No Point to Unionize

On a recent Facebook thread about events in Wisconsin, one of my friends argued that even though only 11.9% of U.S. workers belong to unions, workers at non-union companies also benefit from increased wages. Uncertain about that, I consulted Professor James Feigenbaum of the Economics and Finance Department at Utah State University. Here’s what he said:

“The standard answer assumes that the companies and workers are otherwise equal. If the union restricts who can be employed at a company, that will reduce employment at the unionized company and increase wages. This, in turn, will increase the supply available at other companies, increasing their employment at the cost of lower wages.

“However, in my experience, unionized companies and non-unionized companies are not the same. On my parents' street, there are two supermarkets: a Wegman's, which is non-union, and a Tops, which is union. For a long time you would see the union guys go picket at Wegman's, which was ridiculous because wages and benefits were better at Wegman's. But Wegman's is one of the best managed stores in the country. Tops is not. Since a union can discourage good workers from going to a business, that can reduce wages at the business.

“In the modern era, though, there is really no point for workers to unionize except in rare instances when the employer is the only one buying their services. Professional athletes unionize because there is only one major league for each sport in the US. Graduate students have an incentive to unionize because they can't easily switch to another university without disrupting their progress toward a degree. Professors, on the other hand, have no incentive to unionize because they can easily switch to another university. Government employees unionize because there is only one government. Auto workers, meanwhile, have undoubtedly hurt themselves by unionizing. In the short run, they may have gotten higher wages, but in the long run they have made their employers less profitable.”