Library of Economics and Liberty: Do Labor Unions Promote the Middle Class?
… What Hacker and Pierson have done here is point to one effect of unions–labor economists call it the "threat effect"–but left out another that is stronger. But to see why, we need to back up and think about what unions have been in the United States since the 1930s. Unions, as economists, even many who are pro-union, have pointed out are legal monopolies. As pro-union Harvard economists Richard Freeman and James Medoff, put it, "Most, if not all, unions have monopoly power, which they can use to raise wages above competitive levels." They have this monopoly power mainly because the federal government gives them the power, not the right, to be the sole bargaining agent for workers in a plant or company, even if many of the workers don't want to be represented. These workers tend to be "the unseen." But because the unions drive wages above competitive levels, they cause some of the workers to be put out of work. …
… What do these workers do? Sit and eat bon-bons the rest of their lives? No, they go out and find other work. If they find work in the non-union sector, that drives down wages there. Indeed, one of the main findings of the late H. Gregg Lewis, the famous labor economist at the University of Chicago, is that unions in their heyday, the 1950s and early 1960s, caused union wages to be 10 to 15 percent higher and non-union wages to be 3 to 4 percent lower. …
Leave a Reply to Michael W. KruseCancel reply