FREE TO CHOOSE CHAPTER 8 WHO PROTECTS THE WORKER?

I. INTRODUCTION The condition of the ordinary worker has improved enormously What accounts for the improvement? As late as 1900, only 3% of workforce was unionized Today, less than 25% unionized So it couldn’t be unions Until New Deal, gov’t intervention was minimal Direct gov’t action couldn’t be the answer So who or what was it? Is Friedman understating union’s impact?

II. LABOR UNIONS “Labor” is a misuse of language; not synonymous with labor union Labor unions are not a product of industrial development Origins date to pre-industrial period Earliest known union is in medicine

II. LABOR UNIONS A. Who Benefits? “The gains that strong unions win for their members are primarily at the expense of other workers.” Higher wages to one group of workers must come primarily from other workers Everyone has been indirectly harmed as consumers Are members highly paid because the unions are strong or are the unions strong because the members are highly paid?

II. LABOR UNIONS B. The Source of Union Power Power comes from the ability to keep down the number of jobs available, or keep down the number of people eligible for a class of jobs (a) Enforcing a high wage rate How to ration the jobs? 1)Nepotism 2)Seniority and apprenticeship roles 3)Featherbedding 4)Simple corruption How can a union enforce a high wage rate? 1)Violence or threat of violence 2)Government aid

II. LABOR UNIONS B. The Source of Union Power (b) Restricting numbers Licensure is most common way To reinforce restriction, the groups try to legally define the occupation as broadly as possible (c) Collusion between unions and employers Unions have sometimes gained power by helping business fix prices

III. GOVERNMENT Gov’t had adopted a host of laws intended to protect workers Laws have had mixed results

IV. NO ONE Two classes of workers not protected by anyone: 1)Workers with only one possible employer 2)Workers with no possible employer

V. OTHER EMPLOYERS “A worker is protected from his employer by the existence of other employers for whom he can go to work. An employer is protected from exploitation by his employees by the existence of other workers whom he can hire.” Discuss this claim.

Questions Have you ever practiced medicine? Is Milton exaggerating the AMA? Are there economic justifications for medical specialty? What is a closed shop? Raisin farmer comments. Prophetic? How have things changed since 1978? 1982 min wage = $3.35; 2011 equivalent = $7.82 Why doesn’t Congress index the min wage? Discuss why I am able to keep my salary- opportunity costs