A New Report On The Economic Impacts of Union

Liberal prognosticators predicted the decline in union membership since the 1960s (which accelerated in the 1980s) would lead to lower wages and make the poor poorer. Today, they blame the decline of the middle class–which is a myth, by the way–on the decline in union membership. A new report by the American Action Forum debunks these claims.

According to the report, the decline in union membership has been associated with four positive economic outcomes:

  1. Increased economic growth.
  2. Faster job creation.
  3. Greater worker earnings.
  4. Greater total labor earnings.

So much for the doom and gloom the left was expecting.

On growth, the report argues, “For every one-percentage point increase in the union membership rate, a state’s real GDP growth rate decreases by 0.25 percentage points. To put this in perspective, in 2013 state real GDP grew 1.28 percent on average. If the average union membership rate increased by one percentage point, then the state average real GDP growth rate would have declined to 1.03 percent.”

Ben Gitis, the author, also writes “the results indicate that a one-percentage point increase in the union membership rate is associated with a 0.11 percentage point decrease in the job growth rate.”

On wages, “the average weekly earnings growth rate for all workers in the state declines by 0.22 percentage points and for workers in businesses with fewer than 5 employees it declines by 0.14 percentage points. Again, these results mirror the raw data: average compounded annual average weekly earnings growth was slightly quicker (0.03 percentage point) in states where union membership declined than in states where it increased.”

And, on total labor earnings, “We find statistically significant evidence that an increase in a state’s union membership rate is associated with a decrease in the growth rate of total wage earnings for all workers in that state and particularly for those in small- and medium-size business establishments. For all workers, we find that a one-percentage point increase in the union membership rate is associated with a 0.20 percentage point decline in the total wage earnings growth rate.”

So, fortunately, the decline in union membership may be a good thing.

P.S. You still think unions gave you things like shorter work days and work weeks? That’s a myth, too. 

P.P.S. I don’t oppose unions in general. I oppose mandatory unions and I support right to work laws. I believe that, in a market system, workers should have the ability to collectivize as long as it is voluntary and as long as they don’t force others to join or pay dues.

Advertisements

Leave a Reply

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

WordPress.com Logo

You are commenting using your WordPress.com 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 )

Google+ photo

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

Connecting to %s