Labor Scarcity and Social Democracy
July 28, 2011

One thing I like about Erik Kain’s blogging is that he’s not afraid to change his mind, and he always has a compelling reason for doing so. That’s why I’ve liked watching his brief fling and subsequent breakup with union solidarity: both his support and his criticism is valuable for organized labor advocates. And it’s why I’ve spent the past week or so thinking about this post and especially this part:

Organized labor creates a labor cartel, restricting the supply of jobs and wages and limiting the opportunities of non-union workers. The argument against this is essentially ‘a rising tide lifts all ships’. Non-union workers, the argument goes, benefit from the competitive wages at union firms. I think this is true to some degree, but I think it’s also true that in order to create a system wherein organized labor has clout, artificial labor scarcity has to be created. To do that you have to limit the number of slots. This was traditionally done by excluding women and minorities from many jobs. In other countries it has been politically feasible to push full-employment policies. I doubt that it is either politically or culturally feasible in this country.

Artificially limiting the number of slots by excluding otherwise capable candidates is one thing. Institutional racism and sexism are the most obviously horrible ways to do this, but even the less retrograde alternatives — such as imposing overly burdensome certification requirements on newcomers — are pretty unpalatable. So Erik and I agree there.

On the other hand, full employment sounds pretty great. And while Erik’s probably right that there’s no politically feasible way to bring about full employment right now, that strikes me as an argument for, not against, supporting and building up organized labor. If we think full employment is a good thing, and we recognize that unions have a strong interest in encouraging the policy, why not strengthen their hand in that debate?

But that’s just setting myself up for the obvious response from labor critics: If arbitrarily excluding otherwise qualified workers from the workforce — and if full employment is, at best, a distant pipe dream — then there’s no mechanism for creating the scarcity of labor that would make unions relevant. So why even bother with them? Why not just accept organized labor’s inevitable demise?

Because Erik’s left out some other important ways we can create labor scarcity. Trying to boost employment through good monetary policy is one, as Matt Yglesias has repeatedly pointed out. Yesterday Peter Frase made another proposal: lower the cost of being unemployed through a better social safety net. If people are guaranteed some minimum level of income, and if they don’t have to worry about losing their health care coverage, then many of them will voluntarily opt out of the labor supply. Some might become freelancers, artisans, or small businesspeople. Others might choose to raise their kids while a spouse brings home the bacon. Either way, that’s a solution that allows non-union labor to pursue their own interests without competing against union workers for the same jobs.

Granted, expanding the social safety net on the federal level sounds pretty implausible right now. But that doesn’t mean good things can’t happen on the state level — recall that Vermont just recently became the first state to institute a single-payer health care system. Recall also that in regions where unions still have some clout, they can lobby for social welfare expansion. There’s little that can be done on the federal level for now, but local strongholds of both organized labor and general social democracy could have a positive ripple effect.

If you broadly favor one or the other — the social safety net or organized labor — it doesn’t make a whole lot of sense to exclude the other from your agenda. Clearly, we need to reconceptualize and refine both: that’s why I’ve used this space to push for open source unionism and address the welfare state’s “shameful revelation” problem. But institutional problems don’t negate first principle moral imperatives. Certainly not when those institutions can be reformed.

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