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July 29, 2003
Myth: labor unions were the saviors of American workers
Also from The Volokh Conspiracy, David Bernstein writes:
Unlike fellow guest blogger Daniel Drezner, I am not appalled that Howard Dean believes that labor unions were the saviors of American workers, because I remember learning this in fifth grade social studies class. I suppose that means that the unions as saviors myth is conventional wisdom, and I don't generally expect politicians to depart from conventional wisdom. But I agree with Daniel that neither economic history nor economic logic support this conventional wisdom. Increases in wage rates follow increases in productivity, and have historically been independent of the concentration of union membership or influence. ... Economists have found that to the extent that unions raise the wages of their members, the long-term gains come largely, perhaps solely, at the expense of other workers. ... And labor unions often serve as a barrier to entry to excluded minorities (this was historically true in the U.S., but nowadays blacks are overrepresented in unions) and to unskilled workers.
This is mere ideology, rather rather than economics. All responsible, modern, mathematically inclined economicsts believe--and can stastically prove--that (in the Anglophone countriest at any rate) the increase in wages for the working classes was achieved by combination of an increase in productivity (making an increase in wages economically possible), a perceived increased value in skilled labor (making management willing to consider wages increases), AND the power of collective bargaining by labor unions (creating the impetus for wage increases). To think otherwise is mere special pleading for the wondrous powers of the free market to cause all socially beneficial ends.
I know, I know, what Chris will say: that if there is a market for increased wages then those wages will inevitably go up; and that if wages are increased without real market demand then some one must loose out: most commonly other workers. But this ignores the real world facts of collective decision making by management. Every one who has been a hiring manager knows this: one pays as little as one can, dependent on the bargaining power of employees. In the case of the working classes, they have little bargaining power except through the mechanism of collective bargaining through labor unions, or through the benign concern of a paternalistic government.
Enough with the high-school debating club tactics already: eventually you will have to face the arguments rather than merely insulting those that make them. You make a brief attempt towards the end of your comment to make an argument when you discuss bargaining power but you miss the point. Workers have a collective, if non-centrally planned, bargaining power because they can choose to take better paying jobs, if there is a market for their skills. By the way, the private sector is hardly unionized at all (not sure of the precise number--5%?) and yet wages have increased substantially over the past several decades. What does this do to your argument?
For more, as you might call them, irresponsible, antiquated, and mathmaticaly incompetent economists on the topic please see David Bernstein's bio (linked above) and the multiple sources he cites in his post (also linked above)which I deleted for space reasons but will paste in here: "See F.A. Harper, Why Wages Rise (IHS ed. 1957); Henry Hazlitt, Economics in One Lesson 140 (Arlington House ed. 1979); Campbell R. McConnell, Economics 651 (10th ed. 1987); Douglass C. North, Growth and Welfare in the American Past 179 (1966); Lloyd G. Reynolds et al, Labor Economics and Labor Relations 301, 314 (1986)... Albert Rees, The Economics of Trade Unions 87-89 (3d ed. 1989)."
I would answer two things to your suggestion that unions are demonstrably unimportant because wages continue to increase, while fewer and fewer Americans are members of unions:
1). That the real wages of the working class, corresponding to purchasing power, have not been rising as fast as the wages of the middle and upper classes--and this corresponds to the end of the collective bargaining of unions. The proof would be that real wages stagnated during an era of record profits and valuations of U.S. and U.K. companies.
2). That Unions were most important in the post-WWI era, when they performed the vital role of overcoming the intrasigence of employers to pay a fair wage, and when they lobbied successfully for the elements of the New Deal in America, and the New Jerusalem in the United Kingdom, and created the social sytem that both countries now enjoy. I am highly skeptical that without the unions there would ever have been a minimum wage in America and the U.K., or such entitlements as Medicare, Medicaid, Social Security, etc..
I'd argue a middle ground rooted in organizational evolution.
It seems that unions serve to raise wages and working standards when they are first organized ... take coal miners or farm workers making the transition from non-union to union.
But as soon as a union grows beyond a tripping point of organizational self interest, the leadership grow greedy for power, bigger memberships, personal influence. At this point, the organization begins to protect not the interests of its members, but at the bureaucratic self-interests of the union as directed by the personal megalomania of its leaders.
In this way, big union behavior becomes indistinguishable from big corporate behavior (AFL-CIO = Enron/WorldCom) to the detriment of society as a whole.
Thus they DO work for social good which benefits us all, but then deteriorate into overbearing parasites as they grow.