Unions rarely miss their payday.

• Author: Weidenbaum, Murray
• Position: Labor unions - Economics

THIS IS A TIME of great pressure to change the role of government in collective bargaining. That issue opens up the whole question of the function of unions in our contemporary society. For necessary background, it is helpful to recall the positive accomplishments of unions over the years. Surely, it is a widely held view that unions have helped build a strong middle class. They have done so because unionized firms tend to pay significantly higher wages and total compensation (including fringe benefits). In 2009, median weekly earnings were $908 for unionized workers and $710 for all other workers in the U.S.

For better or worse, unions sanely give workers a collective voice in the management of large companies. This basic power was augmented by combining craft workers organized by traditional unions such as the electricians, plumbers, etc., with those in manufacturing industries organized company by company (such as the United Auto Workers and the United Steel Workers). The formation of the combined AFL-CIO (American Federation of Labor and Congress of Industrial Organizations) enables the labor union movement to present a united front in dealing with management and government. In practice, the result was not as neat as the theory. Jurisdictional disputes among unions still continue.

Unions also boast that their support was crucial in the enactment and expansion of Social Security, Medicare, job safety, and other social programs. Unions claim to have helped reduce racial disparities, but the statistical data does not overwhelmingly support that contention. In the 1970s, plenty of disagreements occurred between unions and civil rights groups. Actually, the Nixon Administration pushed to open unions to minorities, especially when George Shultz was Secretary of Labor.

Other impacts of unions are more complicated. Henry Simons (a teacher of famed economist Milton Friedman at the University of Chicago) wrote that, if he was a labor leader, he would squeeze corporate earnings in favor of employee compensation so hard that the business eventually would close down when his original members died or retired. To some extent, it sounds like the UAW may have read this esoteric economist in preparing for its dealings with General Motors and Chrysler.

To understand the current environment of labor-management relations in the U.S., it also is useful to examine some fundamental and measurable developments. For instance, only 12% of wage and salary workers are members of a union today. That is down from 20% in 1983 and more than 30% in the middle of the last century. Another way of looking at this situation is to note that, at present, about 15,000,000 people are members of labor unions in the U.S. That is exactly the same number as reported for 1947, when the nonagricultural workforce was one-third of its current size.

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