Support Your Local Union, Not Your Union Local

Professor N. Gregory Mankiw points his readers to a brief interview with his colleague Richard Freeman on the topic of labor unions, on which subject Prof. Freeman is a recognized authority. The good professor believes that unions accomplish two desirable ends. First, in his words, “The first thing unions do is to raise wages for working people, and that obviously benefits the working people.” At the risk of seeming like a stickler for precision, I feel compelled to add the phrase “among those who retain their jobs” to his statement. Given the general trend of employment among unionized auto workers, for example, over the past several decades, this does not appear to be a minor point:

Professor Freeman is also an enthusiast of labor unions because, “Employers also get more credible information about what workers really want in the workplace, because the union representatives are democratically elected and they really speak for the workers.” In this manner, Prof. Freeman argues persuasively, union representation helps employers to find the mix of wages and benefits most preferred by their workers, thereby increasing the productivity of the establishment by reducing labor turnover. Yet, again, I fear that I–decidedly not an authority on labor unions other than by virtue of having occasionally worked in union shops–must dissent from the conclusion the good professor reaches on the basis of the argument he presents.

What Prof. Freeman has advanced is an argument in favor of employer-specific labor unions. It is at this level where both workers and employers can benefit from the ability of workers to air their grievances about working conditions, from cruel or abusive shop foremen to the desirability of an on-site daycare facility. It should not be necessary for one worker to confront the bosses on her own, Norma-Rae-like, to complain about adverse conditions. But this argument simply does not apply to industry-wide, let alone interindustry, organizations designed to establish and expand labor cartels.

Advocates on the unions’ side marshal evidence that seems persuasive at first blush: It sometimes happens that unionized firms are more productive than their nonunionized rivals. After a moment’s reflection, it isn’t difficult to see why such evidence proves very little. As has been noted elsewhere, if a union succeeds in driving up wages, then firms will employ fewer workers per unit of plant and equipment. This in itself will have the effect of raising the productivity of the remaining workers. Indeed, that is the entire point of the firms’ response.

In light of the recent events in Wisconsin and Ohio, and the prospect of more to come, one naturally wonders what relevance the analysis of private-sectors unions has for their public-sector counterparts. Professor Freeman’s views are again both insightful and noteworthy:

Public sector unions are different in an interesting way. Private sector unions can do very little to raise the demand for their services. But public sector unions can try to convince voters that we need more police and better education. By politicking, they can help public sector employers raise the funds to provide more and better public services. They have that unique attribute.

There is the entire debate over public-sector unions in a pithy paragraph. All I would add to Freeman’s analysis would be to point out that there are more efficient ways for public-sector employees to increase funding for their jobs other than the demanding and uncertain route of “convinc[ing] voters.” It appears to be far simpler, and more efficacious, to simply donate directly to the campaign funds of political allies (i.e., Democrats). In the interest of retaining Prof. Freeman’s admirable brevity, I would in exchange delete the words “and better” from the phrase “more and better public services.” In support of my proposed deletion I could refer Prof. Freeman to the work of his former colleague, Prof. Caroline Hoxby, whose research has led her to conclude “that teachers’ unions increase school inputs but reduce productivity sufficiently to have a negative overall effect on student performance.” (emphasis added)

Prof. Freeman’s arguments in favor of private unions do not seem to apply in any way to the case of public employees. In the absence of a union, public employees have exactly as much say over their conditions of employment as do their bosses, the taxpayers. All of them have the right to vote on how much to spend on every manner of public service, as well as on the terms of provision of those services. What public employees have obtained through unionization is the upper hand in bargaining. What is at stake in Wisconsin, Ohio, Indiana, and elsewhere is the crucial task of restoring the taxpayers’ say in what government spends and how it spends it. The vehemence of public-employee resistance and the mob mentality manifested by Wisconsin Democrats is sufficient evidence of how great are the stakes in this struggle.

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