't implicated by anti-trust laws.

Second, anti-trust laws don't apply to labor that works for a company, they apply to the companies themselves. The workers don't have a monopoly on anything. If management doesn't like what they're doing, they can always fire everyone and hire a completely new staff. So no, anti-trust laws do not apply to unions.

 

[Tigger]

There's something you're not taking into account here. Those Union workers......

a. Made a choice to Unionize and were required to get probably at least two-thirds of the current workers to agree to that Unionization at the time it was originally done, so it was a democratic process in the first place.

b. The Management of the company had to agree to a contract with those workers, at which point the jobs no longer belong to the employees who hold them, but actually to the Union itself.

c. There is a mechanism in place to disband the Union if it no longer serves the needs of its members. It's not an easy process, but there is always a mechanism to do it.

 

[MaggieD]

I don't actually know the answer to this so this is a question to everyone.

If I start a factory that makes widgets and everybody wants one and nobody else can create such a factory, I have a Monopoly on widgets. The Government will force me to split under anti-trust laws (if I understand it correctly). So my company is split into two companies that make widgets.

Now if my workers create a union "the widget workers of America union" don't they now have a monopoly on widget labor? Shouldn't the Federal Government sue them and force a split? That way there would be two competing sources of labor for widget makers?

Here's more information:

Why are Labor Unions Exempt from Anti-Trust Laws?

History

The exemption has two roots: First, beginning in 1914, the Clayton Antitrust Act exempted union activities, including secondary picketing and boycotts, from antitrust enforcement. Subsequently, federal court decisions created a non-statutory union exemption for collective bargaining with employers.

Function of Antitrust Laws

Antitrust laws encourage lower prices and better quality for consumers by outlawing activities such as price-fixing agreements and commercial mergers that create a monopoly of product supply. Such activities reduce competition.

Function of Labor Unions

Unions are bargaining agents for groups of workers. Unions typically make contracts with individual employers or employer groups that set common wage rates and working conditions for those employers' covered workers.

Benefits

A union that makes a contract with one among several competing enterprises (for example, automobile manufacturers) facilitates labor peace by setting a template for bargaining with the others.

Considerations

Industry-wide wage "collusion" arguably stifles individual effort by making it impossible for dissatisfied workers with exceptional abilities to seek better deals elsewhere.

Read more: Why Are Labor Unions Exempt From Antitrust Laws? | eHow.com Why Are Labor Unions Exempt From Antitrust Laws? | eHow.com

 

[bitbuckit]

So what I am reading implies that LEGALLY they are exempt, but the "spirit" as it were of anti-trust laws is being violated by labor unions?

 

[longview]

So what I am reading implies that LEGALLY they are exempt, but the "spirit" as it were of anti-trust laws is being violated by labor unions?

It does look like the union is putting one owner out of business in hopes of getting a better deal from the next owner, or maybe becoming the next owner.
After this is all done, I wonder who will gain and who will lose, ether way I suspect the workers will not be better off.

 

[Aderleth]

So what I am reading implies that LEGALLY they are exempt, but the "spirit" as it were of anti-trust laws is being violated by labor unions?

Not really. It's closer to the truth to suggest that, while there are some relatively valid arguments to be made that unions fall within the letter of certain aspects of anti-trust law (hence the formal exemption), what they do isn't really the sort of activity that anti-trust laws were enacted to prevent. This is not entirely unlike the anti-trust exemption the NFL gets. What they do (e.g. competitors setting ticket prices, colluding on the timing and frequency of their product (footbal games)) technically violates anti-trust laws, but congress realized that punishing them under the traditional rubric didn't make any damn sense at all.

 

[MaggieD]

Not really. It's closer to the truth to suggest that, while there are some relatively valid arguments to be made that unions fall within the letter of certain aspects of anti-trust law (hence the formal exemption), what they do isn't really the sort of activity that anti-trust laws were enacted to prevent. This is not entirely unlike the anti-trust exemption the NFL gets. What they do (e.g. competitors setting ticket prices, colluding on the timing and frequency of their product (footbal games)) technically violates anti-trust laws, but congress realized that punishing them under the traditional rubric didn't make any damn sense at all.

It's interesting...it's really wage collusion. If it were employers getting together and discussing paying everyone the same, people would go to jail.

 

[Aderleth]

It's interesting...it's really wage collusion. If it were employers getting together and discussing paying everyone the same, people would go to jail.

That's true. It is an interesting topic. However, I think the differential treatment mostly stems from the power dynamic. Individual employees have very little power compared to the company for which they work. Collective bargaining puts the employee on relatively equal footing with the employer, thus enabling more or less fair bargaining (in theory at least). Since the purpose of anti-trust laws is to encourage competition... well I think you can see where I'm going with this. And of course unions don't really have the power to actually set wages, they merely have the power to set bargaining goals for what they want from management. Management is still free to tell them to **** off.

 

[bitbuckit]

Not really. It's closer to the truth to suggest that, while there are some relatively valid arguments to be made that unions fall within the letter of certain aspects of anti-trust law (hence the formal exemption), what they do isn't really the sort of activity that anti-trust laws were enacted to prevent. This is not entirely unlike the anti-trust exemption the NFL gets. What they do (e.g. competitors setting ticket prices, colluding on the timing and frequency of their product (footbal games)) technically violates anti-trust laws, but congress realized that punishing them under the traditional rubric didn't make any damn sense at all.

I don't think professional sports can be used as a comparison to anything really. Kinda like the argument that afirmitive action be applied to the teams etc.

I do think the spirit of anti-trust applies. Bullying is bullying, doesn't matter who is doing it. Are we loosing the Twinkie to Mexico because the labor union had no viable comptetion?

 

[bitbuckit]

That's true. It is an interesting topic. However, I think the differential treatment mostly stems from the power dynamic. Individual employees have very little power compared to the company for which they work. Collective bargaining puts the employee on relatively equal footing with the employer, thus enabling more or less fair bargaining (in theory at least). Since the purpose of anti-trust laws is to encourage competition... well I think you can see where I'm going with this. And of course unions don't really have the power to actually set wages, they merely have the power to set bargaining goals for what they want from management. Management is still free to tell them to **** off.

I am not sure management always has the ability when there is no alternative, Hostess being the case in point. I think it would be wrong to disallow unions as they do protect individuals that would not have the means to do so themselves otherwise. Perhaps the pendulum has swung too far the other way and we need to introduce some competition to prevent power abuse by the unions themselves?

 

[Aderleth]

I don't think professional sports can be used as a comparison to anything really. Kinda like the argument that afirmitive action be applied to the teams etc.?

I was pulling that analogy from a conversation I had with my antitrust professor in law school. Section 1 of the Sherman Act prohibits collusive behavior (e.g. horizontal and vertical price fixing, setting of territories, etc) between competitors. The actions of sports teams in (e.g.) setting price standards for NFL tickets, colluding to establish who may compete against whom and when technically does violate the Sherman Act. If I'm remembering correctly, congress had to step in to point out that applying anti-trust laws in that context was epically stupid.

I do think the spirit of anti-trust applies. Bullying is bullying, doesn't matter who is doing it. Are we loosing the Twinkie to Mexico because the labor union had no viable comptetion?

Anti-trust laws don't prevent bullying, they prevent anti-competitive commercial activity. As I pointed out in one of my previous posts, an individual employee is at a severe competitive disadvantage in (e.g.) negotiating a contract with a company. A group of employees, however, is not necessarily at such a disadvantage.

 

[Fisher]

That's not really how anti-trust laws work for a couple of reasons.

First, anti-trust laws don't completely ban monopolies, they punish attempts to either maintain or create a monopoly via anti-competitive practices. Companies that acquire and/or maintain a monopoly via legitimately competitive activities aren't implicated by anti-trust laws.

Second, anti-trust laws don't apply to labor that works for a company, they apply to the companies themselves. The workers don't have a monopoly on anything. If management doesn't like what they're doing, they can always fire everyone and hire a completely new staff. So no, anti-trust laws do not apply to unions.

You are right in part, but management cannot just fire strikers and just hire new people. They can hire employees to keep operations going while the strike goes on, but the unionized workers do have the right to strike if it does not violate their union's contract with the company.

 

[bitbuckit]

I was pulling that analogy from a conversation I had with my antitrust professor in law school. Section 1 of the Sherman Act prohibits collusive behavior (e.g. horizontal and vertical price fixing, setting of territories, etc) between competitors. The actions of sports teams in (e.g.) setting price standards for NFL tickets, colluding to establish who may compete against whom and when technically does violate the Sherman Act. If I'm remembering correctly, congress had to step in to point out that applying anti-trust laws in that context was epically stupid.

Touche.

Anti-trust laws don't prevent bullying, they prevent anti-competitive commercial activity. As I pointed out in one of my previous posts, an individual employee is at a severe competitive disadvantage in (e.g.) negotiating a contract with a company. A group of employees, however, is not necessarily at such a disadvantage.

Ok, semantically they are different. However Ideologically they are the same.

 

[Cephus]

If management doesn't like what they're doing, they can always fire everyone and hire a completely new staff.

In fact, management can't do that, particularly when it comes to unions. If management doesn't like the union, they cannot, in fact, fire the whole staff and hire new, non-union employees, it is against the law. The problem is, management is also not able to hire people who are not members of the union, once their shop is unionized.

 

[samsmart]

I don't actually know the answer to this so this is a question to everyone.

If I start a factory that makes widgets and everybody wants one and nobody else can create such a factory, I have a Monopoly on widgets. The Government will force me to split under anti-trust laws (if I understand it correctly). So my company is split into two companies that make widgets.

Now if my workers create a union "the widget workers of America union" don't they now have a monopoly on widget labor? Shouldn't the Federal Government sue them and force a split? That way there would be two competing sources of labor for widget makers?

That's not exactly how anti-trust laws work.

If you're the only company that can create a widget, the government will not force you to split.

However, if you're the only company that can create a widget and it has been discovered that you have prevented other companies from trying to make the same widget, the government intervened.

As for labor unions, such does not apply because there are different types of unions, and some unions are regional rather than national in scale.

Also, different unions operate differently. For example, the Screen Actors Guild operates more by having contract minimums in their members than full collective bargaining. So even though different actors get paid different salaries even within the same movie production, they can all expect certain minimums - such as royalties to DVD sales.

A plumber's union, however, may demand different things.

So no, labor unions are not prohibited by anti-trust laws.

 

[Aderleth]

In fact, management can't do that, particularly when it comes to unions. If management doesn't like the union, they cannot, in fact, fire the whole staff and hire new, non-union employees, it is against the law. The problem is, management is also not able to hire people who are not members of the union, once their shop is unionized.

That was obviously a bit of an overstatement, but my general understanding is that there are (generally cumbersome) ways for management to at least temporarily replace striking workers as necessary; and deal with total breakdowns in negotiations. I would imagine the details vary considerably based on what exactly the existing union/employment contracts state.

 

[Aderleth]

I am not sure management always has the ability when there is no alternative, Hostess being the case in point. I think it would be wrong to disallow unions as they do protect individuals that would not have the means to do so themselves otherwise. Perhaps the pendulum has swung too far the other way and we need to introduce some competition to prevent power abuse by the unions themselves?

There's probably some truth to that. I'd say it's definitely the case with public worker's unions.

 

[Cephus]

That was obviously a bit of an overstatement, but my general understanding is that there are (generally cumbersome) ways for management to at least temporarily replace striking workers as necessary; and deal with total breakdowns in negotiations. I would imagine the details vary considerably based on what exactly the existing union/employment contracts state.

I'm not talking about striking workers, I'm talking about general, every-day workers who don't happen to be a part of the union and don't wish to join. Employers in union shops cannot hire them.

 

[rathi]

The point of anti-trust law is prevent practices that limit competition in the marketplace. Being a monopoly is not a crime, only using the power of said monopoly against the competition. Unions only bargain for wages and benefits, they don't have control over any of the players in a market.

 

[Aderleth]

I'm not talking about striking workers, I'm talking about general, every-day workers who don't happen to be a part of the union and don't wish to join. Employers in union shops cannot hire them.

My understanding is that genuine "closed shops" (i.e. places of employment at which an employer must hire exclusively union employees) are illegal in the US. Depending on where you live (i.e. not a "right to work" state) an employer may contract with the union to require future hires to join the union, or at least pay into the union via dues. My guess is that there's a lot of variety as to how that works in practice. Since I have a professional degree, I have absolutely no direct experience with this, however.

 

[Cephus]

The point of anti-trust law is prevent practices that limit competition in the marketplace. Being a monopoly is not a crime, only using the power of said monopoly against the competition. Unions only bargain for wages and benefits, they don't have control over any of the players in a market.

Yet it does exactly that. Unions limit competition of non-union workers in the employment marketplace, they limit the ability of businesses to hire non-union workers and, in fact, they harm union shops when they strike by harming a company's ability to produce product, blackmailing them into acquiescing to unwarranted pay and benefit increases.

I fail to see any functional difference.

 

[Cephus]

My understanding is that genuine "closed shops" (i.e. places of employment at which an employer must hire exclusively union employees) are illegal in the US. Depending on where you live (i.e. not a "right to work" state) an employer may contract with the union to require future hires to join the union, or at least pay into the union via dues. My guess is that there's a lot of variety as to how that works in practice. Since I have a professional degree, I have absolutely no direct experience with this, however.

Not the case, I've worked for such companies, both as an employee and as management. It is a standard clause that any hires are required, as a condition of employment, to join the union. If you don't want to be a part of the union, you cannot work there.

 

[bitbuckit]

The point of anti-trust law is prevent practices that limit competition in the marketplace. Being a monopoly is not a crime, only using the power of said monopoly against the competition. Unions only bargain for wages and benefits, they don't have control over any of the players in a market.

Well, i think you could argue that they have control over the labor market. Particularly in non right to work states.