The Closed Shop Scam

I was researching the WGA (Writer's Guild) and SAG (Screen Actor's Guild) contract negotiations some more. I found something deeply offensive. It applies to all union negotiations and not just the WGA or SAG.

Congress passed laws regulating unions, neutering their effectiveness. This converted union leaders into State employees, instead of being true workers' advocates. Union leaders are more interested in protecting their cushy jobs, than truly advocating for workers.

After lobbying by union leaders, Congress approved a law known as the "union shop". In a "union shop", *ALL* employees must be members of the union. Employees are barred from negotiating individual contracts with their employers. From the point of view of union bureaucrats, this is a great deal; they have a State-endorsed monopoly to represent their workers. From the point of view of corporate management, this is a great deal; if a worker has above-average ability, they merely need to be paid the minimum specified by the union contract. Most industries are organized as an oligopoly/monopoly. Even with this incredible inefficiency, people are barred by the State from forming competing businesses.

However, the union shop was deemed to be too restrictive. Someone sued over the "union shop" law. The Supreme Court outlawed the union shop, and created something called a "closed shop". Under a "closed shop", workers are *NOT* required to be members of the union. However, the union still has the exclusive bargaining rights for *ALL* workers. Even if a worker is not a member of the union, he still is obligated to follow the union contract. He is barred from negotiating his own separate agreement with his employer. The union still gets to collect dues from all workers, even those that aren't members of the union. The only exception is money the union spends on lobbying efforts; this money must be refunded to non-members. Notice this rule limits the abilities of unions to lobby, but it's usually only a few percent.

A worker can adopt "financial core" status. This means that the worker is *NOT* a member of the union. The worker is still allowed to keep his job. He must still pay taxes/tribute to the union, because they have the exclusive right to negotiate for him. The worker is not allowed to vote for the union leadership, and is not allowed to vote for ratifying the contract. Voting doesn't work, whether it's a State election or a union election. Since the worker is obligated to pay union dues anyway, the incentive is for the worker to join the union; this way, he has a meaningless vote and the illusion that he controls the union.

Closed-shop unions claim that their workers are their personal property. If a union member accepts a non-union job, he will be fined by the union. Union members are *OBLIGATED* to obey a strike vote. If a union member crosses the picket line, he will be fined by the union.

However, financial core workers are *NOT* obligated to honor a strike vote! They are not members of the union, yet they are still allowed to keep their jobs and are required to pay union dues. During a strike, workers can declare "financial core" status and return to work. Do you see how this completely cripples a union's ability to negotiate, without destroying the union?

SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE

If a strike drags on for too long, workers will declare "financial core" status and return to work. If too many workers do this, then the union completely collapses.

Near the end of the WGA strike, a lot of writers *THREATENED* to declare "financial core" status and return to work. This pressured the WGA leadership to accept a lousy contract. This lousy contract was hyped as wonderful, even though it was a load of ****. This lousy contract naturally *CONTAINED THE CLOSED SHOP CLAUSE*. Union leadership caved into management to save their jobs. Management could afford to hold out, knowing that workers would eventually declare "financial core" status and break the union. Management knew union leaders would act to save their jobs, ratifying a lousy contract.

The most skilled writers would be better off without the "closed shop" clause, allowing each writer to negotiate their own separate employment contract. Naturally, union leadership will *ALMOST NEVER* advocate decertifying the union. They would lose their property/workers!

Even though the industry is a cartel, there still are 4+ market participants. (CBS/Viacom, NBC/GE/Universal, ABC/Disney, Fox/News Corporation, plus some minor players) Even with 4 market participants, that's enough for there to be some competition. The industry and unions negotiate as a cartel. This prevents *ANY* competition among employers.

If you're an above-average worker, you're *BARRED* from negotiating your own separate agreement. For example, suppose a 1.5% residual rate is specified by the union contract. If you're a great writer, you can't demand a 3% residual rate based on your great reputation. You're obligated to accept what the union contract specifies. In this way, the union closed shop rule discriminates *AGAINST* above-average workers.

The "closed shop" rule is "justified" because it prevents workers from "free-riding" the union. All workers receive the "benefit" of the union contract; therefore all are obligated to pay for it. In practice, the reverse occurs. The union has a State-granted negotiating monopoly. Workers have no choice but to pay dues/taxes/tribute to their union. The reality is that the union management is free-riding off the workers, instead of workers free-riding off the union.

The SAG and WGA have a particularly bizarre position. Technically, they aren't unions; they're guilds. For an autoworkers' union, teachers' union, or policemen's union, the union *GUARANTEES* the jobs of its workers. The SAG and WGA do not guarantee their workers a job. They merely guarantee them a certain minimum salary and working conditions if they do find a job.

The SAG has a "minimum wage" rule that discriminates against new actors. The SAG minimum salary is over $650/day. That's an annualized salary rate of over $150k! Plus, there are other required perks for actors that further raise the cost. For example, each SAG actor must have their own private dressing room. These costs are a strong disincentive to hire inexperienced actors. A high minimum wage is a barrier to new workers entering the market. An employer can't experiment and hire an inexperienced actor for $100-$200/day. The result is that most semi-pro actors spend large periods of time unemployed, but they earn a nice salary when/if they find a job. Most SAG members are on the low end of the wage scale. Their union's own rules prevent them from finding steady employment! Every amateur actor dreams they will someday be a superstar, so they like the fact that their union makes it hard for competition to enter the field.

I also looked up the "minimum wage" for a unionized cameraman. It's an annualized salary of $100k/year, plus all the overhead of dealing with a union! Further, you have to pay the cameraman for a full day of work, even if you only need him for a few hours! A cameraman is unskilled labor; you probably could teach an average person how to do it in 1-5 days. All these unions in the film industry are an incredible inefficiency. A production company organized along free market principles should have a *HUGE* advantage. However, the industry is organized as a cartel. If all your competitors have the exact same inefficiency, and there's a cartel, then there's no market penalty for inefficiency.

I'm wondering if independent filmmaker is a potentially lucrative business? If you can cut out all the union **** and deal direct with customers via the Internet, it could be very profitable. The ability to profitably sell shows/movies on the Internet isn't there yet, but it may be there soon.

The SAG and WGA also exhibit bully-like behavior. During the recent WGA strike, some soap opera writers defected and declared "financial core" status. Soap opera writers are not well paid, and residuals on soap operas aren't worth much anyway. The WGA then published a list of the writers who declared "financial core", with the implication that other union members should not hire them. Union members are encouraged to discriminate against workers who have "financial core" status. Almost all the workers are union members, making things very uncomfortable for people with "financial core" status.

Another bully-like feature is that "financial core" status is an irrevocable lifetime decision. Once a worker declares "financial core" status, they cannot change their mind and rejoin the union later. This makes it hard for a worker to declare "financial core" status; their co-workers are encouraged to discriminate against them for not acting like slaves.

This sounds like a good opportunity for an independent filmmaker. With all the union bureaucracy in the entertainment industry, a production company organized along free market principles should be very successful. If you use the Internet to build an audience, you may be able to eventually sell your product to a mainstream media corporation.

Surprisingly, the decision to allow a "closed shop" is decided on a per-state basis. Some states allow closed shops; some states disallow them. Most of the "liberal" states are closed shop states. If a state disallows closed shops, then the workers may completely opt out of the union and negotiate their own contract.

All forms of taxation are theft. For a closed shop union, the State has delegated part of its taxation power to the union.