Last Friday, workers at a Mercedes-Benz vehicle factory in Alabama voted by a 55%-45% margin in favor of free market capitalism and against big unions. The final vote, according to the National Labor Relations Board, was 2,045 votes for the union and 2,642 against.

The workers voted against the UAW, in part because they were worried about their futures. The men and women on the factory line know that the automobile manufacturing industry is dying in the United States. They are fully aware that union dues come out of their paychecks and are used for far-left political purposes.

Alabama is a deep red state. The “no” vote against the UAW stopped union expansion in the southern states just as Shawn Fain, the head of the UAW, thought that the labor movement in the U.S. was enjoying a renaissance. UAW has secured recent victories over the Detroit 3 auto companies, Ford General Motors and Stellantis, formerly Chrysler, and a decisive win last month at a Volkswagen plant in Tennessee.

Yet union membership is in decline. Today, the UAW has about 370,000 active members. Four decades ago, UAW membership reached almost 1.5 million workers. It is no coincidence that the decline of UAW membership and the loss of market share by the Detroit 3 has happened simultaneously. It is also no coincidence that the Detroit 3 had to be bailed out by the federal government during the Great Financial Crisis. At that time, the car companies buckled because of that recession and because of very onerous retirement obligations.

The key problem, though, is that UAW is an anti-competitive organization. It possesses monopoly power over the Detroit 3 vehicle manufacturers. The UAW extracts wages and benefits above the market clearing price. With each new contract between the UAW and the Detroit 3, the car companies become less globally competitive and lose market share to imports. The UAW knows that its labor contracts are globally uncompetitive, so it turns to Washington for protection through tariffs and unofficial market share agreements. 

It helps that President Joe Biden is avowedly pro-union, in spite of the reality that unions reduce overall employment and raise automobile prices above the market clearing price, thus contributing to inflation (the No. 1 concern of voters).

Still, the U.S. vehicle industry is dying. Wages are globally uncompetitive. Including healthcare benefits, the typical UAW worker earns over $100,000 a year. An auto worker in Mexico, a nation that is part of the North American free trade zone earns about $10,000 a year. Because UAW wages are too high, automobile manufacturers invest in geographies hostile to unions, Alabama, for example, and in Mexico. But this likely isn’t the end of the story. UAW has five business days to file an objection to the Mercedes vote. The UAW has already filed unfair labor practice charges against the German manufacturer, claiming that Mercedes intimidated workers in the lead-up to the contest, violating U.S. labor law.

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If the National Labor Relations Board, NLRB, rules against Mercedes then the German company could be forced to bargain with the union, under NLRB rules. Biden’s NLRB is run by a far left progressive and carries out vendettas against such companies as Starbucks and Tesla because those companies resist unionization.

The market will be watching closely how this NLRB acts against Mercedes. In the meantime, however, supporters of capitalism can savor a rare win in this time of Biden progressivism.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note.