September 6, 2011
Labor Day means a bit less this year, with 14 million Americans unemployed. While President Obama was preaching to big labor in Detroit on the importance of collective bargaining, millions of Americans were looking for work in an environment where the economy is at a standstill.
It is no surprise that unions are strong allies of the President, whose policies from the stimulus to Obamacare have included privileges for organized labor. Having spent $1.1 billion on politics and lobbying in the last election cycle, unions will continue to hold a prominent seat at the table in 2012.
The labor unions have helped lead to the staggering loss of manufacturing jobs in the United States, and the demands they have made on employers and governments helped create conditions of high unemployment in Detroit and across the country.
Unions make businesses less competitive and discourage investment. This reduces job growth. Studies show that jobs fall by 5–10 percent at newly organized firms. Going forward, employment grows by three to four percentage points more slowly at unionized businesses than at otherwise identical non-union companies.
Neither businesses nor workers seem to approve of this. Since 1970, unionized manufacturing has fallen 80 percent, while non-union manufacturing jobs have only decreased by six percent. In 2010, union membership fell by over 600,000 workers. Sherk explains why:
Union membership has fallen because traditional collective bargaining does not appeal to most workers. Polls show that only one in 10 non-union workers wants to organize. This makes sense: in the competitive private sector, unions can do little to raise their members’ pay. Additionally, most workers like their jobs and believe they are on the same side as their employers.
The unions aren’t going down without a fight, however. They hope to use the power of government to reduce worker choice and make it easier for unions to organize.
It is time for Congress to step up and promote job growth. Big Labor doesn’t have to be the only player in the game.
What are your thoughts on the declining labor market? Do you think big labor is to blame?