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The Free Market
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July 1997
Volume 15, Number 7

Strike Up the Band
Shawn Ritenour

The 5th Street Theater in Seattle, Washington, is one of a dwindling number of houses of its kind. It receives no government money whatsoever. Its revenues come from a permanent endowment and ticket sales to its popular, if small-scale shows. Its charter prevents it from raising money from other private sources. It keeps a low profile in the arts community, but its staff is as loyal and dedicated as its steady stream of patrons.

Like everyone who uses live music for commercial purposes in the Seattle area, the 5th Street Theater is forced by labor union rules to pay excessively high wages ($98 per show) as compared with what they would be in a competitive environment. And yet, the union complained, these wages were below those in San Francisco ($132) and Los Angeles ($125), where music performance is also dominated by unions.

On that basis, the local division of the American Federation of Musicians threatened a strike. Demanding, but failing to get, a 20 percent pay raise, the musicians union staged a walkout at the worst possible time: the opening night of the theater's new production of "Beauty and the Beast." What could the theater management do but send ticket holders home deeply disappointed?

Instead, the management decided to take a risk, for the sake of its credibility with an always-faithful audience. It permanently replaced the striking musicians with 18 new, non-union musicians who agreed to perform at the market rate, and set the date for the new opening night.

This was immediately seized upon by the labor union as an evil attempt to employ a "scab band"--the union's phrase--and it set out to terrorize the musicians, the management, and the audience. On the new opening night, 1,000 strikers showed up to picket and intimidate these "scabs," who had to hide their identities to avoid personal retaliation.

The protesters included not only local union musicians but members of machinist and truckers unions and other assorted thugs in the region. In the midst of the hollering and hysteria, the theater canceled after it received a bomb threat. A week later, the protesters grew to 1,400 as the word spread throughout the labor movement.

After having its name dragged through the mud by the pro-union media, the 5th Street Theater fired the replacement musicians and put union members in the orchestra pit at the higher wages. As a result, this humble theater has entered the ranks of all the other cash-strapped houses around the country. It is worried about its financial future, and, like all the others, will have to make cutbacks in order to make ends meet.

As this example shows, to the extent that the musicians unions are successful, they restrict, not broaden, the opportunities people have to hear great music. For the consumers of music and the employers of musicians, music unions care nothing. The chief end of the unions is to increase power and compensation for its members so that the dues will keep pouring in and wages--for those few lucky enough to have a job--can remain artificially high.

And look what these "oppressed" union members were willing to do to maintain their market position: throw fellow musicians out of work, deny consumers a product they paid for, drive employers into financial ruin, and even blow up a building filled with music lovers. So much for music soothing the savage breast.

This is hardly a unique example. Musicians unions--which are sustained and fed by government privilege--have long had a deleterious effect on the market for live music performance. This is taking a heavy toll on the economic health of the American orchestra. A glut of performers is fighting for a limited number of orchestra positions even while orchestras fail every year (San Diego and Sacramento most recently) and strikes occur about once per quarter.

In the fall of 1996 alone, employees of major symphonies from Philadelphia, Atlanta, and San Francisco struck, lobbying for increased compensation and putting these organizations in greater financial trouble. Predictably, this has also put audience loyalty to the test. Who wants to hear a symphony that is so anxious not to perform?

It's not as if those with professional positions are suffering. The starting salary at the Philadelphia Symphony is $78,000 per year, with guaranteed raises, pensions, and annuity. At San Francisco, the average wage and benefit package is $112,493, plus 10 weeks paid vacation. And this doesn't include the vast opportunities members have to supplement their salaries by teaching and performing in other groups.

As wages and benefits for musicians increase, orchestras find it harder and harder to stay afloat. During the past year, the city of San Diego found this out when its symphony was forced to close its doors for good. It could be the first of many. As the financial deficits mount, the number of orchestras dwindles and the number of concerts falls as well.

The most recent victim of subsidized musical unionism was the Sacramento Symphony. As unions extracted higher salaries in the 1980s, the orchestra began to suffer losses, and by 1992 it was forced to declare bankruptcy and renegotiate a labor agreement, albeit one with wage increases. Wage cuts finally came in 1994, but two years later it was clear that it wasn't enough. That's when the union balked. "You can't turn us into nonprofessionals," declared a violinist and union steward. So the symphony closes permanently, leaving Sacramento music lovers humming "Another One Bites the Dust."

The same trend applies to recorded music. Musicians unions have pushed successfully for increased recording fees for American orchestras who perform on compact discs. This has resulted in American orchestral performers pricing themselves out of the recording market.

In November of last year, the Philadelphia Symphony settled a lengthy strike brought on by the loss of the orchestra's recording contract. This led management to deny musicians their promised recording income. If unions continue to demand overly high recording fees, we'll see more of the same.

American orchestras are not recorded as frequently as they once were. The Naxos record company, which features excellent quality at low prices, has recorded only one, the now-defunct San Diego Symphony. Instead, they draw on overseas talent because European musicians have not priced themselves out of the market.

American union recording contracts also stipulate that if a group from an orchestra records a work, the entire orchestra must be compensated, not only those who are on the record. It is ironic that in order for the American masses to hear great music on records, they must listen to European musicians.

While government-privileged unions are working to restrict competition and opportunities, government subsidies prop up union wages. From its beginning, the National Endowment for the Arts served as the cash cow of the music unions. My own survey of witness testimony before Congressional committees during the 1965 authorization reveals that the most often cited justification for intervention--taking art to the masses--was merely a cover for union organizing.

Performers unions, both musical and dramatic, pushed for stipulations in the law so that NEA money would be granted to only union orchestras and theater groups. Snide remarks were common as witnesses derided the music making of "amateur" groups from every region of the country. These aren't really artists, they said, so they should be supplanted by the "professionals," that is, union members.

Union leaders knew that if only groups employing union performers receive government subsidies, then more wealth and power would come their way. Today the culture of grant-giving foundations and agencies is pervaded by a pro-union bias, and it's the unions that have the power to pick the winners and losers in the musical marketplace.

The government distorts resource allocation wherever it intervenes, causing economic problems in the music industry just as in every other. Government subsidies, for example, help prop up bloated administrative staffs in organizations on the NEA payroll. This results in higher orchestra budgets, but also financial troubles down the line that seem to make more subsidies necessary.

Similar distortions appear in the market for government-subsidized musical training. It causes people who would otherwise not be able to afford a music education to devote their lives to preparation. Many, no doubt, enter the field in hopes of landing a job at one of the organizations in favor with the bureaucrats at the NEA.

But this has led to an unfortunate glut of musicians. The American Record Guide reports that there are currently 82,795 music majors enrolled in American colleges and universities. In 1995, 12,827 music degrees were awarded. But thanks to a conspiracy of government and unions, there are only about 6,500 orchestra positions in the United States, only a few of which become vacant each year.

Meanwhile, there are 8,400 college-level music faculty positions in the United States, again with only a few openings each year. Given the present supply and demand conditions, the market price for even a highly trained musician should be much lower than it is, but the unions have been very successful in keeping wages high enough so that such a glut persists.

The majority of musicians, then, cannot earn a living in their trained field and seek the protection of the government for their sustenance, not understanding that it was the government that helped create the mess in the first place. Many frustrated musicians become bitter liberals cursing the free market, even though the government is the real source of their troubles.

Government intervention in the market for music--subsidizing union-dominated arts organizations, providing legal legitimacy to union restrictionism and terror tactics, and causing market dislocations through educational subsidies--has been bad for the arts, bad for music patrons, and bad for taxpayers. What's best for all goods and services is best for music and the arts too: the government should let the market alone.

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Shawn Ritenour teaches Economics at Southwestern Baptist University and is also a scholarship student. He has written on this subject in The Wall Street JournaL

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