Public Labor Unions Are Beneficial to Society

I. Economics I. a. Unemployment Labor unions are determinal for the economy. They increase overall unemployment and increase the prices of regular consumer products. How do they increase overall unemployment? A business has revenues and costs. The business uses the revenue to pay off the cost, and the remaining money (if there is any) is profit. Unions forcibly raise wages for employees. This raises the amount of cost they pay, which reduces their profit, and a lot of times forces the company to endure a loss. If the business is incurring a loss, they are forced to either reduce costs or increase revenue. The only ways to reduce costs is to shrink the company, which will inevitably result in the loss of jobs, or to directly reduce the amount of employment, which of course raises unemployment. The only way to increase revenue is to increase the costs of products, which in the long run will not work as the demand curve will shift to the left, resulting in negligable increase in revenue. Many studies confirm this correlation: "By restricting the number of eligible workers in an industry, unions essentially decrease the labor supply, shifting the labor supply curve upward. As a result, the existence of unions increases the average wage above the level that would naturally occur in the market. Yet the intersection of the new labor supply and demand curves also occurs at a lower employment level. Thus, there is a higher level of unemployment, as essentially businesses can afford to hire fewer workers at the elevated wage. "[11] "It raises the wages of workers above the market clearing level and creates a situation in which there are more people who want to work at the wage than there are firms who want to hire at the wage. In this way, labor unions increase the wages and benefits of workers who are employed, but may simultaneously increase the number of workers who are unemployed. "[1] In the long term, unionized jobs disappear and unions need to replenish their membership by organizing new firms. Union jobs have disappeared especially quickly in industries where unions win the highest relative wages. [2] Widespread unionization reduces employment opportunities. [13] Empirical evidence can back this up further: Manufacturing jobs have fallen in both sectors since 2000, but non-union workers have fared much better: 38 percent of unionized manufacturing jobs have disappeared since 2000, compared to 18 percent of non-union jobs. [3][13] Labor unions can also lower the amount of jobs by constricting the amount of development a company may achieve: "It has been a well-established fact that unions reduce the numbers of employed workers by mandating wages that move in an ever increasing upward spiral. (The average union wage is 28% higher than a non-union wage). In such situations, cash for hiring new workers diminishes as does cash for R&D and capital improvements. "[4] Economic research demonstrates overwhelmingly that unionized firms invest less in both physical capital and intangible R&D than non-union firms do. [5] One study found that unions directly reduce capital investment by 6 percent and indirectly reduce capital investment through lower profits by another 7 percent. This same study also found that unions reduce R&D activity by 15 percent to 20 percent. [6] Other studies find that unions reduce R&D spending by even larger amounts. [7] Research shows that unions directly cause firms to reduce their investments. In fact, investment drops sharply after unions organize a company. One study found that unionizing reduces capital investment by 30 percent--the same effect as a 33 percentage point increase in the corporate tax rate. [8][13] I. ii. Inflation Now of course, companies can raise prices, and of course, this affects consumers: "Furthermore, those high union-mandated wages result in increased prices for manufactured goods. It has long been an established fact that as labor costs increase, demand for consumer goods diminishes and the pool of consumers shrinks. "[4] ". .. if unions successfully raise the price of labor, employers will purchase less of it. Thus, unions are a major anticompetitive force in labor markets. Their gains come at the expense of consumers, nonunion workers, the jobless, taxpayers, and owners of corporations. "[9] II. Working Labor Unions encourage sloth because they discourage laying off and even firing. Why? Because they want to protect their members from unemployment. How does this encourage sloth? Becuase since they discoruage firing, then the things that companies fire employees for like sloth, can not be an excuse for firing. It takes many times doing the exact same bad thing and that thing has to be pretty bad for a unionized worker to be fired. So they tend to be less productive then non-unionized workers because they can get away with it. "The reason companies like Wal-Mart don"t want unions isn"t because they"re anti-union, but labor unions promote laziness and apathy. Laziness and apathy cause businesses to go bankrupt. "[10] If too many of these unionized workers are in the company, the company can not operate to market capacity and therefore go out of business. Another way Labor Unions increase unemployment. III. Other Workers Unionized workers forcibly increase wages for themselves, and the businesses have to lower their wages for non-unionized workers. Not to mention, they take away health benefits, vacation time, etc. .. for them too. "Labor unions tend to be inclusive. Those who choose to join the union gain all the benefits, but it may be at the expense of those who aren't members. That can cause strife within a company where certain employees, based on their job duties, are offered membership, while other employees have to work in conditions not quite as favorable. Corporations find that having a labor union within the company is not cost effective. Other employee salaries are kept at minimum wage or there are no health benefits due to the high cost of employing labor union members. "[12] Labor unions hurt the economy and consumers while helping very few. Sources: [1]: . http://www.sparknotes.com... [2]: Bernt Bratsberg and James F. Ragan, Jr. , "Changes in the Union Wage Premium by Industry," Industrial and Labor Relations Review, Vol. 56, No. 1 (October 2002), pp. 65-83 [3]: Barry T. Hirsch and David A. Macpherson, "Union Membership and Coverage Database from the Current Population Survey," Industrial Labor Relations Review, Vol. 56, No. 2 (January 2003), pp. 349-354 [4]: . http://stephencabotblog.com... [5]: Robert Connolly, Barry T. Hirsch, and Mark Hirschey, "Union Rent Seeking, Intangible Capital, and Market Value of the Firm," Review of Economics and Statistics, Vol. 68, No. 4 (November 1986), pp. 567-577 [6]: Hirsch, Labor Unions and the Economic Performance of U. S. Firms. [7]: Julian Betts, Cameron W. Odgers, and Michael K. Wilson, "The Effects of Unions on Research and Development: An Empirical Analysis Using Multi-Year Data," Canadian Journal of Economics, Vol. 34, No. 3 (August 2001), pp. 785-806. [8]: Bruce C. Fallick and Kevin A. Hassett, "Investment and Union Certification," Journal of Labor Economics, Vol. 17, No. 3 (July 1999), pp. 570-582. [9]: . http://www.econlib.org... [10]: . http://www.broowaha.com... [11]: . http://www.ehow.com... [12]: . http://www.corporatehx.com... [13]: . http://www.heritage.org...