Sunday Morning Quotation – May Day Edition

Economist Morgan O. Reynolds (former chief economist at the U.S. Department of Labor and a professor emeritus of economics at Texas A&M University) on labor unions in the Concise Encyclopedia of Economics:

Although labor unions have been celebrated in folk songs and stories as fearless champions of the downtrodden working man, this is not how economists see them. Economists who study unions—including some who are avowedly prounion—analyze them as cartels that raise wages above competitive levels by restricting the supply of labor to various firms and industries.

Many unions have won higher wages and better working conditions for their members. In doing so, however, they have reduced the number of jobs available in unionized companies. That second effect occurs because of the basic law of demand: 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.

As I’ve noted before, I think people have a right to belong to unions or any other freely chosen associational institution.  The problem is when governments give unions special privileges – which they have in abundance at great cost to the rest of us (including lots of “workers”). 

Pileus has posted a number of pieces on unions over the last year, especially public sector unions.  Celebrate May Day by reading some by searching for unions in the box to the right!  Here is one particularly interesting series on unions and taxation by Jason Sorens – Part I and Part II

And here is Hayek on unions:

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s