September 20 2011
Unions are supposed to represent workers’ interests. Yet while unions increase compensation for their members, they create a less dynamic economy—and as such, increasingly fail to meet the true, longterm interests of workers. In particular, women pay a high price for this intervention.
While union workers on average receive higher pay than non-union workers, only some workers gain during this process—not all. For example, those (disproportionately female) workers who prefer less traditional work arrangements and would trade higher pay for more flexibility lose in union-created one-size-fits-all compensation regimes.
Unions’ higher wages also create costs for the companies and consumers. Companies raise prices to compensate for higher employment costs. Unions make companies less competitive, which is why some union shops struggle to survive (and need taxpayer-financed bailouts to avoid bankruptcy). When businesses flounder, employees lose jobs.
In addition, the government’s relationship with unions also takes a toll on the economy. Political corruption is inherent in these relationships, creating an unlevel playing field for non-union workers and a less dynamic economy.
At present, the federal government is advancing policies to encourage greater unionization. This is the wrong direction. A dynamic economy, in which new companies are created and existing firms expand, is the most important way to ensure workers have the variety of job opportunities that they want and need.