Workers' Labor Needs to be Defined More in Terms of Property Rather than Commodities

July 15, 2013
By Prof. Oren M. Levin-Waldman, Ph.D. Graduate School for Public Affairs and Administration Metropolitan

When states pass right-to-work laws, they claim that they are creating working conditions conducive to choice. Workers can choose to join a union or not, but because these laws effectively bar closed shops workers are no longer coerced to join unions. Opponents of these laws point out the obvious: because unionization efforts have been made more difficult, the power of unions is diminished, and so too are the legitimate rights of workers.

And yet, right-ro-work laws rest on a fundamental assumption which has long permeated American labor law. That is, employers have property rights while workers do not. Hence the asymmetrical balance of power between workers and their employers.

The National Labor Relations Act (NLRA) which created the National Labor Relations Board (NLRB) was so important when it was passed in 1935 because it called for collective-bargaining as a means to prevent labor strife and instability in labor markets. By threatening to strike, which was now legal, employers would be forced to bargain with their employees. Prior to passage of the NLRA, employers could easily assert their property rights and claim that unions and strikes were an infringement of those rights. The courts originally took the position that unions were illegal because they violated the Sherman Anti-Trust Act by creating labor monopolies in restraint of free trade. Nobody would deny that they were monopolies, but institutional economists maintained that so long as workers had neither power nor property rights, they needed a measure of bargaining power that only unions and collective bargaining could afford them. Then when states attempted to pass maximum hours and minimum wage laws, which would effectively grant a measure of monopoly bargaining power to those not covered by collective bargaining agreements, the courts held them to be a violation of liberty of contract.

The Supreme Court famously asserted in the 1905 case of Lochner v. New that a maximum hours law for bakers violated the workers’ liberty of contract because it prevented them from negotiating more hours. And yet, what the Court was really saying was that state intervention on behalf of workers really violated the property rights of employers to dispose of their property as they saw fit. In other words, an employer has a right to determine the working conditions on his premises. Moreover, because employers purchased labor services from their workers through wages, workers had no rights beyond the wages they agreed to. Certainly, they would have no rights to suggest how their employers should dispose of their property. Workers, after all, are nothing more than mere commodities, and when purchased by employers they too become their property as well.

That is why the concept of collective bargaining and the right to it granted by the NLRA was so important. It effectively upended that assumption. If employers are required to recognize collective bargaining units and sit down and negotiate with their workers, workers are in effect being recognized as having a property right to their labor. But that may not be enough. Labor law needs to define the labor services that workers sell as property rights so that when workers’ rights are violated, so too are their property rights. Perhaps this is what makes right-to-work laws so dangerous. By assaulting labor they effectively deny workers property rights in their labor. It is true that if workers were viewed as people with legitimate property rights in their labor, the property rights of employers would effectively be diminished. Measures taken by management that reduced the value of their workers’s property in labor would essentially be akin to a “taking” worthy of some compensation. It is highly unlikely that American labor law will go this far, but if we are ever to right this economy and rebuild the middle class, American labor law needs to strike a better balance between the property rights of employers and the property rights of workers.


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