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Response: Are Unions Necessary?

Derek Thompson from The Atlantic recently wrote an article titled “Are unions necessary?” In this article, he poses the following questions:

If our goal is a strong middle class, are unions the right place to focus our energy ... or are they bad for the country? Has America passed the Rubicon when it comes to organized labor ... or do we still have a reason and opportunity to pass laws that protect skilled and unskilled workers?

The way to strengthen the middle class, and the population as a whole, is through innovation and competition.  Unions protect inefficiencies in markets and limit innovation and progress; these limitations hinder everyone from the upper class to the lower class.

The emergence of capitalism and the push towards innovation has catapulted the quality of living for nearly every American.  Two hundred years ago, American’s were living without electricity and had to go to the bathroom in an outhouse.

Unions are not responsible for this increase in wealth and standard of living.

Thompson writes, “[b]ut some economists suggest that the erosion of union membership is one of the most important factors in explaining the demise of the middle class.”

According to the United States Census Bureau, the 40th to 60th percentile of Americans increased their wealth from $40,393 (2010 dollars) in 1967 to $49,309 in 2010. This hardly seems like a demise of the middle class. Furthermore, this parallel increase in wealth correlates with decreased membership in unions during this time.

Unions inflate wages for employees, this inflation of wages results in decreased overall employment and less productivity per capita. Right-to-work states have consistently maintained a lower rate of unemployment and have a more impressive record of job growth.

According to the NILRR, percentage growth from 2000 to 2010 in non-farm private sector employees in right to work states was 0.3 percent, as opposed to -5.5 percent in forced unionism states. A study by The Mackinac Center found that “from 1978 through 2000, average annual unemployment was 0.5 percent lower in right-to-work states.”

If workers feel they are mistreated at work, then they can either individually negotiate or choose to leave the job and find other employment. If enough workers feel wronged by the company and choose to quit, then the company will not be able to stay afloat. The businesses that attract workers and support them will be more successful because they will have fewer turnovers and have employees that are happy to be at work.

Right now there is an abundance of laws that protect workers. The FLSA lays out federal laws on overtime, minimum wage, and child labor. Most unions end up adding too much protection to employees. This ends up stagnating efficiency of companies, and hinders them from competing effectively with their non-unionized counterparts. This can hinder companies so much so that they have to file for bankruptcy. Then society is potentially left with thousands of unemployed workers.

When compared to private sector unions, public sector unions have an even greater negative impact on the middle class.  Government unions strip taxpayers of money in order to fund inflated wages and pensions.  Increased demands from government sector unions across the nation are bankrupting states and municipalities. Wisconsin’s Governor Scott Walker was forced to make huge reforms to counteract government union demands. The American Enterprise Institute for Public Policy Research released a study showing that prior to Act 10, Wisconsin public-sector employees made 29 percent more than workers in similar private sector jobs. Afterwards, they still made 22 percent more than private sector counterparts. Many states are now forced to cut programs to pay government employee union wages and benefits; these unions are detrimental to a middle class that is left to foot the bill.