All Commentary
Thursday, September 21, 2017

The 5 Best Explanations for Why Unions Are Anti-Worker

  1. Union Video of the Day I. From a 1980 lecture, Milton Friedman discusses the “real world effects of unions” in the video below.

You must recognize that the only way in which any group of workers through union organization can increase the amount of its pay is to make sure that there are fewer jobs available. There is no way in which a union can simultaneously increase the number of jobs and the pay. The law of demand in economics is inescapable, you can not get out of it. Raise the price of anything and fewer people will buy it.

  1. Union Video of the Day II. From a 1978 lecture, Milton Friedman explains “the power of unions” in the video below and discusses some of the racist traditions of labor unions.

There has probably been fewer more important sources of racial discrimination against minority groups [in the US], than discrimination by skilled craft unions.

  1. Union Quotation of the Day I is from the textbook Economics: Private and Public Choice by James Gwartney et al.

For a time, unionized workers enjoy higher wages. In the long run, however, investment will move away from areas of low profitability. To the extent that the profits of unionized firms are lower, investment expenditures will flow into the nonunion sector and away from unionized firms. As a result, the growth of both productivity and employment will tend to lag in the unionized sector. The larger the wage premium of unionized firms, the greater the incentive to shift production toward nonunion operations. Empirical evidence shows that industries with the largest union wage premiums were precisely the industries with the largest declines in the employment of unionized workers.

  1. Union Photo of the Day (above), to accompany these comments from Michael Saltsman writing in Forbes “How The UAW Stands Athwart Automotive Innovation”:

Consider the UAW’s 2007 master contract with Ford Motor Company. The encyclopedic document spanned five volumes and exceeded 2,200 pages in length; that’s 22 pounds of paper (see photo above and notice the Coke can for reference). As my former colleague J. Justin Wilson wrote at the time, “those 2,215 pages don’t include much regarding efficiency and competitiveness.” Rather, the union contract was larded-up with hundreds of workplace rules and one-off letters of understanding that made it near-impossible to run an agile, profitable company. (For comparison purposes, consider that the UAW’s original master agreement with Ford Motor Company was 24-pages long.)

The pace of innovation in the auto industry today is measured in days, not years–which means companies bound by lengthy employment contracts spanning thousands pages are destined to go the way of the dinosaur. If the UAW leadership is curious why private-sector union membership is at its all-time low, it should look in the mirror.

  1. Union Quotation of the Day II from a Wall Street Journal editorial in September of 2007 (“The UAW’s Awakening“):

The problem with unions is not all that dissimilar to that posed by entrenched management: Once they win comfortable contracts, they often become impediments to the kind of innovation and flexibility essential to success in today’s economy. So in the name of “job security,” they undermine a company’s – or a nation’s – competitiveness. The result, over time, is less job security for everyone, especially the union workforce. There’s no better example of this than GM, where the UAW now represents about 74,000 hourly workers, compared to 246,000 in 1994. Some security.

Reprinted from American Enterprise Institute.

  • Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.