The largest strike in the history of Canada’s largest private-sector union, Unifor, is currently underway, with 3,700 workers shutting down 27 Metro grocery stores in the Greater Toronto Area by refusing to work. The strike is supported by NDP Leader Jagmeet Singh, who in the same breath in which he rails against high prices at grocery stores demands grocery stores pay significantly higher prices for the labour that allows them to operate. It is not a political position calculated to demonstrate financial literacy, and is clear evidence the NDP cares nothing about actual food affordability: they just hate businesses earning profits.

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Matthew Lau: The NDP wants lower grocery prices but higher wages for grocery workers. How does that work? Back to video

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Unifor and NDP statements in favour of striking workers are notable for the absence of sound economic reasoning to justify unionized workers’ demands. Since wages should match workers’ productive output, higher productivity would be a good justification for increasing wages, but no one has demonstrated that unionized grocery store workers are much more productive than previously. Nor has Unifor or the NDP shown Metro workers are paid less than they are worth by offering evidence of workers being paid more by other companies to do the same work.

In fact, that Metro workers are unionized is well nigh conclusive evidence they are currently overpaid. Without exception, unions are monopolistic institutions that try to raise wages not by increasing workers’ value (in fact, the rules they impose often reduce worker productivity) but by limiting the labour supply and relying on government privileges such as unbalanced labour relations laws, preferential treatment under, or exclusive access to. government contracts, and special subsidies or other forms of government protection. The 73.5 per cent unionization rate in the public sector versus just 13.4 per cent in the private sector is the best evidence of unions’ monopolistic, anti-competitive nature.

It is because unions rely on government privileges to browbeat businesses, consumers, and taxpayers that libertarian economists, who are generally happy to let individuals in a free market make their own decisions instead of prescribing what employment arrangements should look like, come down so heavily on unionization. “It cannot be stressed enough,” Friedrich Hayek wrote in his chapter on unions in The Constitution of Liberty, “that the coercion which unions have been permitted to exercise contrary to all principles of freedom under the law is primarily the coercion of fellow workers.” Case in point: in Ontario, workers covered by a collective bargaining agreement must pay union dues even if they do not wish to join the union.

Without sound economic justification for union strikes, Unifor and the NDP have resorted to non sequiturs. In trying to drum up public support for their strike, Unifor has talked about Metro’s “record profits and soaring CEO compensation,” neither of which has anything to do with determining the appropriate wage for workers. Appearing alongside Unifor officials, Jagmeet Singh similarly complained about grocery store profits. The union insists it is time for the grocery store workers “to get their fair share of Metro’s enormous profits.” But in a free society workers’ fair share of business profits is zero per cent. The business, and therefore the profits, belong to the shareholders.

The workers may of course be shareholders as well, but just as a gardener is not entitled to live in somebody’s home by virtue of being hired to mow the lawn, a grocery store employee is not entitled to a share of the profits by virtue of being hired to operate the cash register.

Again echoing the NDP, Unifor has also lamented high grocery store prices, to which unionization and strikes undoubtedly contribute by inflating costs and reducing supply. It is an error, too, to say higher wages and lower food prices can simply be paid for by reducing profits. Metro’s 2023-Q2 results report its past eight quarters of earnings; in each quarter net earnings were less than five per cent of sales. And that significantly overstates its food margins: in addition to its 975 food stores Metro also operates 645 pharmacies, and margins in pharmacies are much higher than in the grocery stores.

While business competition makes things better for workers and consumers alike, labour unions invariably stand in the way of affordability and competition, and as Hayek said, rely on government privilege and coercion of employees for survival. Many Metro workers may well want to accept the latest company offer, which includes improved benefits and wage increases that outpace inflation, but the union strikes prevent them from returning to work. It is difficult to see how this coercion of some workers by other workers is beneficial or compensates for rising consumer prices and lost economic output.