The process of industrialization upended traditional ways of life that undoubtedly caused fear and doubt. It’s no surprise that some workers destroyed machinery in fear of lost work (the Luddites) or that workers banded together to negotiate for wages (the unions). But Frederick Douglass expressed frustration with the “political economy” of unionists, which he thought was not “villainy” but rather “honest stupidity”: the idea that “every piece of bread that goes into the mouth of one man is so much bread taken out of the mouth of another.” In other words, many unionists took the zero-sum-game view of the economy—that for them to do better, someone else had to do worse. In an otherwise racist era, the union mentality drove a new form of racist oppression: shutting blacks out of unions and union jobs. What ought to surprise us a bit more is just how racist unions remained over time, including the passage of legislation inspired by explicitly eugenicist goals.
Paul Moreno covers much of this in his excellent Black Americans and Organized Labor, a devastating history of formalized racism in the union movement. One of his more surprising insights is that the popular progressive narrative that employers pitted black and white workers against one another to break up class solidarity turns out to be based on no real historical evidence. Given that the split between the two races allowed white workers to drive wages up, it wouldn’t have made much sense if employers had behaved that way anyway, and intricate conspiracies that involve collusion between a bunch of competitors are never as probable as they sound. Instead, when we dig a little deeper, we see that employers were desperate to hire black workers but that white workers did everything in their power to keep them out. This story aligns both with the history and with the economic incentives at play. Given the rise of unionization pushes by employees of Starbucks, Amazon, Walmart, and other large chains, now is a good time to review some often-forgotten history of the union movement.
The exclusion of blacks by unions starts early, with white workers striking over the hiring of blacks in 1862 in Chicago (butchers), Cincinnati (waterfront workers), and New Orleans (dockworkers). The next year, in New York, Irish longshoremen rioted when black workers were hired by the shipping companies. But this exclusion became more poisonous with the rise of pseudo-scientific eugenics, chronicled in Illiberal Reformers by Thomas C. Leonard. Under progressive eugenics, the health of the nation would be upheld by supporting white male heads of households and suppressing blacks and immigrants through disemployment. In fact, it was this movement that gave rise to the idea of the minimum wage. Harvard’s Frank Taussig grieved that we were not so advanced as to “proceed to chloroform” those we wished to strip out of the population “once and for all,” so he outlined the disemployment effects of the minimum wage as a way to proceed with the eugenics project in the meantime. The idea that eugenicist social scientists in America were recommending policies with the goal of culling the population of undesirables sounds like a conspiracy theory from our perspective today. But the passage above appeared in a widely used economics textbook, and everyone from Woodrow Wilson to W.K. Kellogg to John Maynard Keynes were writing explicitly about improving the “quality” of the American stock through various economic and policy schemes.
This eugenicist language comes out in the debate over legislative support for unions. In principle, nothing about unionization violates classical liberal principles: If I can negotiate with my employer, I can certainly do so as part of a group. However, a slew of pro-union legislation in the 1930s tipped the scale in favor of the unions in ways that made their exclusion of black workers even more painful, including the Davis-Bacon Act of 1931, little Davis-Bacon laws in various states, the National Industrial Recovery Act of 1933, the National Labor Relations Act of 1935, and the Fair Labor Standards Act of 1938. The Davis-Bacon Act, which insisted that all federal government projects pay a “prevailing wage” (which meant a union-scale wage), was explicitly racist; here Robert Bacon argues for it in 1927: “Only by this method can that large proportion of our population which is descended from the colonists … have their proper racial representation.” As the bill was debated in Congress, the framing of what was at stake, eliminating “competition with white labor,” was ubiquitous. After it’s passage, black laborers were de facto barred from working on federal projects. In one episode, white workers went on strike to make railroad work all white, but the railroad fought hard to keep their black workers and won, inspiring Booker T. Washington to comment: “Business has no color line.”
The compilation of all these bills, which kept wages high and encouraged the formation of unions in more and more industries, certainly extended the severity of unemployment and the length of the Great Depression. But our point here concerns the racial makeup of the unemployed group, and the ways those groups that were already established in good positions were able to make sure other groups never got their foot in the door. Sometimes unions explicitly barred black people (Jim Crow laws were a factor here), sometimes implicitly, and other times blacks were allowed in but not meaningfully represented as a group or allowed promotion. Communists within the union movement made overtures toward black inclusion, which made sense considering their focus on class solidarity. But their commitment to atheism as well as their willingness to commit violence in pursuit of their goals alienated the majority of black Americans, who were (and remain) overwhelmingly Christian. In the long run, union exclusion had even worse effects when paired with other destructive government policies. With employers bearing the cost of paying into entitlement programs, and wages and pensions pushed sky high by the unions, manufacturing jobs were automated or offshored far sooner than they otherwise would have been. This means that by the time the civil rights movement finally achieved its victories in the mid-1960s, the loss of American manufacturing work was already underway. Many black men, relegated to manual labor jobs, never got to participate in the manufacturing boom that transitioned so many others from farm work to white collar work.
A subtler but perhaps more cunningly destructive phenomenon emerged at the same time. White comfort with black female employees, which arose from their history of working within the white home, led to their quicker advancement to jobs like teaching, nursing, and secretarial positions. It didn’t take long for black parents to adjust their schooling goals as well, training boys for manual labor and girls for a life in the professions. Black sociologist Orlando Patterson argues that this shift in black education patterns and the subsequent split between black male and female economic outcomes has caused distrust and resentment between the sexes in the black community, assisting the perverse incentives of our welfare system to harm family formation even more.
While employment rates among black and white men were similar (black women worked quite a bit more than white women) up until the 1930s, after the advent of government-backed unionism—including various forms of minimum-wage laws—we see blacks falling behind whites in employment. In Out of Work, Richard Vedder and Lowell Gallaway show that even after adjusting for migration and changes in occupation, these New Deal policies drove unemployment up by at least 10%. Sometimes the topics of economic recovery and growth can seem to be all about big companies or people who play the stock market. But as Jason L. Riley points out in Black Boom, big companies can relocate to Singapore if they want a better economic environment; you and I cannot. So the person most likely to lose, particularly in terms of marginal utility, is the person in the toughest position in any society. It’s he who will lose his job, have his home foreclosed on, or give up on his dream of owning a small business. While fat cats may certainly feel disappointed when they open their financial statements, economic downturns can utterly change the life trajectory of someone on the bottom rung of the economic ladder. That’s one reason why policies that encourage general economic growth—like low taxes and deregulation—are far more precious to the poor and downtrodden than to anybody else. It’s no wonder that even W.E.B. Du Bois, (who flirted with communism at various points in his life!) couldn’t get over his resentment against the unions. He said that their strategy seemed to be to form the union, strike for bargaining rights so that only they could represent the workers, and then “close the union to black workers, effectively cutting them off from employment.” Booker T. Washington put it more bluntly: Once blacks start working in factories, the “trade union soon follows, and the Negro is crowded to the wall.”
While we often think of unionism as pitting the worker against the employer, there’s no escaping the inevitable effect on intra-worker relations. Union leader Samuel Gompers complained that “employers care very little what nationality or color or previous conditions of life the wage worker has been or is in so long as he will consent to work cheap.” Moreno noticed that relations between black Americans and employers were generally quite friendly, as marginalized workers saw their chance to start climbing the economic ladder by underbidding the competition. Branch Rickey and Jackie Robinson are a classic example of this phenomenon: It was the other players who wanted to keep blacks out, while Rickey and the fans wanted to get them in.
The upshot of all this is that we need not adopt a conflict theory of economics that pits workers against one another. When we understand that the market is all about innovation, we shift our thinking to an entrepreneurial mindset, one in which new workers are always welcome because there are always bigger and better things to be doing. We must reject the us-versus-them mentality of a zero-sum economics. Instead, when I win, you win. Unions especially need not take this view, but they still often do. We see the persistence of this attitude in concerns about immigration, in which evil corporate CEOs supposedly rub their hands in glee as they exploit illegal labor. In reality, immigrant labor is beneficial because immigrants do the jobs (both very low-skilled and very high-skilled) that American citizens don’t care for. The only evidence we have for economic harm is competition with workers who do not have a high school diploma—already a small population (under 5% of U.S. workers), but even then the effect is only a temporary ~3% reduction in income. (See Jason Riley’s brief primer Black Boom for the data on this.) Immigrants provide labor we need and are a constant source of new patents and innovative entrepreneurship, both of which have a long-term beneficial effect on the economy as a whole. By erecting a “high wall with a wide gate” in our immigration policy, we could enjoy these benefits while avoiding the tragedies that go with being undocumented in America.
Similar objections can be made to other union postures: The opposition of the teachers unions to educational choice is a form of economic protectionism for public school teachers, as is the way police unions will require simple secretarial work to be done by a trained officer. In all these cases, other workers get shut out of their chance at trying something new or more efficient so that the established don’t have to compete. And as we’ve argued elsewhere, this always comes at the expense of the least well-off in our society.
It’s never OK for me to gain some temporary comfort by shutting you out, whether I’m a union worker or a CEO in cahoots with my congressman. That kind of temporary gain is what we call “bad profit” or “cronyism.” Instead, gain by being more productive, more inventive, and more honest. That’s “good profit”: We can be proud of what we’ve generated because we know we’ve made others better off, too.
