Wednesday, June 27, 2007

The Economic Role of Unions

Earlier this week, Senate Republicans blocked the Employee Free Choice Act (EFCA), a bill that would enable unions to organize by having a majority of workers sign membership cards, rather than through elections. The issue prompted David Leonhardt to reconsider the role of unions in the economy in a thoughtful NY Times "Economix" column:
...Thanks to a large body of economic research, we can get a sense for how much the decline of unions has to do with these larger economic trends. Unions, the research has shown, do not do much to affect the overall performance of the economy, one way or the other. “Do unions raise or reduce productivity,” Richard B. Freeman, a Harvard economist, asked in his recent book, “America Works,” an excellent overview of the labor market. “The evidence is clear: they do not.”

But if they don’t change the size of the economic pie, they do influence how it’s divvied up. All else equal, a union worker makes about 15 percent more per hour than a nonunion worker and also gets better benefits. So while there are many reasons inequality has increased over the last three decades — like technology and global trade — the decline of unions is certainly one of them...

Leonhardt is against the EFCA itself - he writes, "I think it’s pretty clear that the bill’s opponents have the stronger argument here. In the best of worlds, secret ballots are simply fairer." The case in favor - that illegal intimidation campaigns by employers have become widespread during the election process - was made by the Washington Post's Harold Meyerson last week:

...The goal of the Employee Free Choice Act is simply to give workers the right to join unions without facing the (currently) one-in-five chance of being fired for playing an active role in a campaign to do so.

Firing employees for endeavoring to form unions has been illegal since 1935 under the National Labor Relations Act, but beginning in the 1970s, employers have preferred to violate the law -- the penalties are negligible -- rather than have their workers unionize. Today, employer violations rank somewhere between routine and de rigueur. Over half -- 51 percent -- of employers illegally threaten workers with the specter of plant closings if employees choose to unionize (1 percent actually go through with this threat, according to Cornell University professor Kate Bronfenbrenner). And even when workers vote to unionize, companies can refuse to bargain with them and can drag out the process for years -- indeed, forever...
Full disclosure: as a former union treasurer, you can guess where my sympathies lie on this one...
Here's Mankiw's take (clearly not a former union treasurer!)


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