Do Labor Unions Deserve Special Treatment?

Labor unions occupy a favored status under federal law. Given their steady decline and the problems that are now being caused by public sector unions, perhaps the time has come to reconsider whether according preferential treatment to unions is sound public policy.
In 1890, Congress passed the Sherman Antitrust Act. Section 1 of the Sherman Act prohibits any “combination … or conspiracy, in restraint of trade or commerce….” A labor union, by definition, is a combination in restraint of trade. Thus, courts began applying the Sherman Act to unions. Congress had not intended this consequence, so, when it passed the Clayton Act in 1914, it included Section 6:

The labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.

Notwithstanding the first sentence of that section, there is no doubt that the antitrust laws apply to provision of services just as they do to production of goods.
The Sherman Act’s prohibition of combinations and conspiracies in restraint of trade is unqualified, but the courts have held that the law is intended to proscribe only “unreasonable” combinations and conspiracies. “Unreasonable” generally means anticompetitive. However, some agreements are held to be per se illegal, such as agreements to fix prices. If Section 6 of the Clayton Act were repealed, thereby ending the special protection of unions under federal law, the courts would have to address whether collective bargaining by unions constitutes price fixing and is therefore per se illegal. That appears to be the most logical approach. But if, for some reason, the courts were to hold that collective bargaining is not per se illegal, then unions would have to justify, on a case by case basis, the proposition that their activities are not anticompetitive. If unions were subjected to the antitrust laws, other adjustments presumably would also need to be made, e.g., repeal or modification of the Taft-Hartley Act.
The time has come for a robust debate on the proper role of unions–if any–in a free society. It is not obvious that the special treatment accorded to unions under current federal law is justified. No doubt any proposal to subject unions’ collective bargaining activities to the antitrust laws would provoke howls of protest, but with only 6.9 percent of private sector workers unionized, it is hard to make the case that unions are playing a vital role in the nation’s economy. If the debate is stripped of emotionalism and conducted on the basis of sound public policy, a consensus may well emerge that there is no reason to grant unions a specially favored legal status.

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