I don’t have any problems with unions. I’ve been a union member myself at one time or another over the years. I think unions perform a necessary function particularly in negotiating for working conditions. However, I think that those who believe that unions are the solution to the problem of growing income inequality in the United States (who include in their number Jared Bernstein and Paul Krugman just to name two of the many) are asking more of unions than they’ll be able to deliver. There’s some good evidence for why I think that in Justin Fox’s recent post at Bloomberg:
In olden times, before the Great Recession, UAW negotiations with the automakers were often occasion for oohing and aahing (or, if that was your thing, moaning and groaning) about what amazing pay and benefits autoworkers got. You don’t hear much of that anymore.
Yes, many autoworkers are reasonably well compensated: the average hourly labor cost (pay plus benefits) is $58 at General Motors, $57 at Ford and $48 at Fiat Chrysler, according to the Center for Automotive Research in Ann Arbor, Michigan. But that’s way down from before the recession and near-demise of GM and Chrysler. It also includes profit-sharing checks that only come in good years. New autoworkers hired by the companies start at a wage of just $15.78 an hour, not much higher than the $15-an-hour national minimum wage recently proposed by Bernie Sanders.
Workers at nonunion plants owned by manufacturers such as Toyota, Honda and BMW generally make less than those employed by the Detroit Three. So do most American workers. According to the Bureau of Labor Statistics, average hourly earnings for production and nonsupervisory workers in motor vehicle manufacturing were $27.81 in July, compared with $21.02 for the nonfarm private sector overall. But while private-sector hourly earnings kept rising even through the recession, autoworker earnings are down substantially from a decade ago (and that’s without even figuring in inflation).
Add in employees of motor vehicle parts manufacturers, and you get a remarkable result. Auto workers no longer make much more than other American workers…
I think that the ability of unions to push wages up depends on some very specific conditions, e.g. tight labor markets, weak international competition, and those just aren’t present any more.
Public employee unions are a different subject. I have serious reservations about any union’s ability to recycle tax dollars into political contributions.
