14 September 2006

Down With Unions

Unions are bad for this country. Unions use government power to gain a monopoly on the right to bargain on behalf of employees over wages, hours, and working conditions. The government forcibly prevents employers and non-union employees from arriving at separate agreements and prevents employers from favoring non-union workers. As with most disruptions with the free market, this results in inefficiency and the use of government to bleed the taxpayers for private gain.

Backed by government power, unions are a drag on the economy. George Reisman and other economists argue that unions ratchet up wages above the market rate. This reduces employment in industries forced to employ union workers. The background idea here is that if the price of something increases, buyers purchase less of it.

Union wages and benefits also decrease the competitiveness of the economic sectors they inhabit. The American car, steel, and textile companies are sinking in part due to union-fueled costs. They seek tariff-protections that hose the taxpayer. The destructive effects of unions on competitive industries explain their decline in the private work force and growth in the public one, which is less subject to competitive pressures. The percentage of unionized workers in the U.S. civilian workforce has dropped from 33% in 1955 to 13% today. During this period, the percentage of the union members that work for the government went from about 2% to about 38%. The anti-competitive effects also explain the faster economic growth in the right-to-work states, that is, states where employers are barred from firing workers who refuse to pay union dues or fees.

My guess is that unionization in part explains why federal civilian workers do better than workers in the private sector. According to Chris Edwards of the CATO Institute who used Bureau of Economic Analysis numbers, in 2005 the average compensation (wages plus benefits) of the federal workers was twice that of private workers ($106,579 vs. $53,289) and recently the latter have been growing more than twice as fast (38% vs. 14% increase over the last five years). The private jobs are also far less secure with layoffs and firings being four times more frequent in the private sector. The compensation and security are good for the persons with the federal spots, but bad for the taxpayer and the economy. In addition, unionized government workers form a powerful constituency for even higher taxes and more spending.

Unions are also in bed with the Democratic Party. This should grate on those who don’t like really high taxes and those who are offended by the use of union dues for political causes. For example, the members of the National Education Association (NEA) members comprise around a quarter of the delegates at the Democratic National Convention. In spending, they heavily favor Democratic candidates. For example, journalist Peter Brimelow asserts that historically as much as 98% of the NEA’s money has gone to the Democrats. In addition, to being the Democratic Party’s ATM, unions also are directly involved in politics. For example, they recently poured in $100 million against a California initiative that would have made it more difficult for the state to raise taxes.

One of the places where union activity is particularly destructive is in K-12 education. Neal McCluskey also of the CATO Institute notes that between 1965 and 2003, U.S. per-pupil spending, adjusted for inflation, nearly tripled while academic achievement stagnated. Internationally, the United States spends more per capita on education than any other country and produces mediocre results compared to peer countries. Teacher unions such as the NEA and the American Federation of Teachers (the union for Dunkirk and Fredonia teachers) are a major cause of this poor performance. These powerhouses have over 3 million members, $1 billion in annual revenues, and as of 2003 represented almost all of the teachers in the 34 states that require school boards to bargain collectively with the teachers. These unions fight educational reforms such as charter schools, vouchers, and removal of incompetent teachers, reforms that would save the taxpayer money and increase student learning. Instead, unions focus on increasing their revenues by increasing the number of teachers and the pay rate per teacher. This is hardly surprising. As Albert Shanker, the former president of the AFT said, “I’ll start representing kids when kids start paying union dues.”

Now I should mention that in my work at Fredonia, I’d had the chance to work the local leaders of the United University Professions and specialists at the New York State United Teachers. Without exception, the persons I’ve dealt with were principled, bright, pleasant, and caring. That said, the fact remains that unions, at least as currently propped up via government power, harm the citizens of this country.


Anonymous said...

I completely disagree with your premise. Without unions people have no guarantees from their employer. No job security. No cost of living salary adjustments. Do you like weekends? Thank the unions. How about a 40 hour work week? Again, thank you unions.
You think you pay too much in taxes? Well tell the Republicans to stop giving tax breaks to the rich and to corporations. Rich people and corporations should be funding things more than they are. Right now the average American worker is being buried in taxes while the rich are allowed to dodge paying their fair share. This is not the fault of unions, this is the fault of those in power who wish to use unions as a scapegoat.

Anonymous said...

It is not the job of the union to represent the client. It is the job of the union to represent the employee so that (s)he can do a better job of helping the client without having to worry about things mentioned above.

The Constructivist said...

O, just a quick post-typhoon question for you. If unions were open shop rather than closed shop--if there were no "government-supported monopoly"--would you no longer be against them?

The Constructivist said...

O, as you know, the share of GDP going to labor in the US is at a historic low, while management salaries keep skyrocketing. Shareholders should see unions as a check and balance on management. If unions are doing what they should, workers in a unionized workforce will be better trained, more productive, with better morale than those in a nonunionized workforce. What's wrong with such workers being better compensated?

The Objectivist said...

Dear Anonymous and Constructivist:

You make an excellent point. If unions were just private groupings of individuals who chose to negotiate together, then I would have no problem with them. It does not involve the use of force, fraud, or theft in ecnomic relations.

However, I wonder what evidence you have that unions actually improve workers' conditions. One might think that workers with jobs do better but there are more unemployed. So the net balance of utility is unclear and given the loss of productivity probably negative.

Here is my challenge to you. What evidence is there that unions improve the lives of the collection of working adults?

The Objectivist said...

Dear Anonymous and Constructivist:

Two points.

1. NO CRITERION FOR POWER: I don't see any union proponent explaining when unions have too little, too much, or the right amount of power. What backs up their claim for deciding when government thumbs on the scale benefit unions too much.

2. UNIONS HURT THE ECONOMY: Unions are present in the least efficient parts of the economy: government, car companies, steel companies, textile companies, etc. These areas are doing poorly and constantly seeking protectionist measures. This is evidence that unions are inefficient and a drag on others' well-being.

If you have time, I would like to hear your response to these points.

The Constructivist said...

O, in lieu of a long response, here's a link to Firedoglake's labor archive.

On #1, what is your criterion for too much corporate power? Are any checks on corporate power legitimate, in your view?

On #2, blaming unions is a standard practice of bad managers. US car companies have themselves to blame for riding the SUV boom and not trying to compete with other automakers on good fuel-efficient vehicles. This was and remains a managerial decision. You can't blame the UAW for that one. What is your evidence that unions hurt the overall economym cause productivity to be lost rather than gained, and thus hurt working people more than they help them?

You'll note US workers' productivity has been rising dramatically along with hours worked over the past generation yet wages are not rising accordingly. Why is that? Cold it be the decline in unionzation levels?

The Constructivist said...

In case you thought I was making up the productivity/wage thing--this one's just on the past 5 years, however.

The Constructivist said...

Oh, and O, if you believe teacher unions drag down academic standards, why do you defend the teaching of intelligent design as if it were a science when evidence shows doing so contributes to students' scientific illiteracy? By the way, ths link is to the conservative blog The Volokh Conspiracy, for what that's worth