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Imagine a land where the most highly educated citizens work for a pittance. Where the local lord treats them more or less as he pleases because the supply of workers is greater than the work available. Where the nobles enjoy lives of relative ease and comfort while the people who do most of the work struggle to make ends meet.

These aren’t the sans-culottes of late 18th-century France. We’re talking about the modern American university. Specifically, Harvard—at least if you believe the complaints by the graduate students trying to unionize there. They have a case, too, even if their solution isn’t the cure they think it is. Even taking into account the value of the tuition relief that grad students receive in exchange for the teaching and research they do, their low pay and limited benefits are all too real.

These grad students (and part-time adjuncts) carry much of the teaching load at universities for one reason: They are cheaper. According to the Chronicle of Higher Education, at Harvard the average professor’s salary is $205,000. Grad students get a fraction of this, and the glut of Ph.D.s means most will never find the professorships they seek.

Public universities are covered by state labor laws, and some have unionized. Private universities come under the National Labor Relations Act. They have been able to resist unionization because the National Labor Relations Board ruled in 2004 in a case involving Brown University that grad students are “primarily students,” not employees.

That may change. President Obama’s NLRB is a wholly owned subsidiary of organized labor. Last month the board agreed to hear a petition by graduate students at Columbia University that challenges the 2004 decision. The Columbia students want to join the United Auto Workers, and they’re seeking an NLRB ruling like the one last year that Northwestern football players can unionize because they’re employees more than student-athletes.

The universities argue that unionization would make the nature of their relationship with students adversarial. They too have a case. Most of America’s top universities aren’t unionized. So the schools have valid concern about elevating union interests over academic merit. Meanwhile, NYU is a rare private university that has voluntarily recognized a grad-student union.

But none of this lets academe off the hook. For one thing, the universities contribute to a glut of Ph.D.s by admitting students who take out loans (some 40% of the $1 trillion in student debt is for graduate school) even when they know few will ever work as full professors. By admitting them into graduate programs, the schools in effect are producing for themselves a low-paid work force.

“To put it crudely, they are hiring their own serfs,” says Richard Vedder, an Ohio University economist who runs the Center for College Affordability and Productivity. He says it’s “as much a moral issue as an economic one.” A university truly devoted to the well-being of its students would be more honest to grad students about the dismal job prospects for Ph.D.s—and more candid to undergrads about their actual instructors.

Unionization isn’t the best solution for grad students or universities. Mr. Vedder has a better idea when he suggests that universities accept some responsibility for defaults on student loans or pick up some of the tab for students who can’t find jobs after graduation.

All of which is worth keeping in mind next time you hear university officials lecture America about corporate greed or the wages of garment workers in Guatemala.