Unions: The 7 Great Lies

COMMENTARY Jobs and Labor

Unions: The 7 Great Lies

Sep 6, 2011 2 min read

Research Fellow, Labor Economics

As research fellow in labor economics at The Heritage Foundation, James Sherk researched ways to promote competition and mobility.

Labor Day has become a time for eulogies to the union movement. The recent, short-lived strike at Verizon illustrates why: In the modern economy, unions provide few benefits to workers.

Last month, Verizon’s landline workers went on strike after management asked the unions for concessions. The number of Americans paying for landlines has steadily declined as cell phones have become popular: Verizon had 63 million landline customers in 2000; by 2010, that number had fallen to 26 million. To survive, Verizon’s landline division must cut costs.

Union leaders understand the economic realities that Verizon faces. They called the strike off after two weeks and the final contract will include many of the cuts that management originally demanded.

Unions can do many things, but they cannot change the laws of economics. In a competitive market, businesses have no power to pass higher costs on to consumers. This makes it very difficult for them to pay anyone — union or otherwise — above-market wages and stay in business. Once cell phones were invented, it was only a matter of time before the unions that represent Verizon’s landline workers accepted concessions.

This has happened throughout the economy. Deregulation, free trade and new technologies have made America more competitive. That makes it more difficult for unions to raise wages. Often, unions don’t even try: at many newly unionized companies, average pay does not rise. When unions do win higher pay, it frequently comes at the cost of jobs. The number of unionized jobs at General Motors fell by half between 2005 and 2010.

But if unions cannot increase pay, why would workers join them? The collective bargaining model — with one contract covering hundreds of employees — no longer appeals to many workers. What worker wants her boss to ignore her individual efforts? Just one-in-ten non-union employees say they want a union.

As a result, union membership has fallen steadily over the past generation. Unionization rates in the private sector are lower today than when the National Labor Relations Act became law in 1935.

To reverse their decline, unions have turned to the political process. Their top priority was the misnamed “Employee Free Choice Act,” which would abolish secret ballots in union organizing elections. That would have let union organizers know precisely who did and who did not support them — enabling them to pressure holdouts to change their minds. Fortunately, Congress declined to go along.

Now the union movement is attempting to accomplish the same goal through regulation. Obama’s appointees to the National Labor Relations Board (NLRB) are radically rewriting labor regulations to facilitate union organizing.

The NLRB filed charges against Boeing for opening a new plant in South Carolina, a right-to-work state. It also gave the green light for the formation of “micro-unions,” which represent small groups of a business’s workers. The NLRB will soon implement snap elections that will take place as soon as 10 days after organizing drives begin, giving management little time to make its case.

While these measures may boost union organizing, they will not make unions a better deal for workers. As a result, they are unlikely to reverse unions’ long-term decline.

The union movement would accomplish far more by transforming itself to serve modern workers’ needs. Unions should step back from one-size-fits-all contracts that try to tie workers to one job for life. As the workers at Verizon are discovering, such promises are empty.

Unions should instead focus on providing workers with the tools they need for a competitive economy. Unions could provide job training, skill certification, career networking opportunities, and financial and retirement advice. They could help workers start up their own businesses and become their own bosses.

Such a union movement, creating value for workers, would not need the government to boost its membership. Unions would grow as workers saw the benefits they provided. That would be something everyone could celebrate come Labor Day.

James Sherk is a senior policy analyst in labor economics within the Center for Data Analysis at The Heritage Foundation.

First appeared in The Daily Caller