April 1, 2008
By James Sherk
NO: LABOR UNIONS ADD TO COSTS AND DISCOURAGE
Would you want to work for a company that treats all workers
exactly the same, no matter how hard they work? What about one that
promotes only on the basis of seniority and not merit?
Few Americans want a job with an employer who ignores their
individual efforts. Yet that's what labor unions offer employees
today. Small wonder membership is steadily declining.
The premise of collective bargaining is that by representing all
employees a union can negotiate a better collective contract than
each worker could get through individual negotiations. But because
the union negotiates collectively, the same contract covers every
worker, regardless of his or her productivity or effort.
In the manufacturing economy of the 1930s, this worked
reasonably well. An employee's unique talents and skills made
little difference on the assembly line.
In today's knowledge economy, however, collective representation
makes little sense. Machines perform most of the repetitive
manufacturing tasks of yesteryear. Employers now want employees
with individual insights and abilities. The fastest-growing
occupations over the past quarter-century have been professional,
technical, and managerial in nature. The jobs of the future include
Web designers, interior decorators, and public-relations
specialists, among others.
These jobs depend on the creativity and skills of individual
employees. Few workers today want a one-size-fits-all contract that
ignores what they individually bring to the bargaining table.
Union-negotiated, seniority-based promotions and raises feel like
chains to workers who want to get ahead.
Additionally, economic changes mean that unions can no longer
deliver large gains to their members. Unions boast that their
members earn higher wages than non-union workers. But they don't
create money out of thin air. They use their bargaining power to
take it from someone else. Contrary to popular impression, that
someone is usually not business owners. It is consumers, who pay
higher prices when companies pass on the added cost of the
But companies can pass union costs on only when customers cannot
shop elsewhere. Deregulation and free trade have increased
competition, and benefit both consumers and the economy. NAFTA
alone saves a typical family $2,000 a year. But increased
competition also means that unions cannot win above-market wages
through collective bargaining. Companies no longer have monopoly
profits to afford those inflated wages.
Take General Motors, which used to pay its janitors and security
workers the union rate of $75 an hour. When Toyota and Honda
started selling better cars for less, they drove GM to the brink of
bankruptcy and forced the United Auto Workers to agree to new
contracts paying market rates. As this has happened at company
after company, the difference between union and non-union wages has
The average union member still earns more than the average
non-union member, but not because unions are skilled negotiators.
It's because unionized companies become very selective about whom
Since unions make it virtually impossible to lay off
under-performing workers, unionized companies take pains to hire
more productive workers in the first place. The typical union
member naturally earns higher wages--with or without general
representation. New workers who vote to join a union, however, do
not earn more than they would have if they had stayed
These modern realities are colliding with problems that have
long turned off workers--corruption, unaccountable leadership, and
members' dues funding union bosses' lavish salaries. Not to mention
excessive political activism. Unions have announced plans to spend
$300 million to defeat John McCain. That's great news if you're a
partisan Democrat--less so if you're a rank-and-file worker whose
dues foot the bill.
THE PUBLIC SECTOR
The one sector where unions remain relevant is the government.
Almost half of all union members now work in the public sector. The
typical union member today works for the DMV, not on the assembly
Unions fit more comfortably into government workplaces than the
private sector. Government employees are used to bureaucracy that
does little to reward individual initiative. And the government
faces no competition.
The state of Virginia won't go bankrupt, no matter how much
public-sector unions ask for in wages. The state can just raise
taxes on everyone else. It's no accident that the typical
government employee earns substantially more than an equivalently
skilled private-sector worker. Whether it is fair that government
unions push for higher taxes to pay their inflated salaries is
The upshot is that unions today have little to offer workers
outside of government. By a more than 3-to-1 margin, non-union
workers tell pollsters they are happy to stay that way, and union
membership has fallen steadily over the past generation. Fewer than
one in 25 Virginia workers today belong to a union.
Unions naturally want to reverse their decline. But rather than
reform to become relevant, unions want to take away a worker's
right to vote on joining a union.
Currently workers join unions through secret-ballot elections.
If a majority of employees votes in privacy for a union, their
company is organized, but neither their employer nor the union
knows how each employee voted. This allows workers to vote their
Now organized labor has thrown its weight behind the
little-known "Employee Free Choice Act." This misnamed bill
abolishes secret-ballot organizing elections and allows unions to
press workers to publicly sign a union representation contract.
Where no-vote unions are allowed, unions do not take "no" for an
answer. Unions train organizers to give workers a high-pressure
sales pitch and push them to immediately sign on. If a worker
refuses, organizers return again and again to press him to change
his mind. Some organizers threaten workers who will not join.
Not surprisingly, unions can organize most workplaces where
workers are denied a vote. But making it difficult for workers to
refuse to join will not make unions more attractive. Nor will it
change the competitive realities that prevent unions from raising
wages by passing on costs to consumers. Unless unions rethink how
they represent workers they will remain irrelevant to 21st-century
James Sherk is a
policy analyst in the Center for Data Analysis
First appeared in the Fredericksburg Free-Lance Star
Would you want to work for a company that treats all workers exactly the same, no matter how hard they work? What about one that promotes only on the basis of seniority and not merit?
Enterprise & Free Markets Initiative of the Leadership for America Campaign
Senior Policy Analyst in Labor Economics
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