Black America and Organized Labor: A Fair Deal?

8/12/2019 Black America and Organized Labor: A Fair Deal?

1/34


2/34

II

5.00

BLACK AMERICA NDORG NIZED LABORF IR DEAL?yWalter E WilliamsLoren A. SmithWendell W Gunn

\

This Study Was Made Possibleby a Grant From The NationalRight To Work Legal Defense

Foundation Inc .

i


3/34

Walter E. Williams

bout theContributorsDr. Williams is Visiting Professor of Economics at George MasonUniversity in Fairfax , Virginia and is the author of Youth andMinority Unemployment which was commissioned by the JointEconomic Committee of the U.S. Congress and has been publishedin unexpurgated form by the Hoover Institution. He is a contributorto Lincoln Review the quarterly journal of The Lincoln Instituteand a member of the national advisory board of The Lincoln Institute.Dr . Williams received his Ph .D. in Economics from U.C.L.A. in 1972and is an adj unct scholar of the Heritage Foundation in Washington,D.C.Loren A. SmithAssociate Professor of Law at the Delaware Law School of WidenerUniversity, Wilmington, Delaware. Mr. Smith was educated at North-western University and Northwestern School of Law (B.A. and J.D.).He has served as assistant to the Special Counsel to the President ofthe U.S. Attorney in the General Counsel s Office, Federal Communi-cations Commission in Washington, D.C ., Professor of Law at theInternational School of Law in Washington, D.C . and Office of theUnited States Attorney for the District of Columbia.W en dell W. unnMr. Gunn is Assistant Treasurer of Pepsico in Purchase, New Yorkand a former Vice President of Chase Manhattan Bank. He hastestified before The Joint Economic Committee of the U.S. Congresson Capital Formation and served as Assistant Professor of Finance atTexas Southern University in Houston, Texas. Mr. Gunn graduatedfrom Florence State University in Florence, Alabama with a B.Sc.degree in Chemistry and Mathematics and received his MBA from theUniversity of Chicago in 1971.

11

Table of ontentsPagePreface . 1

Introduction 6Part I 10Part II 33Part III . 53

111


4/34

refaceSenator S I. Hayakawa

The American labor movement presents two radically different facesto black Americans. One is its rhetoric, which is uniformly supportive of civil rights and equal job opportunities. The other is itsrecord, which is a long history of racial prejudice in both craft andindustrial unions. Unfortunately, even today, the rhetoric and actionsof organized labor are strikingly dissimilar.

In the early years of the American labor movement, blacks wereexcluded from many job markets through charter provisions thatexcluded them from unions. Just as often, they were kept out byviolence. Labor unions also sought to eliminate competition fromOrientals by vigorously fighting for exclusionary immigration laws,such as The Chinese Exclusion Act of 1882 and the Immigration Actof 1924, directed against Japanese.

Indeed the union label, of which trade unions are so proud, wasoriginated in the 1880s to indicate that the product labeled was madeby white workers, and not by Chinese.

Black leaders have been well aware of the racist role played by laborunions. Booker T. Washington opposed unions throughout his life.W.E.B. Du Bois called them the greatest enemy of the black workingman. Writing in The ation in 1923, he recognized the desire ofunions to exclude blacks so that they could demand higher wages, andthe desire of many businesses to include blacks so that they could avoidhigher union wages.

Racial exclusion is not simply a part of union history but remainsa reality today. In 1967, for example, statistics on black membershipin some major craft unions were as follows: Electricians ( BEW), 1.6percent; Ironworkers , 1 7 percent; Plumbers, 0.2 percent; and Sheetmetal Workers, 0.2 percent. In 1979, 58 percent of the local unionsreporting to the Equal Employment Opportunity Commission had noblack members at all.

In the construction industry, for example, employment cannot bediscussed without reference to the involvement of craft unions. Thefirst step in gaining entrance to a craft union is the apprenticeshipprogram. Most skilled tradesmen appear to be recruited through the

l

"back" rather than the "front" door, that is through job referrals,obtained by recommendations and "word of mouth" information provided by friends and relatives. To enter the formal apprenticeshipprogram, individual applicants must be approved by all-white reviewing boards. Then a written examination is given. Still, the union'sapprenticeship committee makes the determination on any basis it seesfit. There is often pressure from existing union members to admitfew blacks-or none-into the apprenticeship program, since they willcompete for already scarce jobs in the industry.

Craft unions have traditionally rationalized nepotism as being thetrade union equivalent of a son s inheriting a father s property. In thecase of United States v. Local 638 Pipef itters Judge Murray Gurfeindeclared: "Nepotism tends to freeze out blacks because blacks do nothave white relatives in the union."

Similarly, the reliance of Apprenticeship Committees upon subjective criteria and interviews has led to an exclusionary racial policy. Inthe case of Rowe v General Motors Corp. the Fifth Circuit Court heldthat ," promotion/transfer procedures which depend almost entirelyupon the subjective evaluation and the favorable recommendation ofthe immediate foreman are a ready mechanism for discriminationagainst blacks, much of which can be covertly concealed and, for thatmatter, not really known to management. We and others have expressed a skepticism that Black persons dependent directly on decisiverecommendations from Whites can expect non-discriminatory action."

The racial discrimination practiced by labor unions would not affectblack Americans and their job prospects so severely if labor unions didnot, in many of our states, have a life and death grip over employment.

In those states without Right To Work laws, labor unions are incontrol of much of the employment process. The employer, in manycases, goes to the union for his plumber, pipefitter or \bricklayer. f theunion has not permitted blacks to join, the employer will be unable toemploy blacks, regardless of his own wishes. Laws against discrimination in hiring have little effect if the labor pool, controlled by privatelabor organizations, remains a segregated one.

The fact is that our civil rights legislation makes racial discrimination in labor organizations illegal. This legislation, however, has notbeen enforced and unions themselves have been vigorous and ofteneffective in fighting it.

In an important discussion of this question: the book, Black Workersin White Unions ]ob Discrimination in the United States (CornellUniversity Press, 1977), confronts these questions.

2


5/34

The author, Professor William B Gould of the Stanford UniversityLaw School, writes of organized labor's response to the civil rightslegislation of recent years:

The labor movement's response is ambivalent. While the unionspurport to adopt a moral stance which is a notch above the country's, they have struggled against adhering to the requirements ofnew civil rights legislation. More than any other institutions,trade unions are the focal point of racial discord in our society.For the unions represent both the new immigrants and oldergroups who are pulling themselves up the ladder and who perceivetheir competitive status to be unstable and threatened. Paradoxically, the unions represent some of the most reactionary andinsecure elements in American society as well as the 'underclass',which is disproportionately black as well as Chicano and PuertoRican Thus, unions often constitute roadblocks to the achievement of nondiscriminatory employment practices.

Labor leaders have been completely indifferent to the plight of blackworkers. Asked about the United Steelworkers' experience under statefair employment practices statutes, former union president DavidMcDonald said: I must say that insofar as our personal experience isconcerned, since we have no discrimination I have no experiences toreport. This came after the United Steelworkers of America had beenhit with thousands of charges filed with the Equal Employment Opportunity Commission alleging racial discrimination, as well as with asubstantial number of lawsuits. Though the black membership isapproximately 30 percent, no black is in any elective policy-makingposition on the national level.

Organized labor's top leaders, who are determined to impose compulsory unionism upon the entire country, have never recognized theirracist past nor made any effort to redress such past grievances. Professor Gould notes that, The AFL-CIO has never relented in itsopposition to the reform of seniority systems that have discriminatedagainst blacks in the past. This attitude, coupled with a pattern ofopposition to other civil rights measures-including the Nixon Administration's Philadelphia Plan-indicates that, contrary to the generalimpression, not merely the rank and file of local union leadershipperpetuates discrimina tion in the country.

The U.S. Civil Rights Commission in 1961 declared: Within thelabor movement itself, civil rights goals are celebrated at the higherlevels, but fundamental internal barriers tend to preserve discrimination at the workingman's level. Professor Gould believes that such

3

an assessment lets the union hierarchy off the hook. He argues that,Assertion of the leadership's innocence is simply the first in an arsenal

of arguments that the AFL-CIO and its friends put forward to justifytrade union misbehavior.

Even labor organizations with substantial minority membershipssuch as the International Brotherhood of Teamsters, the InternationalLadies Garment Workers Union, United Steelworkers, United Rubberworkers and the Amalgamated Transit Union have no blacks in policymaking positions.

Whether it is the question of hiring, which is the principal problem'of black workers in relation to craft unions, or the problems of promotion, transfer, seniority and lack of representation in leadership positions which they face in industrial unions, the difficulties are many.Organized labor is, with regard to black workers, the problem, not asolution.

The goal of organized labor is to protect the position of those nowemployed, mainly white, at the expense of those who seek to be employed in the future, both white and non-white. In his book, UnionPower and the Public In terest Professor Emerson P. Schmidt notesthat, The one realistic principle of collective bargaining propoundedin union literature and union oral propaganda, and acted upon inbargaining, striking and picketing is: take labor out of competitionand keep it out Under perfect competition, the individual producer-say, a wheat farmer-or a worker acting alone, cannot raise hisprice; he maximizes his income by increasing his output, becomingmore efficient. In so doing, he increases the national income to thebenefit of all. The purpose of market power or union monopoly is toraise the income of unionists-those who remain or become employed.The increase comes at the expense of the buyers of the product orservice and of the excluded workers. It reduces the Gross NationalProduct as a whole, and it reduces employment to the extent that theexcluded workers fail to find jobs. Taking labor out of competition isthe key union goal . . .

It is the element of compulsion which our laws have given to labororganizations which make their racial prejudices all the m01;e difficultto overcome. It is only by eliminating thi s elem ent of compulsion byproviding real free dom of choi ce to workers f ith regard to whether ornot th ey wish to join a labor union that black workers will be given

lan equa opportunity to advance.Now that black Americans may no longer be subjected to legal

discrimination either on the state, local or national levels, it is ironic4


6/34

indeed that they are still subject to the racism of labor unions-privateorganizations empowered by law to have life and death power overthe access to employment.

The essays in this study review the various elements of this problem.Fortunately, more and more black Americans are becoming aware ofthe role labor unions have played both historically and at the presenttime in preventing them from exercising their rights to equal employ-ment opportunities.

In a free society, every man and every woman, regardless of race,religion or ethnic origin, should have the opportunity to go as far ashis or her ability will permit. No law now stands in the way of suchprogress. What remains as an obstacle, however, is the power of orga-nized labor. Once this fact is properly understood, action will, I amsure, be taken to make certain that no private group can violate rightswhich have been achieved as a result of such strenuous and costlystruggle.

Authors Walter E. Williams, Loren A Smith and Wendell W. Gunnset forth many of the harsh experiences blacks have endured as a resultof organized labor's policies.

Dr. Williams demonstrates how labor organizations have preventedblack workers from contracting with employers for their labor. Pro -fessor Smith shows why the legal structure of organized labor serves toprohibit equal access to the labor market, and Mr. Gunn declares thatorganized labor's legislative initiatives have not, in many cases, helpedto improve the lot of black Americans.

Labor unions, as voluntary organizations of workers who wish tojoin them, can surely make a valuable contribution to our country.As coercive and exclusionary bodies, however, they violate the publicinterest and, most clearly, the interests of minorities. This state ofaffairs cannot be permitted to continue .

5

ntoducton

lack Americans and organized labor have, for many years, had anambivalent relationship .

At their very beginnings, the nation's labor unions did not hesitateto proclaim themselves for whites only . Craft unions for many yearsperformed the function of protecting such occupations as plumber,carpenter and bricklayer from competition from black workers.

Unions have done serious harm to black workers in other, less direct,ways as well. By supporting repeated increases in the minimum wage,union leaders have effectively kept black workers from entering thejob market. Labor leaders who advocate such a policy are, it must beremembered, not representatives of poor people or of minority groupmembers. They are representatives of existing workers and their orga-nizations. No member of a labor union works for the minimum wage.

Labor spokesmen support an even higher minimum wage not to helptheir own members but, quite to the contrary, to protect the membersof their unions from competition.

Nobel Prize winning economist Milton Friedman points out that,The minimum wage law requires employers to discriminate againstpersons with low skills. No one describes it that way, but that is infact what it is Take a poorly educated teenager with little skill whoseservices are worth, say, only $2.00 an hour. He or she might be eager

to work for that wage in order to acquire greater skills that wouldpermit a better job. The law says that such a p ~ r s o n may be hiredonly if the employer is willing to pay him or her (in 1979) $2.90 anhour. Unless an employer is willing to add 90 cents in charity to the$2.00 that the person's services are worth, the teenager will not beemployed. It has always been a mystery to me why a young person isbetter off unemployed from a job that would pay $2.90 an hour thanemployed at a job that does pay $2.00 an hour.Dr. Friedman concludes that, The h ~ h rate on unemploymentamong teenagers, and especially black yopngsters, is both a scandaland a serious source of social unrest . I regard the minimum wagerate as one of the most, if not the most, antiblack laws on the statutebooks.

6


7/34

I f labor unions have been harmful to black workers both by directlykeeping them out of particular job markets for many years and by,more recently, keeping them unemployed or underemployed througha variety of indirect means, their rhetoric has been consistently insupport of civil rights.

Somehow, the leadership of the nation's labor unions have given theappearance of supporting equality of opportunity for black Americansby participating in civil rights marches, advocating civil rights legislation in the Congress, and doing whatever they felt symbolically necessary to create such an image. In many cases, these individual laborleaders may well have been sincere. To charge them with racial biasas individuals would be unfair. Yet, the policies they have supportedwhen it came to their own particular concerns, have hardly beenhelpful to black workers.

During the Nixon Administration, for example, government attempted to make up for the union bias of the past in the constructionindustry through what became known as the Philadelphia Plan.George Meany and the other leaders of the AFL-CIO vigorously opposed this plan. Discussing the manner in which unions in the construction industry made it difficult, if not impossible, for black workersto join their ranks, columnist Hobart Rowen, writing in he Wash-ington ost of January 18 1970, noted that the unions require a fouryear apprenticeship for carpenters. Yet, today most carpenters onlybuild forms for concrete work-a job that can easily be taught in 90days. He pointed out that the U.S. Air Force can take a boy off thefarm and train him to be a bomber and navigator in six months, butthat the union requires five years to train a plumber.

Rowen suggests that, to solve the employment and housing problems,the Federal Government may have to set up its own training programson a realistic basis-aimed at turning out skilled workers not boundby the 19th century practices employed by the unions.

For black workers, who have been denied their basic right to workin many fields by the actions of labor unions over the years, to beforced to join unions against their will as a condition of employmentat the present time is to make a mockery of the civil rights which have,we are repeatedly told, been achieved.

Compulsion and coercion are alien to a free society. In the earlydays of the American labor movement, this notion was widely understood. The first president of the AFL, for example , Samuel Gompers,declared: There may be here and there a worker who for certainreasons does not join a union of labor. This is his right no matter

7

how morally wrong he may be. It is his legal right and no one candare question his exertion of tha t legal r ight.

In most states at the present t ime, that righ t has been eliminated formany workers. In those sta tes which continue to provide freedom ofchoice for workers, organ ized labor is mounting vigorous campaignsto replace free choice wi th compulsion. Only to labor bosses is itcontroversial to say that a man or a woman should have the right, ina free society, to make his or her own decision 'about whether to joina labor union.

For black Americans who have fought so hard to gain freedom andequal rights under the law , it is a sad irony to be told that, in order towork, he must give that freedom up and turn it over to labor leaders.

It takes no genius to figu re ou t why unions like exclusive bargainingrights or why they prefer mandatory membership (or dues payment)to voluntary membership, writes the distinguished black columnist ,William Raspberry. ' They are afraid that if the employees were leftto make the choice on their own, many of them wouldn't join . . .Quite apart from the ph ilosophical implications of voluntary association, requiring un ions to compete for their members has the salutaryeffect of forcing the unions to pay close attention to the desires andneeds of their members and potential members. Unions with compulsory membership tend to develop agendas that have nothing to dowith, and often contradict, what the individual members see as theirbest interest.

Mr. Raspberry concludes that, If unionism is as good for the workersas the uniom claim, there should be no problem attracting members.I f they want to force you to buy what they're selling, they must doubtthe intrinsic attractiveness of their product.

When the U.S. Congress was considering legislation in 1977 whichwould require U.S. government employees in exclusive-recognitionunion agencies either to join the union or pay dues as if they belonged,vigorous opposition came from the predominantly black NationalAlliance of Postal and Federal Employes.

The Alliance argued that the large unions often fail to pursuecomplaints of racial discrimination or equal opportunity programs.

Those who have failed to represent all pf the federal workers nowask you to legislate a monopoly-union shop-which would enslaveall the working people. Employees who' refuse to pay dues to anexclusive union are not freeloaders and deadbeats. Some pay dues tothe Alliance, and we are anxious to perform the service for which they

8


8/34

have paid. Others are those people who choose not to join becausethat is their right, (for) which they owe no one an explanation.

Alliance President Robert White based his opposition to mandatoryunionism on what he called discriminatory practices of the AFL-CIOunions.

Writing in he Sacramento Observer a prominent black newspaper,Henry N. Austin, a Virginia postal worker, makes this importantpoint:The civil rights movement was founded on a principle with whichmost Americans agree . that of increasing the opportunities availableto Blacks and other minority Americans. Many Americans, Black andWhite, gave their lives to earn the right of all people to enjoy the fullbenefits of American life regardless of their particular hue. Are weto die to erase one barrier and close our eyes to the erection ofanother-Compulsory Unionism? In those thirty states that allowclosed-shop-type arrangements, which restrict employment to unionmembers only, a qualified individual cannot even apply for most workwithout first agreeing to join a union. This is especially unjust to sorneminorities who are deemed to not have the necessary education or workexperience to get into a union and, thus, are effectively denied the rightto work. n other words, Blacks find themselves in a classic doublebind: they can't get a job unless they are card-carrying union membersand they can't get into some unions without meeting the unionHierarchy's arbitrary entrance requirements.

Once, Mr. Austin writes, black Americans were forced to bow theirheads and pay tribute in order to support their families. He asks:Must we now as American citizens bow our heads to compulsory

unionism in order to work and feed our families?A recent public opinion poll indicates that the majority of black

Americans support voluntary unionism. Even black union membersexpressed stronger support for voluntary unionism (49 percent) thanforced (45 percent) .Labor unions have had a mixed record at best in their relationshipto black Americans. f they seek to change that record, black Americans should have every right to join them and participate in them.Under no circumstances, however, should black workers be forced tojoin labor unions as a condition of employment. To do so would,sadly, short-change those who have worked so long and sacrifi'ced somuch to be free.

Wendell W. Gunn9

PartFreedom to Contract

Blacks and Labor Organizationsby

Walter E. WilliamsVisiting Professor

George Mason UniversityFairfax, Virginia

lacks have been denied full justice throughout their history in theUnited States. D ecades ago the denial took the form of slavery.

When slavery was abolished, injustice took the form of legalized disenfranchiseme nt. Blacks were denied basic Bill of Rights guarantees thatwere taken for granted by even visitors to the United States. n moderntimes legalized in ustice in its grossest forms has all but been abolished.However, in ustice continues. This form of in ustice is subtle in itsapproach and is not even directed explicitly against blacks. Despitethis, it nonetheless has the force of legalized economic injustice.

The economic injustice referred to is the numerous laws at both thestate and federal levels that give many blacks a competitive disadvantage in labor markets. These laws discriminate against those peoplewho are late-comers, relatively low-skilled and those without muchpolitical clout. Precisely how this works will be the subject of thisessay. The point to recognize is the power that these economic lawshave in inducing various sectors in the economy to act out of selfinterest (one of the most powerful human t i o n s in ways notfavorable to black economic progress.Perhaps the most insidious effects of these economic laws whichimpede black economic progress is that they are not highly visible.That is for well over a decade the country has committed itself throughvarious programs and civil rights laws fo see that blacks (and otherminorities) received fair treatment. h e r ~ have been numerous casesof civil rights litigation , billions of dollars 'spent and numerous initiatives of one sort or another, but for a very large segment of the blackpopulation, economic opportunity remains illusive. The nation isconfused and the black population is bitter. The solution to the

IO


9/34

problem of high unemployment and low skills remains to be found.Until it is fully recognized that the problems blacks face today are notones of racism per se, but that of government-sanctioned laws whichreduce economic opportunities for them, our country will continueto generate a class who are permanently dependent.

This essay will focus mainly on one form of economic m1usticeencountered by a large segment of the black labor force; namely, lawsgoverning labor transactions which effectively prohibit voluntary exchange among individuals and thus deny large segments of the blackcommunity economic opportunity. Before I focus on some of theselaws, I will briefly discuss the nature of competition and how it appliesto the labor market because there is considerable confusion about thisbasic element of economic life.

The Basic Theory of CompetitionOne of the most difficult problems involved in formulating policy

initiatives that hold effective promise to ameliorate relatively weakeconomic opportunities for blacks, particularly those who are mostdisadvantaged in terms of marketable skills, is a misunderstandingabout the nature of competition and a widespread mythology concerning competition. This .section of the essay will attempt to redressthis problem.

Competition of some form or another is the inescapable result ofscarcity. Scarcity in turn is the natural result of the fact that we livein a world of finite resources. Economists define scarcity as the set ofcircumstances whereby human wants are unlimited and the means tosatisfy those wants are limited. n other words, it is rare that we findpeople who will say that all their wants have been satisfied. Peoplealways want more of something, be it more cars, clothes, a larger house,more vacation time, more love, more peace, ad infinitum. On the otherhand, there are finite world resources capable of satisfying those humanwants. Therefore, given the nature of man and given the fact ofscarcity, the big question for mankind to decide, whether he lives ina communistic, socialistic, or capitalistic society, is who gets the rightto use the scarce resources of the society.

The issue of who gets what raises conflict and this is where competition comes into play. There are several methods that a society can useto decide, for example, who gets what house or what job. One way isthrough government fiat where a central authority arbitrarily determines the entitlement. Another way is through some form of violence

11

or threat of violence where physical strength produces the final outcome. Yet another way is through the market mechanism where priceand income perform the function of deciding who gets what. Thebasic point here is that all societies contain onmipresent conflict overhow the society s scarce resources will be used and who will use them.And all societies must find ways to resolve this conflict.

Since this essay has as its purpose the analysis of the labor market,I confine most of my attention to competition for jobs. Des pite manymyths to the contrary, competition in the labor market is principallythe same as competition in other markets.1 That is, competition alwaystakes place among sellers or among buyers not between buyer andseller. For example, General Motors competes against Chrysler (anotherseller not against buyers of automobiles, i.e. the consumer. Becauseof this, if automobile companies wanted to increase their wealththrough restricting competition, one strategy would be to eliminatetheir competitors (rival sellers) which include foreign producers ofautomobiles. Clearly, there are numerous ways, not at issue here, bywhich a particular automobile producer can reduce competition.What is at issue is that competition takes place among sellers: theability to raise prices artificially requires collusive action against rivalsor with rivals.

The identical competitive principle applies in the market for labor.Laborers compete with other laborers, i.e. with other sellers of labor.Just as in the case of buying/selling automobiles, for a particulargroup of laborers to artificially increase its wealth, requires that theyeliminate competing labor-rival sellers of labor. Despite the mythcreated by labor organizations, their primary struggle is not againstemployers but against other workers.

The fact that their primary struggle is against other workers isreadily seen when we consider union strategy to s ~ e k higher wages ormore favorable working conditions for its m e m e r s The strike is thelabor union's ultimate strategic weapon. For the strike, as a tool ofnegotiation, to .be effective, labor unions must be able to deny to theemployer the alternative of hiring persons to replace the strikingworkers. In other words, they must be able to exclude other workersfrom the job market. History is replete with examples of how personswilling to take the places of striking worke l;rs were denied this opportunity by unions through acts of intimidatJon, violence, and outright

No doubt the Clayton Act assertion, that the labor of a human being is not acommodity or article of commerce, is, in part , responsible for labor market myths.

12


10/34

murder.2 Where labor disputes involved violence that violence wasmost of en directed at workers and the victims of the violence werenot em p loyers but other workers.3

A considerable part of the activities of the labor movement in theU.S. has been that of attempting to thwart competition among workers.One of the ways that this has been done is through the use of unionpolitical powers to lobby for laws that confer monopoly power onlabor unions. This observation has nothing to do with any kind ofsocial justification for the monopoly powers that have been conferredon labor unions: whatever the social justification for various laborlaws can be separated from the effects of labor laws Nor will thediscussion center around the intentions or justification of our laborlaws: we will mostly discuss the efjects of labor law which are independent of the intentions.

With this in mind, we now turn our attention to one historicalexample of labor unions' attempt to thwart the rise of the Negroabove the deprecations of a history of slavery. The point of this briefcase study is to show an example of the crude forms of union behaviortowards Negroes.Negroes and the Railroad Industry

Employment in the railroad industry has historically been the siteof the most virulent forms of a union's racially discriminatory policy.There are several factors which made this possible. First, union organization in the railroad industry has traditionally been along craftlines. Second, unions in t:he railroad industry, having launched collective bargaining as early as the 1880's, are among the oldest and thestrongest of American unions. Third, the railroad unions were significantly strengthened by government protection during World War Iand later by the Railway Labor Act, as amended in 1934, which outlawed yellow dog contracts and the formation of company-dominatedor company-financed unions .4 The effects of these factors are of suchimportance that some detail will be useful on how union racial discrimination and government support combined to reduce jobs forNegroes in the railroad industry.

The National Mediation Board (N MB) , created by the 1934 amendments to the Railway Act of 1926, was to mediate labor disputes

The Wagner Act legally established labor monopoly through its requirementth at the firms negotiate solely with the union in settling work disputes.

3 Scab is the term used to describe a worker who sees that his interests are notthose of the union .4 A yellow dog contract is one in which the employee agrees not to join a union.

13

arising on railroads. One of the practices of the Mediation Board wasthat of defining the bargaining unit that was to represent railroademployees. The Mediation Board nearly always defined the unit tosuit the jurisdictional claims of the standard railway union. 5

Negroes who were not accepted for membership in most locals orwere relegated to a low status in the standard unions during this timenaturally attempted to form their own unions. These attempts werenullified by the action of the Natjonal Mediation Board which simplyruled that these alternative unions created by discriminated Negroescould not represent black employees who were unfairly being represented by the bargaining unit given exclusive rights by the Board. Ineffect the Board bestowed monopoly representation powers to whitelabor unions which discriminated in refusing to extend equal membership rights to Negroes.

The adverse effects of this policy stand out in stark relief in the caseof rotherhood of Railway and Steamship Clerks vs United TransportService Employees of America (UTSEA) .6 This case asked the courtto adjudicate the conflicting claims of two unions competing for therights to represent forty-five Negro porters at a train station in St. Paul,Minnesota. The porters were ineligible for membership in the Clerksunion because they were Negro; they had unanimously voted forUTSEA as their bargaining agent. The Mediation Board dismissedthe application of UTSEA on the grounds that the porters were nota separate class of employees and that there was no dispute overrepresentation.

The federal district court, upon appeal, declared the dismissal ordervoid. The Court of Appeals pointed out that the dismissal forced theNegro employees to accept representation by an organization in whichit had no right to membership or right to speak or be heard in its ownbehalf. The Negro workers' victory was not to be had. The UnitedStates Supreme Court reversed the decision by the 'Appeals Court onthe grounds that the Mediation Board's certifications are not subjectto judicial review.

During this era and later there were numerous certification proceedings that granted discriminatory labor unions exclusive bargainingrepresentation. 1

5 Herbert R . Northrup, The Appropriate Bargaining Unit Question Under theRailway Labor Act, Quarterly Journal of Economics Jo i. 60 (February , 1946) , p. 254.

6137 F2d 817 (D.C. Cir. 1943), rev., 320 U.S. 715 (19{3).7 For additional problems and examples see, Howard W. Risher , Jr. The Negro in

the Railroad Industry (Philadelphia, Pa.: University of Pennsylvania Press, 1971) ,especially chapters 4, 5, 6 7.14


11/34

The racially discriminatory practices of railway labor unions, reinforced by national labor laws, gave rise to several important courtcases. Chief among these cases was Steele vs. Louisville NashvilleRailroad.8 This case involved a Negro fireman, B. W. Steele, who hadbeen laid off as a result of the Southeastern Carrier's Agreement, anagreement between several railroad companies and railway labororganizations. Steele had been working as a fireman along with threeother Negro firemen in the high-paying passenger division of theLouisville Nashville line. The jobs of the four Negroes were declared vacant and were filled by white firemen having less seniority.

When Steele first started working in 19 l0, 98 percent of the firemenin his Louisville and Nash ville district were Negro. By 1943 the proportion of Negroes had dropped to 20 percent hired as firemen. Thecase was originally held before the Alabama Supreme Court. TheCourt found that, as a certified representative of the firemen, theBrotherhood had the right to destroy or create rights of members ofthe bargaining unit. However, when the United States SupremeCourt heard the case it reversed the decision of the State Court andfound that the union had violated the Railway Labor Act. In reaching its decision, the Court recognized that the Railway Labor Actwould be on weak Constitutional grounds if it denied individuals(1) the right to bargain for themselves and (2) the right to be fairly

represented by the exclusive bargaining unit. The U.S. SupremeCourt ruled, the Railway Labor Act imposes on the bargaining representative of a craft or class of employees the duty to exercise fairly thepower conferred upon it in behalf of all those for whom it acts,without hostile discrimination against them. 9 Despite the SupremeCourt ruling, effective discrimination against Negro railroad workersdid not encl: the mechanism for the maintenance of effective discrimination had not been reduced-namely, the monopoly powers conferred upon unions by the federal government. The Brotherhood ofLocomotive Firemen ignored the court decision and maintained theillegal Southeastern Carrier's Agreement. It was not until the 1950's,following separate law suits awarding damages, that the effect of theSteele decision was even modestly felt.lo

n the late l 940's unions began to employ subtler techniques whichhad the effect of reducing or eliminating Negro firemen. For example,the Brotherhood of Locomotive Firemen in 1947 began a campaignB 323 U.S. 192, 202 -203 (1944).9 Steele vs . Louisville Nashville R .R ., 323 U.S. 192, 202-203 (1944) _10 Risher , op . cit .

15

wh'.ch, s u ~ e r ~ i ~ l l y at least, appeared to be aimed at rejecting itsraoally d1scnmmatory practices of the past by negotiation of anagreement which struck out the anti-Negro quota clause. However,

t ~ ~ s w ~ s nothing but a strategy to win gains that had been lost throughht1gat10n throughout the Forties. The new contract contained a clausestipulating that only those firemen who were promotable were tobe employed on freight and passenger train runs. All others couldonly be employed in yards.In January, 1948, the Brotherhood of Locomotive Firemen proposedto the members of the Southeastern Carrier's Conference a test todetermine whether a fireman was promotable. Failing the test afterthree tries would mean that the man was unpromotable and would bedismissed from the service. Obviously, the test was directed at eliminating Negro firemen. Most Negro firemen had been hired many yearsago and there had been no education requirements. The test basedon hiring requirement for engineers would have caused the Negroesto be dismissed. Fortunately for the Negro firemen around the country,the courts held that the test was illegal.

One of t h ~ most r e ~ r k b l e stories to be told about the early historyof Negroes m the railroad industry is their success in some sectors ofthe industry despite the hostility they faced. As such this story demonstrated contrary to some of the opinion today, that racial discriminationin and of itself cannot generally explain Negro unemployment, butmay explain lower wages.

The turn of the century in the United States saw considerable hostility against Negroes, particularly in the railroad industry. Trainmenand firemen, while able effectively to bar Negroes from union membership, could not bar them from their craft. In the South, where hostilitytowards Negro workmen was the greatest, some railroad companieshad firemen crews which consisted of 85 to 90 percent Negroes. ForSouthern states as a whole, Negroes constituted 27 percent of thefiremen, 27 percent of the brakemen, and 12 percent of switchmen.These statistics c ~ n g e d dramatically in later years. By 1940, 18 percent of fir:men m. the South were Negroes, falling to 7 percent by1960.11 .This cha.ngmg employment picture in the railroad industry isof considerable mterest and supportive of t-he general hypothesis suggested in this essay.

The high rate of employment for Negroes the railroad industrywas not at all a result of benevolence on belt'alf of white owners and

11 U.S. Census of Population 1940: Vol. Ill, Th e abor Force Part I, Table 62.

16


12/34

managers of railroads. It was due to the fact that Negroes would workfor wages that were often just two-thirds of the wage rate paid to, say,white firemen for doing the same job. The wage differential had theclear effect of reducing the power of white firemen to demand higherwages. As one white firemen put it, Everytime the firemen ask for anincrease in wages or for overtime due them, they are told by thesuperintendent, 'Why I can get a Negro in your place for one dollar,while I am paying you $1.50 per day.' 12Railroad companies were very interested in keeping the Negro intheir employ because hiring Negroes meant a lower cost of operation.White firemen naturally protested, using allegations of Negro incompetency, large-scale crippling strikes, intimidation , and murder.

In 1900 a bitter strike action was taken against the Georgia Railroad.The Brotherhood of Locomotive Firemen demanded that Negroes becompletely eliminated from the road . Instead of recommending theelimination of Negroes as was demanded by the union, the arbitrationboard decided that Negro firemen, hostlers, and hostlers' helpers bepaid wages that were equ al to the wages of white men doing the samejob.13 The Brotherhood of Locomotive Firemen expressed delight withthis decision. They said, If this course is followed by the companyand the incentive for employing Negroes thus removed, the strike willnot have been in vain. 14

Why would the Brotherhood of Locomotive Firemen be happy withthe decision for equal-pay-for-equal-work? The reason is that, if railroads were required to pay blacks the same as they paid whites, thecost to the railroad of discriminating against blacks in employmentwou ld be effectively zero. The work pay rule would effectively preventblacks from competing with whites: the white firemen knew this andknew it well. They knew that the y could trust economic incentives tofurther their racist objectives better than custom, gentlemen's agreements or feelings of white brotherhood.The understanding of the power of economic inducement to furtherthe cause of racial discrimination in employment is further seen in anagreement between the Brotherhood of Railway Trainmen and theSouthern Railroad Association signed in Washington, D.C., in January1910:

12 Locomotive Firemen s Magazine (August, 1899) , p. 203.13 Despite a general consensus among today's public that people should be paid

identically if th ey do identical work, making this Jaw is the first step towardshandicapping the most disad vantaged group of workers.

14 Sterling D. Spero and Abram L H arris , Th e Black Worker (New York:Kennikat Press, 1931 , p . 291.

17

No larger percentage of Negro firemen or yardmen will be employed on any division or in any yard than was employed onJanuary 1, 1910. I f on any roads this percentage is now largerthan ?n January 1, 1910, this agreement does not contemplatethe d r ~ c h r g e of any Negroes to be replaced by whites; but as

v a c ~ n c r e s are filled or new men employed, whites are to be takenuntil the percentage of January first is again reached.Negroes are ~ o t to be employed as baggagemen, flagmen or yardforemen, but 111_ any case in which they are so now employed, theyare ~ o t to be discharged to make places for whites, but when thepos1t1?ns they occupy become vacant, whites shall be employed111 their places.

~ e r e no difference in the rates of pay between white and coloredexists the restrictions s to percentage of Negroes to be employeddoes not apply.15This fam?us Washington Agreement shows the understanding of andconfidence 111 the power of economic inducement for racial discrimination. It is seen by the above citation that, while the white firemen

i ~ s i s t e d on hard and fast quotas for the hiring of Negroes, they recogmzed that these discriminatory measures were not necessary where the:-vages b ~ t ~ e e n the races were equal. In fact, they perhaps realized thatrf they. 111s1sted on racial quotas where wages were equal, that mightresult 111 reduced employment opportunities for white firemen.

~ i t h these kinds of agreements, stronger unionization occurringd u n ~ g _VYorld War I, and an increasingly monopolistic national laborlaw, lt rs not very difficult to see and understand the rapid decline inNegro employment in the railroad industry that was so much talkeda ~ o u t during the 1940's. Charles H. Hou .lton writing in Crisis magaz111e reported the Norfolk & Western, as a result o/ an agreementbetween the railroad and the Brotherhood of Locomotive Firemenand the Brotherhood of Railroad Trainmen in 1909, hired not a singleNegro fireman or brakeman. Of considerable significance to our laterdiscussion, Houston pointed out that the railroad unions helped writet ~ 1 e 1934 Railway Act and that each brotherhood had its representativesrtt111g on the First Division of the Natiofial Railway AdjustmentBoa.rd w h i ~ h has jurisdiction over all g r i e v a n ~ e s affecting train andeng111e service employment.16 1

15 id . p. 293.16 Charles H. Houston, Fo ul Employment Practice on the Rails Crisis (October,1949), pp . 269-84.

18


13/34

National abor Relations ctToday, in sharp contrast to the past, there a:e subtler .methods that

labor unions employ to restrict entry. This task is accomplished throug.hmonopoly powers conferred on labor unions by f e d ~ r a l l ~ w The b.as1cstatute which governs private sector labor transactions m the U?1tedStates is the National Labor Relations Act NLRA) . The Nat10nalLabor Relations Act of 1935, popularly called the Wagner Act, hasseveral minor amendments: I) the Labor-Management Relat10ns

Taft-Hartley) Act of 1947; and (2) the Labor-Management Reportingand Disclosure (Landrum-Griffin) Act of 1959.

The ways of market control granted unions by the National LaborRelations Act are similar to those used by a group of firms that seek tomonopolize a market, i.e., price fixing. The only ~ s s e n t i a l ~ i f f e r e n c ebetween the monopoly behavior of unions and firms is that pnce-fixmg,collusion, and restriction of competition are ill ega l when clone by firmsand are legal when done by unions.17A significant part of the power of a labor organization comes throughits agreement to be the exclusive bargaining agent for all employees ofa firm if a majority of voting employees so choose. Thereafter, laborunions became vested by government with the power to coerce employers and employees alike to deal with unions.

Trade unions seek to advance the economic interest of members bynegotiating agreements setting the terms and conditions o.f work.Their primary aim is to obtain higher wages and ~ e t t e working c o ~ -ditions for their members . To the extent the urnon is successful mnegotiating wages that are higher than those which employees w o ~ l dobtain in the absence of monopoly power, unions must also devisemeans of entry restriction . The reason is simple: the higher wages willattract entry by workers from other sectors of the economy. f otherswere permitted freely to enter the unionized labor markets, theincreased supply of labor would mean less employment and downwardpressures on wages.Since union membership is not bought or sold on the market theinitiation and clues fee does not represent the economic value of union

J 7 The Congress an


14/34

members of the labor force-the low-skilled, disproportionately Negrosegment of the labor force. Howe ver, closer scrutiny of the economiceffects of the minimum wage. law reveals an outcome other than thestated purpose for union support for the legislation.

To understand the economic effects of the minimum wage law, it isnecessary to recognize a basic behaviorial characteristic of all people,not just that of employers. People always prefer lower prices to higherprices for a given good or service. An economist expresses this behavioras utility maximization. That is, for a given budget or resource constraint, people try to seek the highest level of satisfaction that isconsistent with that constraint.

The wage that any person gets in open markets reflect the contribution of his productivity when combined with other economic resources.For the most part, highly productive people can command higherwages relative to their less productive counterparts. Thus, the possession of low skills simply implies low wages relative to those with highskills. The minimum wage law is an act of governmental interventioninto the market whereby employers must pay a specified legal minimumwage to whomever they hire. Such a law produces gains for one classof workers and produces losses for another. Those people who arem d ~ worse off as a result of the minimum wage law are those whohave the lowest skills or those who are perceived as being most costlyto hire in the eyes of the employer.

Why thi s happens is clearly seen if we ask a question from the pointof view of the employer. If a minimum of 3.10 an hour must be paidno matter who is hired, what kind of workers does it pay to hire?Actually the mini1num compensation that must be paid by the employeris more than the legislated minimum because there are mandatoryfringe benefits which must he paid e.g., Social Security, accident insurance, and perhaps sick or vacation benefits: some estimates are thatthese fringe benefits add approximately 1 .00 more to the "minimumwage. Therefore, we should think in terms of about 4.00 being the"minimum wage. Clearly then , if an employer has to pay a minimumhourly wage of . 4.00, he has very little incentive to hire a personwhose hourly output has a value of only 2.00. Even if an employerwere willing to train such a worker, the fact that the worker must bepaid a wage higher than the market value of his output, plus thetraining costs, makes on-the-job-training an unattractive economicproposition.

To the extent the minimum wage law raises the pay level to thatwhich may exceed the productivity of some workers, employers will

21

predictably make adjustments in their use of labor. The adjustmentswill consist of measures to economize on the usage of labor that islow-skilled. We have all seen these adjustments which tend to substitute capital for labor , i.e. automation. Other adjustments are selfservice establishments, longer waiting lines for customers, and doingaway with the service altogether.

The businessman in the literal sense of the word is really anemployee. Customers, acting collectively, are employers The fact thatcustomers exhibit preferences for lower prices to. higher prices forcesthe businessman to make adjustments which lower production costs inlight of the increase in the legal minimum wage. f he does not makeadjustments he will lose his customers (and investors ) to those firmswhich do make the corresponding adjustments. These adjustmentswould be unnecessary if his customers were indifferent to product orservice prices. Therefore, the minimum wage has the full effect of alaw that says that if one cannot produce at least 3. l 0 worth of goodsand services, he should be denied a job.

The minimum wage law does not simply reduce job opportunities,it reduces them in a way that strikes hardest at the most disadvantagedsegments of the labor force. Workers who bear the heaviest unemployment burden of the minimum wage law are those who are mostunskilled. In the American labor force, there are two well-identifiedsegments of the population that tend to be disproportionately lowskilled: youths in general, who are low-skilled because of immaturityand lack of work experience; and those racial minorities who, as aresult of poor education, racial discrimination, and other socioeconomicfactors, are disproportionate y represented among the low-skilled.

It is no accident that it is precisely these labor groups who are mostdisproportionately represented among the unemployment statistics.Youth unemployment, even during relatively prosperous times, rangesfrom two to three times that of the general adult . b o r force. Blackyouth unemployment is even worse-nearly eight times that of the adultlabor force. This high rate of unemployment is largely the result ofbeing priced out of the market by the minimum wage law. That thisis so is a genera l consensus among academic economists who havestudied the prob lem. While there is debate among economists over them gnitude of the effects, there is virtual consensus on the direction ofthe effects of the minimum wage law-that1of reducing employmentopportunities for the most low-skilled work}r.18

18 Several important studies are cited in the bibliography.22


15/34

One of the most ignored aspects of the high rate of youth unemployment among blacks is the fact that this is a new phenomena. In 1948,black youth unemployment was roughly the same as white youthunemployment. In fact, for that year, blacks in the age range 16-17had an unemployment rate which was less than that of comparablewhite youths-9.4 percent unemployed compared to I0.2 percent,respectively . From then until the mid-fifties, black youths generallywere either just as or more active in the labor market than were whiteyouths. Now the labor force participation rate is just one-half that ofwhite youths.19Despite the rhetoric of today, racial discrimination cannot explainthis reversal unless one is able to prove that today's business world ismore racially discriminatory than that of the past. The reason for thisdramatic reversal of market opportunity for black youths lies elsewhereas has already been suggested-it is one of the effects of the minimumwage law. The reason why the minimum wage law has a greaterunemployment effect on black youths than it does on white youths liesin the adjustments that are made by firms: one type of adjustment to ahigher minimum wage is not only to hire fewer youths, but to seekamong those hired the most highly qualified youths. As it turns outfor a host of socioeconomic reasons, some of which have already beenmentioned, white youths more often than black youths have bettereducational backgrounds. Therefore, as confirmed in unemploymentstatistics, the legislation of higher minimum wages can be expectedto impose a greater burden on black youths than on white youths.Given the minimum wage law effects demonstrated here and elsewhere, one immediate question that might be asked is, why does sucha law have the political support it has traditionally enjoyed? Surely,one part of the answer is that decent people entertain a strong desirefor less fortunate people to be better off. However, another part of theanswer is that the minimum wage law serves the economic interests ofstrong political coalitions formed by labor groups.

Economists recognize that, for many productive activities, low-skilledlabor is a substitute for high-skilled workers. In other words, often anemployer has the choice of using a certain number of low-skilledworkers to perform a certain task versus using a smaller number ofhigh-skilled workers and a piece of machinery . The particular productive technique that he employs will largely depend on the comparative

19 The facts and figures are further elaborated in my Government SanctionedRestraints That Reduce Economic Opportunities for Minoritie s Poli y Review

July 1978), Revised Preprint.23

costs involved. High-skilled workers can increase the demand for theirservices, hence also command higher wages, if they can somehoweliminate the competition they face from low-skilled workers. Thefollowing example will make this concept more concrete.

Suppose a fence can be built using either one high-skilled worker orthree low-skilled workers. f the wage of high-skilled workers is $38.00per day and that of an individual low-skilled worker is $13.00 per day,the firm will employ the high-skilled worker because the productioncosts would be lower ($38.00 instead of $39.00, the latter being thecost of using three low-skilled workers) . But if the high-skilled workerwere to demand a wage of anything over $39.00 per day, he would findhimself unemployed. The high-skilled worker would soon recognizethat one of the ways he could increase his income is to advocate aminimum wage of, say, $20.00 per day in the fencing industry. Thearguments that the high-skilled worker would use to gain politicalsupport would be very much like those we hear today. His unionleader would profess a concern for the living standards of the lowskilled, he would want to prevent worker exploitation and promoteworker equality. f he is successful and persuades the legislature toenact a minimum wage of $20.00 in the fencing industry, the highskilled worker can now demand a wage up to $60.00 per day and have ahigher probability of keeping his job.20 The reason that he could dothis is because the minimum wage legislation would make his substitutes (the low-skilled worker) economically unattractive. Therefore,at least one effect of the minimum wage law is to price high-skilledworkers' competition out of the market. Whether the example accurately describes the motives of labor unions is not necessarily at issue.Whatever their motive in support for the minimum wage, the effect isthe same and the fact that the effect also happens to coincide with anumber of very important special economic interests may be entirelycoincidental.

n South Africa, where the racial climate is perhaps the most hostilein the world, white racist labor unions are also major supporters ofminimum wage laws and equal-pay-for-equal-work laws for blacks. Theew York Times reports:

Right wing white unions in the building trades have complainedto the South African Government that laws reserving skilled jobsfor whites have broken down and should IJ e abandoned in favor20 The effectiveness of the wage demand also depends upon the elasticity of

substitution of capital for labor.24


16/34

equal-pay-for-equal-work laws The conservative building tradesmade it clear they were not motivated by concern for black workersbut had come to feel that legal job reservation had been so erodedby Government exemption that it no longer protected the whiteworker.2

These job reservations laws were being eroded because blacks wereworking at wages which were a fraction of those paid white workers,thereby creating an incentive for contractors to hire blacks and therefore threatening the jobs of white workers. The minimum wage andits parallel equal-pay-for-equal work idea were expected to serve as amore reliable racial discriminator. In other words, if the racist contractor had to pay blacks and whites the same wage, the cost of indulging his preference for white workers would be effectively zero. With awage differential, the cost of racial discrimination is positive-meaningmore employment for South African blacks at wages which are admittedly lower but which are nevertheless higher than the unemployed'swage of zero and which permit the acquisition of valuable job trainingexperiences.The minimum wage law and other labor market restrictions doreduce employment opportunities and therefore the income of thoseforced out of the labor market. This fact suggests that, as a part ofsuch union restrictive strategies, there must be a political strategycalling for various kinds of maintenance programs to provide incomefor those who are unemployed as a result of market closures: if thealternative to not working were starvation, it would present a sociallyvolatile climate. Thus it is very probable that labor unions will leadthe support for income subsidy programs (e.g., food stamps, welfare,Job Corps, Public Service Employment projects, and various kinds ofmake-work programs) which represent a redistribution of income fromsociety at large to those who have restricted the labor market in thefirst place. They disguise the true effects of market entry restrictionscaused by unions and other economic agents by casting a few crumbsto those denied jobs in order to keep them quiet, thereby creating apermanent welfare class.

Union support for these programs may explain why minorities andtheir political leaders give unions strong and obedient support. Minorities are major recipients of income subsidy programs and union support

2 The New York Times, November 28, 1972. In the U.S. liberals are virtuallyunanimous in their condemnation of South African policies. Yet they and blackpolitical leaders support essentially the same labor policies that are supported byracist unions in South Africa to suppress black economic progress. Interestinglyenough , U.S. conservatives reject those policies.

25

for these programs gives the impression that unions are pro-minority.Thus, in an important sense, minorities and their political representatives are captured union constituents. f they do not politically supportunion policy, unions will not support the government handouts thatminorities receive as a result of being out of work. Even sadder is thefact that minority political leadership is obliged by labor unions tovote in Congress for union-backed legislation that causes even moreunemployment among minorities. This is readily seen by anyone wishing to check the voting records of black Congressional Members.22

Labor union support for minimum wages and equal-pay-for-equalwork today has its earlier counterpart in discrimination by the railroadunions. There we saw that labor unions sought to protect the wagesof their white members by making the Negro less competitive throughinstitutionally attempting to drive up the wages that railroad companies had to pay Negro firemen. While it may be said that unionstoday have other motives, they still seek to drive up wages of thosethat compete with them. The minimum wage law is a good examplebut there are others, one of which is the Davis-Bacon Act.Unions and the Davis-Bacon ct

The Davis-Bacon Act was enacted on March 31 1931, for the statedpurpose of protecting local wages on federal construction from competition with lower wage non-local labor. The Act required that, onall federally-funded and federally-assisted construction projects, thewages and (as the Act was later amended) fringe benefits had to bethose determined to be locally prevailing. The Secretary of Labor, inviolation of the spirit of the law, usually interprets the prevailingwage requirement of the Act as the union wage or higher.

The proponents of the Davis-Bacon Act were concerned about thetendency for non-union and non-local contractors to underbid contractors in high-wage and highly unionized areas. The proponentsargued that successful low bidders often imported labor from the Southand other low-wage areas, thereby producing unemployment and lowerwages in otherwise high-wage areas.23One effect of the Davis-Bacon Act that interests us here is that itdiscourages non-union contractors from bidding on government construction jobs, mainly because to do so would disrupt a company's

22 t is very interesting how black political leadership sees labor unions as theirfriends particularly in light of labor's resistance to p r o ~ r m s mandating increasedminority participation in union work such as the various quota plans in theconstruction ind us ry.

23 The Legislative History of the Davis-Bacon Act,'' (Washington, D .C.: U.S.Government Printing Office, 1962) , p . 1.

26


17/34

work force through problems that would arise from some of its workersreceiving higher wages than those on private construction j.obs andmorale problems caused when worker wages decreased following completion of the government construction job.24 To the extent that non-union contractors are discouraged from competition on a substantial part of the construction industry, it has economicconsequences for minorities because minority workers are more likelyto work in the non-unionized sector of the construction industry. 25The Equal Employment Opportunity Commission reports that aboutone of every five locals in the building trades union had no Negro members. In those that did, the Negroes were most often laborers. The 1967Survey of Economic Opportunity reported that only 27 percent ofnon-white craftsmen and 35 percent of non-white laborers in the construction industry were union members. The high apprenticeshiprates required by the Davis-Bacon Act discourages the .use ?f a p p r e ~ -tices on federally-funded or federally-assisted construct10n ]Obs. Thisrequirement works at cross purposes with federal job programs seekingto train minority young people. Aside from the reduced employmentopportunities resulting from the Davis-Bacon Act, it also hampersgovernment efforts to stimulate the production of low a ~ ~ moderateincome housing. In other words the interest rate subs1d1es to contractors to build moderate income housing provided by this programis often entirely offset by the higher wages mandated by another federalprogram (Davis-Bacon) .The racial employment effects of the Davis-Bacon Act were anticipated by its designers. Allusions to racial bigotry were made in manyspeeches during the House debate in 1931. Congressmen Allgood wasquite specific:

"That contractor has cheap colored labor that he transports,_ a ~ dhe puts them in cabins, and it is labor of that sort that 1s mcompetition with white labor throughout the country. 26

At least one intent of the Davis-Bacon Act was therefore to preventblack construction workers from competing with white workers onremunerative federal construction projects. Unions today are just asadamant in their backing of the Davis-Bacon Act as they were in years

24 General Accounting Office report to Congress, "The Need for More RealisticMinimum Rate Determina tions for Certain Federally Financed Housing in Washington Metropolitan Area" (Washington, D.C., U.S. ~ i n t i n g Office, 1968); see alsoRi chard L Rowan and Lester Rubi ' , Opening the Skilled Construction Trnd s toBlacks (Philadelphia: University of Pennsylvania Press, 197 3). P 93.

25 This is no doubt partly explained by union discrimination.26 U.S. Congress, House, Congressional Record 7lst Congress, 3rd Session, 1931,

p . 6513.27

past. For the most part the only thing that has changed in the rhetoricbeing used is that the unions make no explicit racial statement in theirsupport. 27 However , for us we have to keep in mind that, regardlessof the intentions involved, the analysis of any policy must always lookto e/Jects of various laws.Occupational Licensure

Entry to certain occupations is regulated by law. Licensing laws andcertification requirements, though having some social merit, limit entryinto certain trades and hence reduce employment opportunities. Licensing laws have another important effect: to the extent they limit entry,licensing makes incumbent practitioner incomes higher than theywould otherwise be. This helps us to understand why unions andtrade associations are nearly always the major supporters both of licensing laws and of any tightening in the licensing standards.

Licensing laws are another form of market entry restriction thatworks to the disadvantage of minorities. In fact, licensure laws havetraditionally been looked at as a way of eliminating or reducing competition resulting from minority participation in a particular trade orcraft. For example, C. H Perry, Secretary of Plumber Local Union 110,in Norfolk, Virginia, wrote in 1905, as the Negro is a factor inthis sector, and I believe the enclosed Virginia state plumbing law willentirely eliminate him and the impostor from following our craft andI would suggest to the different locals that if they would devote a littletime and money they would be able to secure just as good if not betterlaw in their own state. 28 The law requires, in the name of protectingthe public health, that all plumbers be examined and licensed. A magazine in Danville, Virginia, offered the following:

"There are about ten Negro state plumbers working around here(Danville, Virginia), doing quite a lot of jobbing and repairing,but owing to the fact of not having an examining board it isimpossible to stop them, hence the anxiety of the , men here toorganize. 29

And from Georgia:"The justice which has been denied the white firemen of theGeorgia Railroad may be secured, not only for them, but for every

21 The most recent analysis of the many adverse effects of the Davis-Bacon Actcan be found in, U.S. General Accounting Office, The Da visBacon ct Should beR epealed (Washington, D .C.: U .S. Printing Office, April 21 1979).

28 Spero and Harris, op. cit. p. 478. /29 Ibid. p. 481.

28


18/34

white fireman in the South, through legislation such as that nowpending in the lawmaking body of the State of Georgia.The proposed bill fixes generally the limitations and powers of

the Board of Examiners, who shall themselves h ave been firemen ofnot less than three years experience, and shall be five in number.If the act is passed and becomes law it is expected to have theeffect of reducing to a minimum the number of Negro firemeneligible to fill that position on locomotives in the State ofGeorgia. 30

Numerous other examples of'pleas by trade associations and unionsfor licensing can be given. Those same pleas exist today. The onlyreal difference between the pleas then and the pleas now is that thestated reason now never makes explicit the desire to rid the professionor trade of minorities. Very interestingly, during the l 930's, a U.S.citizenship requirement was added to virtually all licensing laws. Thishappened to coincide with the large migration of Jews to the UnitedStates as a result of the hostilities in Europe. Many of.these immigrantswere skilled artisans but , not surprisingly, they invariably lacked thisnew criterion.

Evidence shows that licensing requirements are manipulated to meetthe economic pressure of the moment. One study demonstrated that,when unemployment among journeymen and master electricians andplumbers is high, licensing examination standards are raised. Theobvious intent is that of restricting entry in order to protect the jobs ofincumbent electricians and plumbers-thus driving up the price theycan charge the public for their labor. The pressure for higher standards is couched in terms of protecting the consuming public yet it isobvious that a principal result is to protect the incomes of electriciansand plumbers.31

Raising licensing requirements, and other forms of credentialismis bound to have the most adverse effects on those who are disadvantaged already in terms of formal education skills. Often theserequirements deny people who can otherwise do a job the chance toearn income at that job. For example, one study shows that in Missouribarbers are required to pass a two-part test, one practical and the otherwritten, in order to get a barber's license. 32 Black candidates fail thetest at a rate that is 40 percent higher than whites. However, on the

30Ibid 482.3 See, Elton Rayack, An Economic Analysis of Occupational Licensure , a report

prepared for the U .S Department of Labor, September 1975.32 Professor Stuart Dorsey, Characteristics of the Occupational Licensing Queue,

Unpublished Paper, Western Illinois University, 1978.29

practical part of the test, where examiners test the applicant on hisability actually to cut hair, shave, etc., there s no statistically significantdifference in the failure rate between blacks and whites. This sameresult is probably true of other trades and occupations that are licensed.That is, blacks can do the job, but they are penalized because of thegrossly inferior education they have received in the public schoolsystems around the country.

The same outcomes discussed above can be found in the area ofbusiness licensing and regulation which also wins the support of unions.For example, the taxicab industry is an area that would be a readilyaccessible opportunity for business ownership by many low-income andlow-skilled blacks were it not for the restrictive entry provisions in mostcities. Both capital and the education requirements are low. However,entry is restricted through prohibitively high entry requirements set bylaw. For example, in New York and Boston, a license or medallionsells for $60,000 and $45,000 respectively. Such a license must bepurchased for each vehicle that is operated as a taxicab. In Washington,D.C., the story is different. Fee requirements are quite nominal$200.00. As a consequence, black taxicab ownership is high relative tothe black population.

Another area of potential business ownership for minont1es is thetrucking industry. Here, too, there are significant entry restrictions .To own and operate a truck for the interstate transportation of goodsrequires a certificate from the Interstate Commerce Commission (ICC).A certificate will be granted if the entrant can prove he will provide aservice that no other trucker is currently providing. I f the entrant onlyoffers to provide a better service at a cheaper price, he will be denieda certificate. Behind the support for this restrictive ICC policy aretrucking companies and the Teamsters Union. Teamster Union me m hers benefit from this restrictive policy in the form of higher wagesand more work.33Summary

The adverse impact of market entry restrictions and the role of laborunions in that restrictions, while not seen by today's black leadership,was clearly recognized by black leaders of the past. W.E.B. DuBoisfrequently commented on union behavior:

33 See, Thomas Gale Moore, The Beneficiaries of r u c k Regulation, TheJournal of Law and Economics (Fall, 1978) . Professor Moo e estimates that thebenefit from the restricted entry for Teamster union members add up to $1.0 to$1.3 billion dollars annually in the form of higher wages.

30


19/34

The white employers, North and South, literally gave the Negroeswork when white men refused to work with him; when he 'scabbed'for bread and butter the employers defended him against mobviolence of white laborers; they gave him educational institutionswhen white labor would have left him in ignorance; and evenwhen the full-fledged socialist movement came, the socialists wereafraid to make a direct appeal to the Negro vote because such anappeal would have militated against their chances of attractingwhite labor, North and South.However, instead of taking the part of the Negro and helpinghim toward physical and economic freedom, the American labormovement from the beginning has tried to achieve freedom at theexpense of the Negro.34

DuBois was not the only black leader who condemned labor unions;virtually every Negro leader of the period, including Booker T. Washington, felt the same way 35

The white employers that DuBois spoke of were not necessarily allhumanitarians. That is, you do not need to appeal to humanitarianmotives to account for the willingness of businesses to hire Negroes.The fact of business is that Negroes would work for lower wages inorder to offset any lack of skills or non-pecuniary disadvantage theyhad. From the employer's point of view, his money interests lay in thedirection of increasing job availability for Negroes: the union's moneyinterests lay in decreasing job availability for Negroes.

While labor union policies of restricting entry may not be aimedspecifically at restricting the entry of Negroes as such, they nonethelessare restrictive in practice. As it turns out, disadvantaged Negroes bearthe brunt of labor union restrictions. So far as policy to advance theeconomic progress of Negroes, entry is what is needed rather thanrestriction. t is ironic, if not tragic, that for the most part today'sblack leadership has formed a political coalition with the very peoplein whose interest it is to restrict employment opportunities. Amongmany of these black political leaders is an anti-business attitude andrhetoric. They fail to realize that blacks as a group pose no competitive threat to the Chryslers, U.S. Steels, and other industrial giants ofAmerica. Blacks do pose a competitive threat to plumbers, electricians,and carpenters as well as to their unions. Unfortunately, for blacks,

4 W.E .B. DuBois, The Denial of Economic Justice to Negroes, Th e New L eader(February 9, 1929), pp. 43-46.

5 Booker T . Washington, The Negro and the Labor Unions, Atlantic Monthly(Juty 1913), pp . 756-767 .

31

particularly those most disadvantaged, black leadership today hasformed an association with, and does the bidding of, the very peoplewho are most responsible for narrowing the job opportunities of thosewhom this black leadership claims to represent.

BibliographyYale Brozen, The Effect of Statutory Minimum Wages on TeenageUnemployment, Journal of Law and conomics (April, 1969), pp.109-122.David E. Kaun, Minimum Wages, Factor Substitution, and theMarginal Producer, Quarterly Journal of conomics (August, 1965),pp. 4 78-486.Marvin Kosters and Finis Welch, The Effects of Minimum Wages onthe Distribution of Changes in Aggregate Employment, American

conomic Review (June, 1972).Jacob Mincer, Unemployment Effects of Minimum Wages, Journalof Political Economy (August, 1976), pp. 87-105.Thomas Gale Moore, The Effects of Minimum Wages on TeenageUnemployment Rates, Journal of Political conomy (July/August,1971), pp. 897-902.Walter E Williams, Government Sanctioned Restraints That ReduceEconomic Opportunity for Minorities, Policy Review (Fall, 1977),pp. 1-24.

\

32


20/34

Part IIObstacle to Equal EmploymentThe Legal Structure o Organized Labor

The Problem

byLoren A. Smith, Associate Professor of Law

Delaware Law School of Widener UniversityWilmington, Delaware

After a quarter century of legal recognition that racial discrimination is contrary to the 14th Amendment's equal protection clause, andafter more than a decade of Title VII of the Civil Rights Act of 1964,the United States Commission on Civil Rights issued a report noting:

We have found that referral unions still maintain discriminatorypractices that have an adverse effect on the employment opportunities of minorities and women. We have found further thatFederal programs to provide equal employment opportunity inthe affected industries largely have been ineffective.

This statement was part of the letter of transmittal of a May, 1976report by the Commission entitled Equal Opportunity in ReferralUnions.

In 1977, a black labor lawyer, sympathetic to but recognizing someproblems with the ultimate theory of compulsory unionism, noted:

The principal issues involved in disputes between blacks and theunions are: (I) restrictions on admission to apprenticeship programs jointly administered with employers by both industrial andcraft unions; 2) the denial of journeyman cards to qualifiedblack nonunionists; 3) refusal of admission to membershipeven though no union today refers to a formal color bar in itsconstitutional rules; 4) the establishment of segregated or auxiliary locals for blacks; 5) the maintenance of separate lines ofprogression and seniority districts which prohibit or discouragetransfers by blacks into relatively better paying and more desirablejobs held by whites; and 6) the absence of blacks and otherminorities from policy-making elective and appointed positionsinside the unions.

33

These factors were present at the time of President Kennedy'sspeech in 1963. They are present today-more than a decade afterTitle VII of the Civil Rights Act of 1964, the federal fairemployment practices statute, was enacted into law. The limitedarsenal provided to minority-group plaintiffs by the 1964 statuteand the hostility of the unions have made the problems seem moreintractable today than they once appeared to be. Furthermore,governmental agencies charged with enforcing the act , hamperedby both lack of appropriations from Congress and the absence ofpolitical will and competence, have failed to crack down effectively on offenders.1

The author of the previous statement later goes on to note abouthis work: The entire book demonstrates that the opportunity foremployment is the key to the improvement of race relations in theUnited States. 2 f racial discrimination in employment is a key orthe key national problem in the area of race relations, which we maytake as a starting point, and if, in spite of labor laws and antidiscrimination laws (or because of them), labor unions play animportant role in employment discrimination, then it is certainly atleast worth looking into whether our entire system of labor relationsis the source of the problem.Based on the fact of existing employment discrimination today,despite extensive anti-discriminatory legislation on the federal andmany state statute books (many such laws being of long standing),this paper will look at the question of whether it is this nation's sys-tem of exclusive bargaining and compulsory membership which is inneed of basic revision. It is not the purpose of this paper to providea comprehensi ve analysis of union discrimination against black Americans; that has been done in various places and in more detail thanwe could hope to duplicate.3 Nor is this paper designed to be acomprehensive history or critique of the effect of national labor relations legislation on racial discrimination in employment, Rather itis designed to suggest some of the central and perhaps critical inconsistencies between the ultimate goal of true equal opportunity employ-

Gould, Black Workers in White Unions 1977, 16 .2 Id at 22.3 Id . generally. See also as a representative sample : Hill , Black Labor and the

American Legal System 1977; Demsetz, Minorities in the .Ma rket Place, 43 NorthCarolina L Rev . 271 (1965), Rowan & Rubin, Opening tre Skilled ConstructionTrades to Blacks (1972); Rosen, The Law and Racial Discrimination in Employment, 53 Calif. L Rev . 729 (1965); Kahn, Racial Discrim)nation on the Jobsite,12 UCLA L . Rev . ll86 (1965); Herring, The 'Fair Representation' Doctrine, 24Maryland L Rev. ll3 (1964).

34


21/34

ment and the ultimate goal and effect of our scheme of national laborlaw.The hardest thing we must face in dealing with racial discrimination

in the United States is to separate the moral issues from the practicalproblem. This is not meant to suggest that the moral issue has noplace in the consideration of the problem of racial discrimination. Inf ~ c t has a preeminent place, for it defines the problem: racial prejudice is morally wrong and inconsistent with both American politicalvalues and our Judea-Christian religious heritage. However, once the~ o r a l problem has been defined, once the moral sensibility has recognized the wrong, it is largely up to the practical arts and sciences of

~ a . , pol tics ~ n d economics to find solutions. n this life, purely moralms1ght identifies problems, it does not solve them. Once identified,t l ~ e ~ r o b l e m m ~ s t be tackled with all the great human tools of orga

~ 1 z a t 1 0 n , analysis and effort. . f a particular solution is not working,t may not be that the solution is immoral, but it surely is immoralto pursue such an ineffective solution. For then one is really saying

that the moral problem should not be solved.. W ~ e n . we look at the instant problem of eliminating racial dis

c n ~ 1 ~ a t 1 0 n from the realm of employment in this country, the startingpomt is .the m o ~ a l p ~ o p o s i t i o n that such discrimination is wrong. Beingfaced with an mfimte range of possible solutions, it is desirable as amoral matter to pick the solution that is most effective.

Otherwise, in the name of solving the problem, and curing the evil,the reverse is actually being clone. f we are trying to put out a fire,the ~ e r s o n ~ h o (possibly) with the best of motives, suggests pouring?asolme on t .rather th an water is spreading pernicious concepts. Heis not necessarily a bad person, nor should he be silenced, but his ideasshould be examined and rejected. It is the thesis of this paper thatthe legal structure 4 our nation has erected over the last fifty years to

4 We are primarily talking about the National Labor Relations Act (Wagner Act)of 1935 as ame nded by the La bor-Management Relations Act (Ta ft-Hartl ey Act) of1947 and the Labor M a n ~ ~ e m e Reporting and Disclosure Act (Landrum-GriffinAct) of 1959 (and the ClVll Rights Act of 196 Titl e VII, along with the E 1Employment Opportunity A c ~ of 1972) . Two other significant laws make up ~ : efed era l legal structure governmg labor relations They are the Ra' L b Af 1 1 way a or cto 1926 and the Norns-L.aGuard1a Act of 1932. It is interesting that the RailwaAct, a p a t t e r ~ - s e t t r n g statute , was the product of comp rom ise between t h ~railroads and the un10ns With Congress enacting the final comprom' L b . Lc B k G 97 . . . . . 1se. a 1 awox'. o orman, I 7 p . ;> . This ongm 1s significant because it reAects the

c o n t 1 ~ u e d pattern of m o s ~ American lab or law reAecting only the interests ofo . g a m ~ e d ? r o ~ ~ s , labor umons and corporat ion s, and ignoring the interest of thed1s sentmg md1v1dual.

35

govern employer-employee relations represents the pouring of gasolineon the fires of racial discrimination, and not the quenching of thosefires. The moral motivations for this dumping of gasoline have beenmixed. Social idealism, crass economic greed, institutional inertia,political demagoguery and false ideology have all played a part inmaking American labor relations particularly subject to the passionsof prejudice. There are, in fact, many attitudes at work in our culturepromoting the current system of labor relations. The desires of idealists to create a better livelihood for the workingman; the desires ofunion leaders for the power and prestige of $100,000 plus jobs (paidby the cumpulsory dues of millions of workers) ; the fact of judicialdecisions, political thought and regulatory experience based uponexpectations of compulsory unionism; and the strong interest thatpoliticians and employers have in dealing with a few union officialsrather than with millions of diverse working people-these have allplayed a part in creating our current system. This, however, is lessimportant for the purposes of this study than the question or topic ofwhat is the practical nature of the problem created by our system andwhat are relevant potential solutions to the problem.

The specific practical probl

Documents

Black America and Organized Labor: A Fair Deal?