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February 19, 2007

Unionbusting in Op-Ed Form

Kevin already did important yeoman's work pointing out some of the simple factual inaccuracies riddling Russell Roberts' anti-union screed, but it's worth noting what a conceptual mess the article is. Roberts writes, "When more than 90% of the private-sector labor force isn't unionized, why do 97% of us earn above the minimum wage? If our bargaining power is so pitiful, why don't greedy employers exploit us and drive wages down to the legal minimum?"

This seems like a discussion question at the end of an Introduction to Economics textbook chapter. And Roberts' answer is about as illuminating. Meanwhile, the issue with unions is, in the immortal words of Samuel Gompers, "more." Just because the median laborer is clearing $5.15 doesn't mean he's making as much he theoretically could. Distribution matters. Unions get more for their workers, a "more" that would otherwise fall into executive pockets and corporate profits. The question isn't whether they save us from economic dystopia, but whether they make the economy better for the median participant.

Indeed, Roberts' final conclusion eviscerates his point. "A better way to increase wages [than unions]," he writes, "is to make workers more productive. That lifts everyone's standard of living." At least it did. In the post-war era, worker salaries tracked productivity increases rather precisely. This was also the high period of union density in America. Post-1979 or so, that link shattered. "Coincidentally," this is around when Reagan and his merry band of plutocrats effectively legalized and encouraged unionbusting. In the past few decades, economists have shown that productivity increases are going almost entirely to the top tenth, while median incomes stagnate or retreat. Without unions and robust worker bargaining power, those magic productivity increases haven't been doing much for workers. But Roberts, of course, doesn't tell you that.

Also at Tapped

February 19, 2007 in Labor | Permalink

Comments

Strong unions = Strong country.

Speaking of unions, Obama's decision to blow off the AFSMCE forum in Carson City is puzzling. Either he's not ready to put meat on his pretty rhetorical bones or he's ceding the union vote (and perhaps Nevada) to Edwards.

Taylor Marsh: "If anyone's keeping score this early, this one beats a verbal gaffe or any blogger brouhaha by a mile, because it's delivered by the candidate himself. Senator Obama, you just might have to kiss those Nevada union votes good-by."

Posted by: david mizner | Feb 19, 2007 1:04:01 PM

"Kevin already did important yeoman's work pointing out some ..."

Based on the link, "some" = 1. Those yeomen didn't work as hard as I'd thought. Or maybe it was just the important yeoman who didn't work so hard.

Posted by: ostap | Feb 19, 2007 1:58:17 PM

When more than 90% of the private-sector labor force isn't unionized, why do 97% of us earn above the minimum wage?

Because the minimum wage is so low, and because you can't be earning less than that, what with it being a minimum and all.

Posted by: DonBoy | Feb 19, 2007 2:06:29 PM

DonBoy, read the sentence that follows what you quoted.

Posted by: Sanpete | Feb 19, 2007 2:20:50 PM

I've got a question about that 97% number, hopefully somebody here can clear it up for me. Does he mean that 97% of workers earn more than the federal minimum of $5.15, or more than whatever the minimum is in their state/city? If you make $7.50 an hour in CA (I think that's minimum there), it would be deeply dishonest to say that you are part of the 97% who make more than the minimum just because you are above the federal floor. I don't know if Roberts is that much of a hack, but I wouldn't be surprised. Anybody know where he's pulling this stat from?

Posted by: Houdini's Ghost | Feb 19, 2007 2:27:56 PM

This argument by Roberts is also completely wrong: "Unions help those they represent by trying to raise wages above what they would otherwise be. To the extent they succeed, they reduce the demand for labor in unionized shops. That means more workers have to find employment in non-unionized shops, pushing down wages there. That's especially tough on workers with limited skills and education. The sad irony of unions is that they can only improve the lot of their members at the expense of other workers."

In fact, the opposite is true. Non-union wages tend to rise in partially unionized markets, partly because of competition for labor, but more importantly beacuse employers make themselves vulnerable to unionization if the union vs. non-union wage gap grows too large within a market.

Posted by: Cloudy | Feb 19, 2007 2:28:24 PM

"Unions get more for their workers, a "more" that would otherwise fall into executive pockets and corporate profits."

They do this in a copule of ways though. One is by negotiating better terms which is a good thing. The other, often undiscussed on this page, is by trying to make it as difficult as possible for other groups to perform the same task in order to make the first way more effective. That's not so good.

Posted by: Alex | Feb 19, 2007 3:18:41 PM

"Those millions, passed onto consumers through premiums and prices, added no value to the system, but kept the elderly from getting necessary drugs at affordable prices."

Extremely high branded drug prices in US allow(ed) Pharma companies to recover very high research expenses. In the rest of the world they could charge marginal costs of production (very low fro drugs) plus profit.

And if a country (France, Canada, most of EU) would conduct tough negotiating, they will get drugs at a cost of production, a great deal.

In effect USA consumers pay/paid for the world pharma research.

Very good for the world, not fair to US consumers. Strange, as libertoads concern for consumers suddenly evaporates in this case.

However, there is some value in this arrangements, it makes it easier for Pharma to recover their huge research expenses, that, hopefully, should motivate them to invest more in research than they would do otherwise.

But they could get more reaserch recovery from other countries by just hanging tough during negotiations.


Posted by: mik | Feb 19, 2007 4:05:46 PM

The other, often undiscussed on this page, is by trying to make it as difficult as possible for other groups to perform the same task in order to make the first way more effective.

Please tell us about the "other groups." A group of employees that can negotiate binding agreements for wages and benefits with employers is, by definition, a "union."

Posted by: Constantine | Feb 19, 2007 4:10:40 PM

mik, you might think your arguments sound intelligent, and they might pass muster at the local bar, but they are rather simple-minded, and Ezra, despite lacking any academic or professional credentials in health care economics, is actually much more well-informed on the issue than you are.

Posted by: Constantine | Feb 19, 2007 4:12:50 PM

I'm guessing Prof. Roberts stepped out his door and asked the university janitor what he was making. Most urban universities' are having to pay higher wages for support staff positions due to the rising cost of housing. People do not take minimum wage jobs with large commutes if a similar crappy low paying job is closer to home.
Non-union wages rise faster in many markets as union wages are locked into multiyear contracts that take longer to adjust to changed conditions.

Posted by: Hawise | Feb 19, 2007 4:21:10 PM

Constantine, comment was for Drug Prices thread, got here by my typo.

Any examples of simple-mindedness? Or all you are good for are mind reading and assertions?

Put whatever response you could think-up into Drug Prices thread.

Posted by: mik | Feb 19, 2007 4:30:39 PM

Also about unions, I recommend a short story by Peter Baida called A Nurse's Story. It was the 1999 winner of the O'Henry Awards and it's centered on a view to the life of a nurse and how her life affected her small town. One of the main incidents in that life was her struggle to unionize the nurses at a catholic hospital. I really liked it.

Posted by: rafaelh | Feb 19, 2007 6:27:08 PM

Please tell us about the "other groups." A group of employees that can negotiate binding agreements for wages and benefits with employers is, by definition, a "union."

Everyone else.

Posted by: Alex | Feb 20, 2007 12:26:53 AM

The link between rising profits and rising real wages for male high school graduates was broken earlier, in the early to mid seventies.

Posted by: Wells. | Feb 20, 2007 2:32:40 AM

mik, you might think your arguments sound intelligent, and they might pass muster at the local bar, but they are rather simple-minded...

Don't take this to heart, mik. Don't agree with him? Then you're STUPID. Don't believe me? Just ask ol' Dean. I'm sure this attitude gets him laid a lot (not).

Posted by: Fred Jones | Feb 20, 2007 8:44:52 AM

The link between rising productivity and rising real wages for male high school graduates was broken earlier, in the early to mid seventies.

Posted by: Wells. | Feb 20, 2007 11:18:55 AM

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Posted by: judy | Sep 26, 2007 11:58:10 AM

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