Public service announcement: more unions ≠ lower productivity

By Kathy G.

I've written about this before, but I'm doing it here again, because the wingnuts really need to put an end to this irresponsible bullshit, and pronto. Repeat after me: unions do not cause lower productivity.

The latest conservative to lie about this is Soren Dayton (who, last I heard, was "suspended" from the McCain campaign for peddling a sleazy, racially charged anti-Obama video). In a recent post about "card check," aka the Employee Free Choice Act (a proposed law that will make it easier to organize a union -- see here for more), Dayton wrote:

The unions and their lackies in the Democratic party are intent on a path that will destroy our productivity for a significant period of time.

Um, not hardly.  Even if you didn't know what the economic literature says about this topic, if you stop to consider that the postwar era saw the record high union density in this country as well as unprecedented economic growth and productivity gains, it might give you pause. Indeed, Ezra made just this argument recently.

But actually, there  have been some good studies looking at the impact of unions on productivity. Overall, the empirical findings have been mixed. About as many studies show a positive impact on productivity as show a negative impact, and in any case the effects that are found tend to be small. Which is why, for example, economist Barry T. Hirsch, in a survey of the literature on this topic (it's in chapter 7 of this excellent book), recently wrote that "[t]he empirical evidence does not allow one to infer a precise estimate of the average union productivity effect, but my assessment of existing evidence is that the average union effect is very close to zero, and as likely to be somewhat negative as somewhat positive."

Theoretically, the impact on productivity could go either way. You might assume, on the one hand, that unions might lower productivity, because of restrictive work rules, featherbedding (i.e., keeping on more personnel than needed), workers having less of an incentive to work hard, and managers having somewhat less control over the workplace.

On the other hand, you might assume that the impact on productivity might be positive, because of fewer quits (and thus more experienced workers and fewer resources needed for training and recruitment), improved personnel policies that result in better labor relations, and more efficient management practices (due the "shock effect" of union wage increases).

As Hirsch points out, the finding that the average impact of unions on productivity is close to zero is hard to interpret. Is there really nothing going on there, or do the positive and negative effects mentioned above tend to cancel each other out? Also, there are diverse effects across firms and industries. Hirsch writes that "productivity effects tend to be largest in industries where the union wage premium is most pronounced," which would tend to support the "shock effect" thesis. One 2002 study produced the interesting result that unionized firms that instituted profit sharing for nonmanagerial employers and practiced joint decision making were more productive than their nonunion counterparts.

Btw, in case you were wondering, the literature shows that unions don't cause firms to go out of business, either (see, again, chapter 7 in the above-mentioned book for a discussion of the literature on this topic). But unions are associated with lower profits, and those findings are fairly robust (again, see chapter 7 for the evidence of this). I suspect that's what really worries the anti-union folks, except it sounds better to get all concern-trolly about productivity. That makes it sound like you care about the economy as a whole, and not just the interests of the owners of capital.

Dayton got one thing right, though: if card check succeeds in producing higher union density, this will be very, very good for the Democrats, and for liberalism in general. First of all, more union members mean there will be more union resources helping to elect Democrats. Secondly, unions are institutions that create Democrats, even among demographic groups that are not normally Democratic. For example, in 2004, white males who weren't in a union went for Bush by 31 percentage points, while those that were voted for Kerry by 7 points. Similarly, in 2000, Bush won white nonunion men by 33 points, while Gore won white male union members by 3 points.

Dayton's statement about the impact of unions on productivity was dead wrong. And as to whether he deliberately lied about that or was just being ignorant, who knows? But his basic intuition that more union members will be very, very bad for Republicans and the right, is dead-on.

Comments

[Kevin Carson]

Know what else might hurt productivity? If a CEO decimated human capital, gutted long-term productive capabilities, and otherwise stripped assets, in order to create an illusory short-term profit--all with the primary purpose of gaming his own stock options and bonuses. You know, like Jack Welch, Bob Nardelli, "Chainsaw Al" Dunlap, and, um, CARLY FUCKING FIORINA, who just happens to be John McCain's chief economic adviser.

[ninja_zombie]

>"card check," aka the Employee Free Choice Act

aka the "No Secret Ballots for Votes on Unionization Act."

I like to vote no to unionization. I also like to avoid hostility from my coworkers for having different views.

>But unions are associated with lower profits, and those findings are fairly robust (again, see chapter 7 for the evidence of this).

You realize this is a bad thing, right? This will discourage investment in unionized sectors, and encourage investment elsewhere, causing an inefficient use of resources.

[Andrew]

This will discourage investment in unionized sectors, and encourage investment elsewhere, causing an inefficient use of resources.

This would presume that investment primarily leads to capital deepening. Typically, it does not. It leads to executives lining their pockets and getting out of dodge. The entire notion of encouraging investment for capital deepening requires the sort of long term planning and personal stakes which are resoundingly absent from today's corporate culture.

[Denis Drew]

A hidden dimension of lost productivity is the wasted (as in unproductive) lives that result when pay levels are low enough. People who don't feel middle class because they get EITC -- and thus wont keep their kids hard at work on school. Kids from underpaid homes (hoods) wont flip hamburgers for a 1939 minimum wage ($5.15/hr = $4.65 w/o taxes) -- when selling drugs on the corner will yield them a tax-free $10/hr (at just what hourly wage do you think you would refuse to work dear reader: $4/$3? -- it's called your "reserve wage".)

Properly unionized Europe (as in practicing sector-wide labor agreements -- collective-collective bargaining) doesn't have huge portions of its urban real estate overrun by native drug gangs.

Getting America over the Great Wage Depression (usually weakly called "inequality") could send millions of currently under-productive citizens back into the workplace -- and it will never happen until we catch up to the modern practice of sector-wide bargaining here.

[Pal Ashford]

the notion that unions destroy productivity is a lie to demonize the efforts to give workers what they deserve which the owners of these companies feel is taking away from their personal profits. I don't even think it's about productivity. If these greedy owners could make a profit producing nothing, they would. It's about profit and they see unions as taking away their profits. They would love to see us return to the good ole days that Reagen wanted us to go back to before the civil rights movement, before women's rights. In fact these greedy capitalist would love nothing more than to return us to the system of slavery. That would work perfectly for them.

[bob]

...
You want kids to enter the white market instead of the black market? Make the black market white by legalizing drugs.

You want unions to increase worker productivity? Don't give them OR BUSINESSMEN legal privileges. No subsidies and no violations of private property. No regulation to restrict competition.

It seems you people take a liking to fascist Italy's economic model. Will you also enjoy when it falls flat on its face?