There was a good article in the Wall Street Journal yesterday by Lee Ohanian titled, “The Right Way to Raise Wages.” Here is a section of the article that discusses what unions do to wages:
Those want more unionization claim it is necessary to raise wages. Instead it will further depress the economy. My research suggests that if unionization rates returned to 1970s levels (roughly in the mid 20% range of the private work force), and if new unions could achieve the same wage premium as existing unions have achieved over nonunion workplaces, then employment could decline by about 4.5 million and real GDP could fall by about $500 billion per year.
Why? Unions raise members’ wages by restricting competition, much as a business monopoly raises prices by restricting competition. Economists criticize business monopolies for raising prices above what they would be in a competitive marketplace, which reduces employment and output. Unionization reduces employment and output much the same way by raising wages above underlying worker productivity.
Yet despite the bad economics, President Obama continues to push for more unionization of the country. In fact, he has made it one of the priorities of his presidency. Former SEIU President Andy Stern is one of the most frequent guests to the White House. And Obama has made his support for the Employee Free Choice Act (EFCA) very clear, which contains the infamous “card check” provision that would make unionization much easier.
It would be devastating to see that brought here to Virginia, in a right-to-work state. The bottom line is that without private businesses you can’t have jobs. Government jobs that don’t produce consumer goods cannot sustain the economy. The federal government hiring of hundreds of thousands of temporary census workers is NOT how you revive an economy. Private businesses are the backbone of this country. Small businesses should be the number one employer in this country, not taxpayer funded federal jobs. The best way to accomplished this is to reduce the tax burden in the business community…duh!
