12/11/2012 01:03 pm ET Updated Feb 10, 2013

Why Unions Are Necessary

President Obama hit the nail on the head when he called the Republican assault in Michigan against unions "the right to work for less pay," for that is exactly what it is. His statement goes to the heart of why unions are so necessary in the first place. Simply put, unions would not exist if business owners, small and large, did not routinely abuse their power to keep wages low. The recent allegations of worker exploitation against Walmart, Burger King, Apple, and others are clear evidence of a systemic problem that requires a systemic response.

The biggest service that unions provide to their members is the ability to use collective bargaining in negotiating with management. This is not anti-American at all, but is the very essence of the right of all citizens to join forces for their common good. It is a method that has been used by the disenfranchised since the beginning of time to fight for their rights, and is often the only recourse that they have.

Nor are workers the only ones to employ collective bargaining as a negotiating tool. It happens in government when legislators pull together to fight for a bill, it happens in international diplomacy when allied countries take a stand against an oppressive regime, it happens in the judicial sphere when defendants pool their complaints into a class action lawsuit, it happens in elections when the wealthy put considerable sums of money behind a particular candidate, and it happens in commerce when companies lobby collectively to get regulations changed.

More importantly, though, it happens in the free markets when entire industries set common wage levels for workers. This is a type of 'wage collusion' that may not be illegal but is nevertheless harmful to the interests of workers. It is collective bargaining by industry and is exacerbated by the collective bargaining of management within individual companies. In fact, the very reason that unions are so hated by management is because it hampers their ability to exert pressure on workers by closing ranks at the top and with their colleagues across their sector.

Why, then, should rank-and-file workers at least not have the same right? It is true that unions have a bad reputation due to the strong-arm tactics often employed by union bosses, but that too is no different from the tactics of management, and sometimes the only way to fight a bully. Unions are not social clubs, they are entities with the specific purpose of securing workers' rights, and in order to do that they need to be as tough, and sometimes as combative, as management.

When it comes to wage-setting and collective bargaining, few employers in America take prisoners -- we, live, after all, in a profit-hungry age of Darwinian capitalism -- so there is nothing unreasonable about workers taking the same attitude against exploitation. Demanding better wages or benefits is not an attack on their employers but a stand for fairness, and their fundamental right. Their other fundamental right is to unite forces with other workers to get their voices heard, the same way that companies do it to set wages.

The Michigan debate is symbolic of the rift between the interests of workers and management, but it is also symbolic of the widening rift between the Republican party and common sense. The GOP has always been indifferent to workers' rights but after the re-election of Barack Obama and the repudiation of Mitt Romney's extreme views on capitalism, it is surprising that they would continue on this path.

As the growing number of worker strikes across the country demonstrate, Americans are increasingly unwilling to take economic inequality in stride, and want justice. The Democrats can clearly hear them, so why are the Republicans so deaf?

SANJAY SANGHOEE has worked at leading investment banks and at a multi-billion dollar hedge fund. He has an MBA from Columbia Business School and is the author of a thriller titled "Merger", which Chicago Tribune called "Timely, Gripping, and Original". Please visit for more details.