Card Check: How Would It Stimulate the Economy?

By October 29, 2008Economy, Labor Unions

Since a second round of economic stimulus is the topic du jour, we ask: How would forced unionization of millions of more employees create economic growth?

From a commentary in Forbes by Shikha Dalmia, senior analyst at the Los Angeles-based Reason Foundation, “Obama And Big Labor,” noting the decline of private sector membership to 7.5 percent of the workforce.

Indeed, even as the economy added more than 9.5 million jobs between 1999 and 2006, unions lost more than 1 million members.

One big reason is that workers simply don’t believe that handing over 1% to 2% of their wages in mandatory union dues is worth the services that Big Labor offers. Their skepticism is not unjustified. A 2002 study by the Bureau of National Affairs found that, after adjusting for cost-of-living, private sector workers in the 10 least unionized states earned $1,600 more annually than workers in the 10 most heavily unionized states. What’s more, between 1992 and 2002, the less unionized states generated twice as many nonfarm jobs–with better benefits–than more unionized states.

Dalmia also notes the consequences of rigid labor rules:

Companies’ biggest fear is that unions will foist rigid workplace rules upon them–just as they did on the former Big Three automakers–preventing them from quickly redeploying their workforce in response to shifting market conditions, crimping their productivity and global competitiveness.

Absent an increase in productivity, the higher wages and benefits that MIGHT result from dragooning a business’ employees into a union by definition will increase a company’s labor costs. That company then emerges as a higher-cost producer, one made even less competitive by its lack of market nimbleness institutionalized by union contracts.

Sounds practically unstimulating.

Join the discussion 2 Comments

  • […] Card Check: How Would It Stimulate the Economy? – Shopfloor.org Since a second round of economic stimulus is the topic du jour, we ask: How would forced unionization of millions of more employees create economic growth? From a commentary in Forbes by Shikha Dalmia, senior analyst at the Los Angeles-based Reason Foundation, “Obama And Big Labor,” noting the decline of private sector membership to 7.5 percent of the workforce… (tags: Card Check) […]

  • […] Card Check: How Would It Stimulate the Economy? – Shopfloor.org […]

Leave a Reply