Celebrate with ARI

Yes! I want to celebrate Independence Day with the Ayn Rand Institute. Sign up to attend the live event July 2, 3:00PM E.T.

POV: Have Gun, Will Nudge
by Ayn Rand | March 1962
It's Not the Unions — It's the Labor Laws
by Doug Altner | March 19, 2014
Regulatory Strangulation
by Steve Simpson | March 13, 2014
Obamacare creates a new class of free riders
by Rituparna Basu | January 23, 2014
Obamacare Is Suffocating An Already Sick Health Insurance Patient
by Rituparna Basu | January 22, 2014
The Broken State of American Health Insurance Prior to the Affordable Care Act: A Market Rife with Government Distortion
by Rituparna Basu | January 21, 2014
Obamacare is Really, Really Bad for You, Especially If You're Young
by Rituparna Basu | August 21, 2013
Justice Department should let US Airways & American Airlines merger proceed
by Tom Bowden | August 16, 2013
Why Is Apple Inc. On Trial? For Good Behavior, It Turns Out
by Tom Bowden | June 20, 2013
The Forgotten Man of the Minimum-Wage Debate
by Doug Altner | June 19, 2013
Why Delivering Beer Isn’t Easy
by Doug Altner | June 11, 2013
What Explains GM’s Problems With The UAW?
by Doug Altner | May 20, 2013
What Are The Search Results When You Google ‘Antitrust’?
by Tom Bowden | April 18, 2013
To Protect the Defenseless, We Must Abolish the Minimum Wage
by Don Watkins | March 27, 2013
I’ll Buy My Own Contraception, Thanks
by Rituparna Basu | November 13, 2012
Why The Glass-Steagall Myth Persists
by Yaron Brook | November 12, 2012
Why Ayn Rand’s Absence From Last Thursday’s Debate Benefits Big Government
by Yaron Brook | October 15, 2012
Changing the Debate: How to Move from an Entitlement State to a Free Market
by Don Watkins | July 02, 2012
3 Things Everyone Needs to Know About the Apple Antitrust Case
by Don Watkins | April 10, 2012
What's Really Wrong with Entitlements
by Don Watkins | February 21, 2012
The Entitlement State Is Morally Bankrupt
by Don Watkins | September 13, 2011
How Important Is the Obamacare Litigation?
by Tom Bowden | August 12, 2011
Atlas Shrugged: With America on the Brink, Should You “Go Galt” and Strike?
by Onkar Ghate | April 29, 2011
The Road to Socialized Medicine Is Paved With Pre-existing Conditions (Part 3)
by Yaron Brook | April 06, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions (Part 2)
by Yaron Brook | March 10, 2011
In Defense of Finance
by Yaron Brook | February 15, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions
by Yaron Brook | February 10, 2011
The Avastin Travesty
by Tom Bowden | December 12, 2010
Apple Now Targeted for Success Like Microsoft Was in the 1990s
by Tom Bowden | October 04, 2010
The Un-American Dream
by Don Watkins | August 27, 2010
What About Private Health Emergencies?
by Tom Bowden | April 08, 2010
What’s Really Driving the Toyota Controversy?
by Don Watkins | March 26, 2010
Anti-Smoking Paternalism: A Cancer on American Liberty
by Don Watkins | March 06, 2010
Apple vs. GM: Ayn Rand Knew the Difference. Do You?
by Don Watkins | March 02, 2010
Smash the Labor Monopolies!
by Tom Bowden | September 15, 2009
America’s Unfree Market
by Yaron Brook | May 2009
Atlas Shrugged and the Housing Crisis that Government Built
by Yaron Brook | March 2009
The Green Energy Fantasy
by Keith Lockitch | February 25, 2009
Stop Blaming Capitalism for Government Failures
by Yaron Brook | November 13, 2008
The Resurgence of Big Government
by Yaron Brook | Fall 2008
The Government Did It
by Yaron Brook | July 18, 2008
From Flat World To Free World
by Yaron Brook | June 26, 2008
How Government Makes Disasters More Disastrous
by Tom Bowden | April 29, 2008
Life And Taxes
by Yaron Brook | April 17, 2008
War On Free Political Speech
by Yaron Brook | March 21, 2008
To Stimulate The Economy, Liberate It
by Yaron Brook | February 14, 2008
Exploiters vs. Victims in the Grocery Strike
by Elan Journo | January 30, 2004
Prescription Drug Benefits Violate the Rights of Drug Companies
by Onkar Ghate | July 24, 2002
Drop the Antitrust Case Against Microsoft
by Onkar Ghate | March 17, 2002


Government And Business in Voice for Reason
Government & BusinessRegulations

Exploiters vs. Victims in the Grocery Strike

by Elan Journo | January 30, 2004

The California grocery strike has entered its fourth month — and there is no end in sight. Workers are still picketing stores, the shelves are understocked, and profits are dwindling. Talks between the grocery chains and the United Food and Commercial Workers’ Union have failed to resolve the mutually harmful conflict. Why?

If the union’s demands are outrageous, why can’t the stores walk away? The stores have hired substitute employees, so evidently some people accept the stores’ working conditions. Why can’t the stores fire the strikers and end the dispute? The stores can neither back out nor dismiss strikers because they are forced by law to deal with the union. That coercive power of the union is a gross violation of the employers’ and workers’ rights.

Imagine if laws existed requiring shoppers to buy groceries from one store only, but allowed some room for haggling over price. Would the trade between a shopper and the store be considered voluntary? No. Everyone would scream that individuals should be free to shop wherever they pleased and not be forced to buy at any one store. When it comes to hiring workers, this is exactly the predicament of employers. By law they must deal only with whatever union is voted for by employees. Just as shoppers have the right to choose the terms of trade, so should an employer.

But the National Labor Relations Act, passed in 1935, negates that right. The law makes it illegal for employers to refuse to negotiate with a union or get rid of striking union workers. It is no surprise that every round of talks between the grocery stores and the UFCW has collapsed. The union can demand anything, however outrageous, and the stores are obliged by law to negotiate in good faith. Though an employer may hire replacement workers, the law requires him to give strikers first preference for any new vacancies.

The law violates the rights of workers, too. Seventy thousand UFCW members who work in grocery stores in Southern California are on strike or locked out, but a significant number of them did not vote in favor of the strike. Dissenters who think that the strike will cause long-term harm to their employers — and could cost them their jobs if the stores go bankrupt — have little say in the matter. If a majority of workers choose to unionize, the employees (including all future hires) must join and pay dues. None of them can accept a labor agreement other than that approved by the union. (Recently, there have been reports of union workers trying to return to their jobs under assumed names, hoping that the union won’t notice. The union has filed suit to prevent this practice, which it says the stores have connived in.)

What is at issue in this dispute? Facing intensified competition, the stores wanted to lower costs by having workers share a portion of the expense for their medical benefits. Knowing that it can refuse with near impunity, the union rejected the proposed labor agreement. What is important here is the stores’ right to set the terms of employment, which is abrogated. A rational employer expects to pay wages that enable him to earn a profit — not so high that he has to raise prices and lose customers, but not so low that he cannot attract and retain capable workers.

But unions pride themselves in artificially raising wages beyond the market price for such work. When demanding higher wages, unions do not promise employers that union workers will do a better job or be more productive. They don’t have to. The union has a coercive power over employers. The California grocery stores will soon have to compete with Wal-Mart, which plans to open grocery stores in the state. They are right to be worried. At unionized stores in California workers get paid $10 per hour more than those at a nonunion store. Those artificially high wages have an impact on prices: a cart of groceries is 17 to 39 percent cheaper at nonunion stores.

The solution to this strike and all similar disputes is to recognize the rights of traders — be they workers or employers — to reach mutually advantageous agreements voluntarily. The power of unions to coerce unearned benefits for their workers, while crippling employers, is unjust. Repealing the NLRA should be a first step toward restoring the principle of individual rights as the proper basis for interaction among men.

About The Author

Elan Journo

Senior Fellow and Vice President of Content Products, Ayn Rand Institute