Wednesday, March 11, 2009

Discussion: Unions?

The debate about the Employee Free Choice Act presents a good opportunity to have a discussion about unions (particularly because OSU does not currently offer a labor economics class - gasp! - something I am actively trying to change). Unions are one of these issues that really divide economists. I am going to try (as I have before) summarize some of the recent economics literature on unions in the coming weeks, but for now a quick synopsis of the pro and con arguments made by economists.

[Full disclosure: I was once a Teamster when I was a UPS delivery person, but OSU faculty are not now represented by a union - though there is a discussion about changing that]

Con: They represent monopsony power that distort labor markets and lead to inefficient outcomes. This leads to higher unemployment and lower mobility.

Pro: Labor markets are asymmetric and employers have undue power over employees who find changing jobs costly - thus they do not necessarily yield efficient outcomes. Unions are an effective way to correct these imbalances.

Now I understand that there are lots of other things that I have not mentioned - but I invite you all to discuss unions and give me your reasons for and against in anticipation of my discussion of the economics literature.

5 comments:

Gregory said...

One of my clients struggles under the dictatorship of a union, and it isn't pleasant. The union create strict policies about what can and cannot be done. The IT department cannot add, modify, remove, or move an icon on the desktop without notifying the union 8 weeks in advance. You can't make this stuff up.

Unions have declined over the last several decades--and deservedly so--because their view of the employee/employer relationship is too narrow. I had hoped the AFL-CIO breakup would alter this decline by allowing individual unions to think more creatively about the definition of this relationship. In general ecosystems are healthy when they contain lots of participants trying lots of different things. Unions keep trying to do the same things over and over and expecting different results.

It doesn't have to be this way. Observe Germany. Observe Japan. Their unions don't think the same way, and they remain more relevant today as a result.

Jeff Alworth said...

I'm a unit rep for a union (AAUP)--therefore not a disinterested party. However, I think the biggest issue is collective bargaining. Un-unionized workers have no leverage in discussions where their job is concerned. Lacking the power to set rules regarding pay, benefits, and workplace issues, they are in a vulnerable position. Unions collectivize the voices of the workers and give them some ability to affect their own job situations.

Not all jobs are the same. In some jobs, merit is more obvious and quantifiable--and some make the argument that the collectivization forces a reversion to the mean. The truly excellent workers can't receive their due reward. But in many jobs--menial work at Walmart, for example--merit is far less obvious and the risk of exploitation high indeed. For Walmart workers, collectively bargaining would benefit nearly every person.

I am skeptical, however, when I hear stories like Gregory's. I think actually you CAN make this stuff up, and unions are cited as the source of nearly every evil in the marketplace. Particularly in a time when unfettered management greed and incompetence threatens to pull the economy down, I find these urban legends worse than silly--they're dangerous. I would ask for real data about union abuses where any discussion of labor is concerned. Anecdotes about abuses don't add anything to the conversation.

Garage Wine said...

I pay money to a union (AFT at Portland State). What do I get? Crappy pay and no benefits. No representation, either. I have to pay extra for that "benefit."

Since my "day job" is pretty lucrative, I could probably extract much better pay/benefits at PSU than AFT dictates.

Instead, I earn the same as an adjunct teaching Afro-lesbian basket weaving.

As my students would say: "Unions are teh suxor."

Vanessa said...

I will give credit to the unions on improving labor conditions for the average worker in the US, but for the most part unions have outlived their usefulness in the modern economy. When you really think about it does it make sense to pay a worker $50 an hour to assemble a car? Or pay the HAPPY to be unemployed crane operator (i.e. my father) a weekly stipend in addition to his unemployment benefits? No it doesn't.

Now if big labor were truly dedicated to the cause of improving conditions/bargaining power of the worker they would be focusing all their attention on the developing world where unions would truly be useful. Looking at it rationally it should be all about cost/benefit. The benefits to be gained from collective bargaining in the third world far outweight the benefits gained from collective bargaining in the first world. I suspect that big labor would never go this route because there's clearly less/no money for them to gain.

Big labor is on its way out. With the near collapse of the American Auto Industry the American populace has finally recognized the harm that unions can do.

Jeff Alworth said...

Vanessa, union power to set salaries began to wane in the 1970s. So did median salaries. Exactly how have they outlived their usefulness?