The Union Delusion

The latest assailant of Wal-Mart, Harold Meyerson of The American Prospect magazine, asserts that the low-price chain is depriving U. S. workers of a booming new-home market everywhere but Las Vegas.

Las Vegas is different, he says, because of the Culinary Union, which Meyerson describes as “the latter-day UAW [United Auto Workers union]” and “a quite brilliant hotel workers union, which has won the right to represent the workers in all the Strip hotels.”

Mr. Meyerson exaggerates when he says “all the Strip hotels.” There is this little place called The Venetian with 5,000 non-union employees whose wage and benefit package is far superior to the Culinary Union contract. And the Venetian is not alone: The Aladdin, Imperial Palace and Casino Royale are also on the Strip, while off the Strip many major casino-hotel properties are non-union. 

Meyerson asserts that, “The relation of union power to mass prosperity is, in a word, causal.” He then goes on to cite Las Vegas’s housing construction boom as an example.

While the Las Vegas housing market for new construction is strong, it’s not the strongest in the country—let alone the “only American city today where there’s a boom in housing construction for the working class.” According to Steele Analytics, Las Vegas is ninth nationally in total building permit value for residential construction.

The Meyerson rant is reminiscent of UNLV professor Bill Thompson’s nutty comment in a recent interview with the Las Vegas Business Press. Thompson told the Press: “There are reasons for unions, it gives us a healthy workforce that can afford to buy a house and put their kids through college.”

Union members are not fueling the Las Vegas housing boom. There are 50,000 Culinary Union members. According to Home Builders Research Inc., 87,124 new homes were sold in Las Vegas during the last four years. Add to that another 13,106 through July of this year and the 100,230 new home closings in Las Vegas the last four and half years.

So, according to Meyerson and Thompson, the 50,000 Culinary Union members—many who are $10.50-per-hour housekeepers—purchased the majority of the 100,000-plus new homes sold during last four and half years in Las Vegas?

Each and every one of those 50,000 would have had to purchase a home—the median price now exceeding $200,000—to comprise just half of the market.

That’s not likely.

Meyerson’s knock against Wal-Mart is that the company sells its merchandise too cheap, and to do this, the company “forces” its suppliers to lower their costs. The supposed result is that Wal-Mart employees and the employees of suppliers are not paid “enough to buy decent cars, let alone homes.” The implication? If you see a new Wal-Mart going up, the local economy will soon hit the ditch.

The penetrating British classic liberal Auberon Herbert disposed of this fiction 112 years ago.

“Unionism,” he wrote, “essentially means the sacrifice of one section of the laborers to another section—it means this in more than one sense; it means the setting aside of the desires and the judgment of the individual for the sake of a common end; it means temptations to coerce; it means regulation, restriction, and centralization, with all the evils that flow from these fatal methods.”

Wal-Mart, on the other hand, last year sold $245 billion worth of merchandise that people wanted from its 3,200 stores. And people must like working for Wal-Mart: It’s the nation’s largest private employer.

Over 15 percent of Wal-Mart’s workforce is over 55 years of age, while the company is the largest employer of African-Americans and Hispanics in the nation. That is why the unions continually wage war with Wal-Mart. The union mission, as always, is to decrease competition for jobs. When there is less competition, wage rates are pushed upward. Employers like Wal-Mart bring non-traditional employees into the workforce, increasing the labor pool and providing competition for union labor. It’s one reason why union membership has fallen from 20.1 percent of the nation’s workforce in 1983 to 13.2 percent in 2002.

Union membership only creates prosperity for the union brass. The people who run Wal-Mart and The Venetian know this.

As Herbert wrote, so many years ago, “[T]he true method of increasing wages is to increase the whole body of capital…. The all-important fact—which in reality is a mere truism—remains: that only as the methods of production are improved and more is produced at less cost, can more be divided between employer and employed.”

Doug French is executive vice president of a Southern Nevada bank and a policy fellow of the Nevada Policy Research Institute.