newjerseynewsroom.com

BY MICHAEL BUSLER

COMMENTARY

Prior to the industrial revolution in the mid 1800’s virtually every worker was involved in agriculture or was employed in small shops. Those in agriculture produced enough to feed their families and perhaps had some extra to sell to neighbors. Those involved with small shops provided some basic services. For each group though, their productivity was relatively low and as a result their earned income was low. Then the industrial revolution came.

At that time machines were invented that, coupled with labor, could vastly increase worker output. Factories began to be built by those individuals who were able to accumulate capital. For early entrepreneurs, the incomes earned were very large which led to more capital formation.

For workers who were anxious to leave the farm and seek a job in the new factories, there were few opportunities since there were only a few factories. The result of a large supply of willing workers and a low demand for workers from the relatively few factories was that wages were extremely low. Profit maximizing business people realized that they could offer very low wages and still attract a large number of workers who really had no options other than to return to the farm.

Eventually as the economy became more industrialized the demand for workers caught up to the supply and wages began to rise. In the late 1800’s and continuing into the early 1900’s workers realized that when they bargained for wages and working conditions they were at a distinct disadvantage. That was because they bargained as many individuals against a single employer. To strengthen their position they organized and could then bargain as a single unit. From the early 1900’s until the mid 1900’s, this collective bargaining produced positive results for the workers and, for the most part, led to a stable workforce which was a benefit to employers. Then in the 1960’s things began to change.

Organized labor realized that they now had power. They used this power when negotiating contracts and then used it for political gain. By 1980 labor began to demand and often times receive wages that far exceeded the value of their output. This ultimately lead to the decline of many industries as foreign competition could produce as good or better products at significantly lower costs. This was true in the steel industry and the automobile industry, as examples.

Until recently, organized labor was able to command significantly higher wages than those bargaining individually. And since public employees can now bargain collectively their wages are significantly higher than comparable private sector workers. This has led to severe problems for the taxpayers who must pay the bill for those high wages. The result in 2011 is severe battles between organized workers and those who must pay their wages.

The public’s mood seems to be turning against organized labor. Less than 12% of all workers belong to a labor organization and many elected officials are taking actions to reduce public worker’s wages and benefits. New Jersey is a prime example of this. But can the labor movement be saved?

Yes it can and most believe it must. Labor organizations have many benefits not just for the workers but also for the economy as a whole. Poor working conditions and abuses by unscrupulous employers (yes there are some) are prevented because labor has the tools to prevent them. For that reason, labor organizations should exist. But with their numbers declining and with the general negative mood in the public, survival may be difficult, unless they change their thinking.