“Higher wages or lower unemployment? It is a wrenching choice. . . . Think of the moral calculus. Lower wages cause an incremental decline in one’s well-being. No doubt. But for the unemployed, the decline is categorical, sometimes catastrophic — a loss not just of income but of independence and dignity.”
by Charles Krauthammer
For all the fury and fistfights outside the Lansing Capitol, what happened in Michigan this week was a simple accommodation to reality. The most famously unionized state, birthplace of the United Auto Workers, royalty of the American working class, became right-to-work.
It’s shocking, except that it was inevitable. Indiana went that way earlier this year. The entire Rust Belt will eventually follow because the heyday of the sovereign private-sector union is gone. Globalization has made splendid isolation impossible.
Protests in Michigan against right-to-work bill: As state lawmakers gather to vote on a right-to-work legislation in Lansing, Mich., protests are held outside the state Capitol.
The nostalgics look back to the immediate postwar years when the UAW was all-powerful, the auto companies were highly profitable and the world was flooded with American cars. In that Golden Age, the UAW won wages, benefits and protections that were the envy of the world.
Today’s angry protesters demand a return to that norm. Except that it was not a norm but a historical anomaly. America, alone among the great industrial powers, emerged unscathed from World War II. Japan was a cinder, Germany rubble and the allies — beginning with Britain and France — an exhausted shell of their former imperial selves.
For a generation, America had the run of the world. Then the others recovered. Soon global competition — from Volkswagen to Samsung — began to overtake American industry that was saddled with protected, inflated, relatively uncompetitive wages, benefits and work rules.
There’s a reason Detroit went bankrupt while the southern auto transplants did not. This is not to exonerate incompetent overpaid management that contributed to the fall. But clearly the wage, benefit and work-rule gap between the unionized North and the right-to-work South was a major factor.
President Obama railed against the Michigan legislation, calling right-to-work “giving you the right to work for less money.” Well, there is a principle at stake here: A free country should allow its workers to choose whether to join a union. Moreover, it is more than slightly ironic that Democrats, the fiercely pro-choice party, reserve free choice for aborting a fetus while denying it for such matters as choosing your child’s school or joining a union.
Principle and hypocrisy aside, however, the president’s statement has some validity. Let’s be honest: Right-to-work laws do weaken unions. And de-unionization can lead to lower wages.
But there is another factor at play: having a job in the first place. In right-to-work states, the average wage is about 10 percent lower. But in right-to-work states, unemployment also is about 10 percent lower.
Higher wages or lower unemployment? It is a wrenching choice. Although, you would think that liberals would be more inclined to spread the wealth — i.e., the jobs — around, preferring somewhat lower pay in order to leave fewer fellow workers mired in unemployment.
Think of the moral calculus. Lower wages cause an incremental decline in one’s well-being. No doubt. But for the unemployed, the decline is categorical, sometimes catastrophic — a loss not just of income but of independence and dignity.
Nor does protectionism offer escape from this dilemma. Shutting out China and the others deprives less well-off Americans of access to the kinds of goods once reserved for the upper classes: quality clothing, furnishings, electronics, durable goods — from the Taiwanese-manufactured smartphone to the affordable, highly functional Kia.
Globalization taketh away. But it giveth more. The net benefit of free trade has been known since, oh, 1817. (See David Ricardo and the Law of Comparative Advantage.) There is no easy parachute from reality.
Obama calls this a race to the bottom. No, it’s a race to a new equilibrium that tries to maintain employment levels, albeit at the price of some modest wage decline. It is a choice not to be despised.
I have great admiration for the dignity and protections trade unionism has brought to American workers. I have no great desire to see the private-sector unions defenestrated. (Like FDR, Fiorello La Guardia and George Meany, however, I don’t extend that sympathy to public-sector unions.)
But rigidity and nostalgia have a price. The industrial Midwest is littered with the resulting wreckage. Michigan most notably, where its formerly great metropolis of Detroit is reduced to boarded-up bankruptcy by its inability and unwillingness to adapt to global change.
It’s easy to understand why a state such as Michigan would seek to recover its competitiveness by emulating the success of Indiana. One can sympathize with those who pine for the union glory days, while at the same time welcoming the new realism that promises not an impossible restoration but desperately needed — and doable — recalibration and recovery.
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This article first appeared in the Washington Post on December 13, 2012.