Labor Unions: Effects on Productivity
Unions’ Effects on Labor Productivity
Labor unions have long been a central issue of economic debate in the United States, and since their emergence in the mid-19th century, the role of unions in industry has changed very little given the changes to the make-up of our economy. Although employer abuses of power aren’t nearly so blatant or extreme as in the early days of unions, the need to protect workers’ rights and ensure fair wages and benefits still exists. Employees should be able to take problems directly to management. They should be able to miss work without being fired and have a say in how much they are paid or the benefit packages they receive. Labor unions and other collective bargaining strategies make these things possible. Of concern is not whether unions are good for union workers, but whether they are good for the economy as a whole, namely the labor market. Economists often ask critical questions such as: How do labor unions affect non-union workers’ wages? Do higher wages for union workers lead to more unemployment? Are union workers more or less productive than non-union workers? The focus of this paper will primarily be on the effect of unions on labor productivity and how productivity might suffer or in fact gain from unionized labor. It’s important to investigate as to whether the gains of union workers both in compensation and opportunity are not at the cost of the firms’ productivity and profitability, or perhaps that of non-union workers. Union participation has been in steep decline since the 1970’s when 27% of U.S. workers were covered by union contracts. Now, only 12% of the labor force consists of union members. Compare these figures to countries like France, Belgium and Sweden, and one can see how substantially small U.S. unionization is when these countries have over 90% union participation. Such comparisons are helpful when looking at U.S. productivity growth and how it compares to productivity in heavily
Labor unions have long been a central issue of economic debate in the United States, and since their emergence in the mid-19th century, the role of unions in industry has changed very little given the changes to the make-up of our economy. Although employer abuses of power aren’t nearly so blatant or extreme as in the early days of unions, the need to protect workers’ rights and ensure fair wages and benefits still exists. Employees should be able to take problems directly to management. They should be able to miss work without being fired and have a say in how much they are paid or the benefit packages they receive. Labor unions and other collective bargaining strategies make these things possible. Of concern is not whether unions are good for union workers, but whether they are good for the economy as a whole, namely the labor market. Economists often ask critical questions such as: How do labor unions affect non-union workers’ wages? Do higher wages for union workers lead to more unemployment? Are union workers more or less productive than non-union workers? The focus of this paper will primarily be on the effect of unions on labor productivity and how productivity might suffer or in fact gain from unionized labor. It’s important to investigate as to whether the gains of union workers both in compensation and opportunity are not at the cost of the firms’ productivity and profitability, or perhaps that of non-union workers. Union participation has been in steep decline since the 1970’s when 27% of U.S. workers were covered by union contracts. Now, only 12% of the labor force consists of union members. Compare these figures to countries like France, Belgium and Sweden, and one can see how substantially small U.S. unionization is when these countries have over 90% union participation. Such comparisons are helpful when looking at U.S. productivity growth and how it compares to productivity in heavily
Cited: Hirsch, Barry T. "What Do Unions Do for Economic Performance?." IZA. 892 (2003): Print. Hirsch, Barry T., Stephen Machin, and John Van Reenen. "Minimum Wages and Firm Profitability." American Economic Journal: Applied Economics. 3. (2011): 129-151. Print. Hanlon, Martin D. "Unions, Productivity, and the New Industrial Relations: Strategic Considerations." Interfaces. 15.3 (1985): 41-53. Print