My Thoughts on Unions
Last week, April Glaser, a journalist at NBC News, contacted me for a story on the unionization effort at Amazon in Bessemer, Alabama.
Is this bad for business or workers? Is it good? Would be great to get your perspective, especially considering President Biden’s pro-union comments made Sunday.
His comments are here.
I emailed her back the following response:
Dear Ms. Glaser,
Thanks for your note.
I would prefer to answer questions by email. And we can go back and forth with follow-up. That way, there’s less chance of being misinterpreted.
So here are my answers to your first questions.
Unions per se are not bad or good. Unfortunately, unions under the laws of the United States tend to have bad effects. I watched President Biden’s 2-minute speech. I noted that he said that the choice to join a union is up to the workers. True, but here’s the problem. Once a majority votes for the union, the union represents all the workers, even those who didn’t want to be represented. So although President Biden makes it sound as if this is a free choice, the free choice is only on the first vote. Once the vote is taken, if the majority wants the union, everyone is forced to be represented and often everyone, even those who don’t join, is forced to pay union dues.
Moreover, while our political system is imperfect, to put it mildly, we get to vote every 4 years on who the President will be. But once the workers vote to join the union, the union is there forever unless the workers choose to get a decertification vote going. If would be as if people who wanted President Biden to be president would have to get enough signatures to have a decertification election to remove President Trump. Absent that election, in this analogy, Trump would be president forever.
One of the major effects of unions is to ossify the work structure in a plant or business, making it hard for the management to move workers around between various tasks. Unions also tend to compress pay scales so that the relatively less productive will gain somewhat and the most productive will lose. Overall, unions tend to raise the compensation package (wages plus benefits) per worker. That sounds good, but we’ve got to remember the law of demand. When wages rise, employers let attrition reduce the number of people employed and so while it’s good on average for those who keep their jobs, it reduces opportunities for those who would otherwise get jobs.
Please reply if you want to follow up.
David R. Henderson
This isn’t my ideal strategy. I like socializing with reporters but I didn’t know who she was and I didn’t know whether she would get the nuances or report them. So maybe it was my ideal strategy.
Ms. Glaser didn’t reply but within minutes wrote a piece quoting me. Here’s the piece. Here’s what she wrote in reference to my point:
Not all academics agree that the union will be good for the Amazon workers in Bessemer. David Henderson, a fellow at the conservative think tank the Hoover Institution, says that while unions do tend to lead to a rise in wages for workers, it could amount to fewer jobs in the long run.
“When wages rise, employers let attrition reduce the number of people employed and so while it’s good on average for those who keep their jobs, it reduces opportunities for those who would otherwise get jobs,” Henderson said.
For more on unions, see Morgan O. Reynolds, “Labor Unions,” in David R. Henderson, ed., The Concise Encyclopedia of Economics.