Last week, April Glaser, a journalist at NBC News, contacted me for a story on the unionization effort at Amazon in Bessemer, Alabama.
She wrote:
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.
Best,
David R. Henderson
Research Fellow
Hoover Institution
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.
READER COMMENTS
Matthias
Mar 10 2021 at 6:37pm
That’s actually a fairly reasonable quote from your email.
David Henderson
Mar 10 2021 at 6:55pm
I agree. It’s accurate and it states one of my more important thoughts. It doesn’t say everything I would have want said, but hey, it’s her story, not mine.
Phil H
Mar 10 2021 at 8:25pm
Huh. This is far and away the best argument against unions that I remember seeing. I see a lot of ranty nonsense written against them, but there must be some solid arguments as well, and this is a great start. Thanks.
Frank
Mar 10 2021 at 9:24pm
The heyday of US unions occurred when oligopoly profits could be shared. Are there any left?
If there were company unions, as in Japan, they would be completely benign. But that’s not what’s compatible with US labor law.
Indeed, the late successes of the union movement in the US have been in the public sector.
sean
Mar 11 2021 at 3:26pm
If you have oligopoly profits and unions let workers share in those profits then you also have consumers in non-oligopoly profit industry taking bad losses. And overpaying for consumer goods.
I think we should attack oligopoly profits and let all consumers benefit.
In the modern world I think big tech firms often have oligopoly profits; and I’m not sure Amazon does in the delivery part of their business where they would want to unionize. Most blue collar work is in constant cost industries with a ton of competition. Unions would just crush those businesses and transfer work to other firms without unions.
john hare
Mar 11 2021 at 8:12pm
And very often that firm is foreign. After which people blame the corporation and the foreigners.
Daniel Kling
Mar 10 2021 at 9:34pm
I really appreciate you sharing stuff like this. I’m in my 2nd year as an assistant professor and I’ve had a couple media inquiries so far, but nothing that’s made it into a segment or story that I’m aware of. But just prospectively, it’s felt helpful to hear about your negative experiences w/ media but also to hear about this fairly benign one (as Matthias noted above). It’s remarkable (so here I am remarking) that you didn’t just subconsciously put this null result (no outrageous behavior from the reporter) in the file drawer. Most of us probably would!
robc
Mar 11 2021 at 7:38am
In a perfect world…employees would clamor to be union members, unions would be selective about who they let in, and employers would prefer to go thru unions to get employees.
In this perfect world unions would provide pensions and health care and etc to their workers also (dues would be higher, but the benefits of being a member makes it worth it).
This is entirely off-topic probably, as I see know way to get from where we are to there.
robc
Mar 11 2021 at 7:42am
no way. I clearly should not be allowed in the homonym union.
Tom Means
Mar 11 2021 at 6:46pm
David, you mention voting, but most unions would rather not have a secret election, but use a card check system to obtain a majority of signatures.
First, the union will attempt to have the employer sign a “peace agreement”. In many cases, local officials will require a peace agreement. Some of the components of this agreement allows the union reps access to the workplace, access to employee information like a worker’s address, and worst of all, allow a card check vote. Reps will then confront the employees ( at work or at their home) and try to obtain a card check signature. Peer pressure will also be applied by the pro-union workers.
The Obama adm. tried to get card check as an option without having a labor peace agreement. I assume the Biden adm. will do the same.
Frank
Mar 11 2021 at 10:14pm
“… but most unions would rather not have a secret election, but use a card check system to obtain a majority of signatures…”
And in Britain, before there was a proper constitution for labor unions, one used the fists of guys in the parking lot where the election was held.
The US has a constitution for labor unions, and it is terribly inefficient.
David Seltzer
Mar 12 2021 at 4:51pm
DH, clear explanation as always. I’m not a trained economist, as one might guess from my comments. The low cost benefit I get, I’m learning economics from you and some of the more thoughtful commenters. The NLRA Act; 29 U.S.C. §§ 151-169 states both unions and employers must bargain in good faith one another. It seems the act has precluded the employer from bargaining with competing unions who may offer better terms, or the unions from bargaining with competing employers.
Everett
Mar 15 2021 at 3:19pm
Eh, my union is currently in the midst of an acrimonious election. Until the citizenry is allowed to vote every four years on whether to decertify their towns, counties, and states this argument doesn’t fly for me. Changing a manager is not analogous to changing a constitution.
A vote to decertify is a heck of a lot easier to initiate than a mere Constitutional convention, or even amendment, much less a dissolution of the forms of government.
Comments are closed.