Union Impact on American Economics

Here is another good article, actually part of a larger one, on how the unions effect the productivity and future of any unionized manufacturer. As we all know, unions and the liberals in government are dependent on one another.

It seems the liberal Democrats, including the new president, will stop at nothing to get more power. To support such an act as the " Free Choice Act" or the "Card Check" proposal, is not in the best interests of this worker or the country's economic health.

This article is very interesting in that it seems there is a large disconnect between those that are living in the past as against those that see the future without rose colored glasses. The world is much smaller now than it was back when unions had the country on it knees -

Keep the faith - the battle rages on for common sense.



Unions in the American Economy-
Gary Becker

Union members constitute a mere 7.5 percent of the private sector
American labor force, only one third of its share 25 years ago. This is
why the UAW is a dinosaur, a relic of times past when unions were much
more important.

The UAW 's membership has declined by more than one
third since 1970, and its membership is still declining at a fast clip.
GM had one quarter of a million UAW workers in 1994, but now has less
than 75,000 workers who are members. It is rather easy to explain why in
effect, the US has become a non-union private sector economy.

The rapid shift during the past several decades from manufacturing to
services has been a significant contributor since the generally smaller
service establishments have always been much less unionized than the
larger manufacturing establishments, like steel mills and auto plants.
Globalization has been crucially important in several dimensions.

Increased competition from imports have undercut the higher prices
charged by domestic competitors who are forced to pay large benefits to
their unionized workers. In addition, if a union tries to raise worker
benefits, and hence production costs, by a lot, companies often close
these plants, and set up production in other countries where costs are
lower.

Government provision of unemployment benefits and rules about
layoffs- including anti-discrimination legislation- and voluntary
provision by non-union companies of health and retirement benefits, and
codified rules about the treatment of employees in regards to hiring,
layoffs, and discipline have greatly reduced the advantages of unions in
providing such benefits.

Border and southern states discovered that they could be attractive to
companies if they had more hostile environments to unions than other
states. When companies like Toyota and Honda decided to set up auto
factories in the US, they generally avoided states where unions were
powerful, and instead mainly went to states where unions were not
important.

Now foreign companies produce more than one third of all cars
made in the US. Much of the decline in UAW membership has been offset by
the growth of non-union workers in plants owned by foreign companies. In
addition, cars made abroad have been out -competing cars made
domestically by GM, Ford, and Chrysler. As a result, cars made by
foreign companies, whether in the US or elsewhere, now account for more
than half the cars sold in this country.

These powerful forces aligned against unions imply that the UAW and
other large manufacturing unions are essentially finished, perhaps
unless they receive major financial and regulatory support from the
federal government.

This is why the AFL-CIO and Change to Win went all
out to get Senator Obama elected president. Unions are said to have
spent over $400 million during the presidential race, and had several
hundred thousand volunteers make phone calls and house visits. They
claim to have been pivotal in Obama's victories in closely contested
states like Ohio and Pennsylvania.

According to one poll, about 2/3 of the members of the AFL-CIO unions voted for Obama, and only 1/3 for McCain.

Unions strongly supported Obama not only because Democrats have
traditionally been much more pro-union than Republicans, but also
because Obama had been explicitly supportive of unions. He and Joe Biden
as senators co-sponsored the so-called Employee Free Choice Act. This
Act failed to muster enough votes in the present Congress, but unions
have placed highest priority on its passing in the new Congress that has
a much bigger Democratic majority.

Such a bill would give workers the
right to join a union as soon as a majority of those employed at an
establishment signed cards saying they wanted a union. Under present
rules, there must be an election by workers to determine whether they
want a union, with votes of individual workers being secret rather than
publicly expressed on cards.

Any substantial shift of federal and state governments toward pro-union
regulations would harm the American economy and the position of the
typical employee. As Posner indicates, unions want greater monopoly
power so that they can raise the wages and other benefits of union
members above their competitive levels. Unfortunately, the effects of
this are to reduce earnings for non-union workers, shift production
outside the US, or toward states with less pro-union laws, and shift
production in unionized plants away from labor and toward capital. None
of these changes are beneficial to the efficiency and performance of the
American economy, especially in a global environment.

Although the union leadership believes the Employee Free Choice Act and
related legislation could add several million members, the good news is
that they are likely to be wrong. The forces I discussed earlier that
contributed to the decline of unions in the US are very powerful, they
will continue to operate, and they are extremely difficult to reverse.
So while pro-union federal legislation might well slow down the decline
of unions in the private sector of the economy, it is highly unlikely to
greatly affect the downward trend.


Posted by Gary Becker at 3:51 PM