No matter whether you're right or not, unions provide an unnecessary economical burden on employers. While these unionized workers ARE being paid more and getting more benefits, they come at a cost. You people have talked about how all of our jobs are going to China and India. Well partly its the extra costs associated with doing business in the US to blame. You talk about how unions bring efficiency to business, but instead it forces employers to pay more for certain workers that aren't any more skilled than his/her co-workers. However, that money has to come from somewhere, and thus one of 2 things happen. 1) Other workers see their salaries lowered (or raises delayed). 2) employers lose profits, thus cutting back on investments (lay off workers or equipment/research). In today's society, unions arent really needed. We have OSHA, the child labor laws, minimum wage laws, etc. Some people in this thread said that if the right has their way these laws wouldnt exist. However, while unions have somewhat of a negative image for many americans, worker safety standard laws don't. It would be political suicide for the right to repeal these laws especially when the left can use that against them in the upcoming elections. Not to mention that the high minimum wage is a main reason why jobs get outsourced in the first place...
You'd only have a point if all firms were small and wage compensation could be simply described by supply and demand theory. That's obviously not the case. Once we have large firms (and the hierarchies that develop), unionisation actually provides a means to enhance productivity. 'Voice effects' are important because of distributed knowledge and the information overload on the manager (i.e. the economic planner) Such rhetoric is rather awkward when we refer to international comparisons. Why, for example, isn't outsourcing more significant in countries with much more extensive collective bargaining and lower supply of low wage labour? Most of the evidence points to insignificant employment effects on employment. Can you refer me to one published academic study that supports your conclusion?
"Effect on Businesses. Union wage gains do not materialize out of thin air. They come out of business earnings. Other union policies, such as union work rules designed to increase the number of workers needed to do a job and stringent job classifications, also raise costs. Often, unionized companies must raise prices to cover these costs, losing customers in the process. Fewer customers and higher costs would be expected to cut businesses' earnings, and economists find that unions have exactly this effect. Unionized companies earn lower profits than are earned by non-union businesses. Studies typically find that unionized companies earn profits between 10 percent and 15 percent lower than those of comparable non-union firms.[17] Unlike the findings with respect to wage effects, the research shows unambiguously that unions directly cause lower profits. Profits drop at companies whose unions win certification elections but remain at normal levels for non-union firms. One recent study found that shareholder returns fall by 10 percent over two years at companies where unions win certification.[18] These studies do not create controversy, because both unions and businesses agree that unions cut profits. They merely disagree over whether this represents a feature or a problem. Unions argue that they get workers their "fair share," while employers complain that union contracts make them uncompetitive." http://www.heritage.org/research/re...-how-labor-unions-affect-jobs-and-the-economy The US has more unskilled or low skilled jobs to lose such as manufacturing. In addition, many jobs cant be outsourced, such as those in the service industry. Only one study has supported minimum wage's proposed benefits, the Card and Krueger study. Heres what the House Joint Economic Committee had to say about it: "Proponents have been able to muddle the debate by pointing to a study done by two Princeton economists, David Card and Alan Krueger. These economists claimed to find that raising the minimum wage does not lower employment. [1] In one paper, they succeeded in casting doubt on 200 years of economic research and theory. Economists took their challenge seriously and attempted to recreate their results. It could not be done. Economists who attempted to replicate their work demonstrated conclusively that raising the minimum wage destroys jobs. [2] Even after the Card and Krueger study was fully discredited by economic science, it is still being used by proponents of higher minimum wages to support an increase." http://www.house.gov/jec/cost-gov/regs/minimum/against/against.htm In addition, the WSJ conducted a survey in which it found that liberals and progressives were MOST LIKELY to be misinformed on issues such as outsourcing, minimum wage, and basic economic principles. http://online.wsj.com/article/SB100...5282190930932412.html?mod=WSJ_Opinion_LEADTop
I'm not interested in quotes from poor sources. Can you respond to my comment?: You'd only have a point if all firms were small and wage compensation could be simply described by supply and demand theory. That's obviously not the case. Once we have large firms (and the hierarchies that develop), unionisation actually provides a means to enhance productivity. 'Voice effects' are important because of distributed knowledge and the information overload on the manager (i.e. the economic planner) If you can't, just say so. So you can't actually account for the failure, once we isolate collective bargaining effects, to find a relationship between union density rates and outsourcing? You can, however, refer to the US and how- compared to countries with more union activity- it has lower wages and a low skilled equilibrium. Afraid you're only showing an innocence of the evidence. Card and Krueger's results, for example, have been replicated in other countries such as Machin and Manning's output in the UK. There are also multiple papers that find positive employment effects (e.g. Addison et al, 2009, Do minimum wages raise employment? Evidence from the U.S. retail-trade sector, Labour Economics, Vol. 16, pp. 397-408 ) That's because its absurd to suggest that its been discredited. The debate was focused on a 'back and forth' debate between the authors and Neumark and Wascher. Both had relevant points to make. Economists are more likely to be Democrats than Republicans. And I haven't met one right winger on here with a detailed understanding of economic analysis. Minimum wage comment is the classic example. They have to be taught from first principles basic labour theory (such as how orthodox economics predicts inefficient underpayment as the norm)
Ok you continue to insist on some sort of "enhanced productivity." However, this group "voice" isnt as effective because the union doesnt provide a "group voice." Unionized workers don't negotiate with the bosses. Union bosses do. Your notion that unionized workers actually have some say in their negotiations with employers is absurd. Union bosses handle all of the negotiations, and i seriously doubt they have the "distributed knowledge" you speak of considering the vast amount of workers they represent. But if you're still not convinced, if unionized workers were so much more "productive," why would the major automakers have laid off over 70% of unionized manufacturing workers? For comparison, non-unionized manufacturing workers saw a 6% growth in employment. Meanwhile, manufacturing jobs as a whole for all workers, but unionized workers saw a 38% drop in employment while non-unionized workers only saw a 18% drop. Companies must have concluded it was more cost-effective to employ non-unionized workers. and the source provided from the article is: Barry T. Hirsch and David A. Macpherson, "Union Membership and Coverage Database from the Current Population Survey," Industrial Labor Relations Review, Vol. 56, No. 2 (January 2003), pp. 349-354, at http://www.unionstats.com/ (May 5, 2009 Point to me one of these countries. The reason i cant account for the failure is because each country differs and i can't ambiguously argue about a country I don't know about. Please name a specific example. American economists have yet to embrace the study as a whole. This following text addresses the faulty methodology behind the study, which didnt use the amount of hours employed. instead it used total amount of workers. This is faulty because minimum wage laws addresses payment on an hourly basis. "The study method was to call the fast food restaurants and ask -- whoever was the manager on duty at the moment -- how many employees the store had. Further, in asking the question, the respondent was not even given a time frame, such as the number of employees at the store at the time of the call, or the number of employees scheduled to work during the course of the day or the number of workers scheduled to work that week. Thus each telephone answerer at the stores could interpret the question with their own meaning! With such a faulty method, the study produced data so ridiculously skewed as to be obvious to even a casual observer. As stated in a report by the Employment Policies Institute: "These serious mistakes and omissions have resulted in a study doomed to become a textbook example of how not to collect data."" http://www.conciseguidetoeconomics.com/minimumwage/chapter18/ Nobel laureate James M. Buchanan responded to the Card and Krueger study in the Wall Street Journal, arguing "...no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimum scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores." Minimum wage addendum". Wall Street Journal: pp. A20. 1996-04-25. Economists have published hundreds of studies on minimum wages before Card and Krueger. Economists studied the effects of minimum wages long before Card and Krueger came along, and found that higher minimum wages reduce demand for low productivity labor. See for example: "Minimum Wages and Teenagers' Enrollment-Employment Outcomes: A Multinomial Logit Model." Ronald G. Ehrenberg; Alan J. Marcus The Journal of Human Resources V17 N1 (Winter, 1982), pp. 3958 "Teenage Employment Effects of State Minimum Wages." Arnold Katz The Journal of Human Resources V8 N2 (Spring, 1973), pp. 250256 Brozen, Yale. 1969. "The Effect of Statutory Minimum Wage Increases on Teen-age Employment." Journal of Law and Economics, vol. 12 (April): 109122 "Recent Department of Labor Studies of Minimum Wage Effects." George Macesich; Charles T. Stewart, Jr. Southern Economic Journal V26, N4 (Apr., 1960), pp. 281290 "The Marginal Productivity Theory of Wages and Disguised Unemployment." Dipak Mazumdar The Review of Economic Studies V26 N3 (Jun., 1959), pp. 190197 "The Economics of Minimum Wage Legislation." George J. Stigler The American Economic Review V36 N3 (Jun., 1946), pp. 358365 http://www.ejournalofpoliticalscience.org/minwagemackenzie.html [/QUOTE]That's because its absurd to suggest that its been discredited. The debate was focused on a 'back and forth' debate between the authors and Neumark and Wascher. Both had relevant points to make.[/QUOTE] As for analytical rigor, Card and Krueger have been widely criticized for the statistical techniques used in their studies. Card and Krueger relied on phone surveys in their original study they had some research assistants ask some fast-food managers in New Jersey and Pennsylvania about their employees. Card and Krueger found that the increase in New Jersey's minimum wage increased employment relative to a Pennsylvania control group. Neumark and Wascher (2000) examined actual payroll data from fast-food places in the same geographic location. What did Neumark and Wascher find? The New Jersey minimum wage increase reduced demand for workers by 4%, just as standard theory predicts. Neumark and Wascher also found that the Card-Krueger data set suffered from "severe measurement error." This is not the only published study that contradicts Card and Krueger. http://www.ejournalofpoliticalscience.org/minwagemackenzie.html If you read the article, it said people who claimed to be very liberal or very progressive tended to be wrong. it said nothing about party affliation or occupation. Just to validate how many liberal viewpoints on economics are flawed.
You've just replied with a comment that advertised that you didn't understand what I typed. Distributed knowledge is key for the socialist calculation debate. However, its also key for appreciating the costs from firm hierarchy. Unions provide one means to minimise those costs. The macroeconomic consequences can be significant. Note, for example, Asteriou and Monastirots (2004, What do unions do at the large scale? Macroeconomic evidence from a panel of OECD countries, Journal of Applied Economics, Vol. 7(1), pp 27-46). This finds a positive relationship between trade union density and per worker output. The original analysis into voice effects finds that unions increase productivity but reduce profitability. They're consistent therefore with economic efficiency gains from the partial removal of market failures A note that summarises the 'internet database providing private and public sector union membership, coverage, and density estimates'. Not particularly useful! I'm happy for you to refer to any evidence that you can. Typically we'd refer to Western Europe and the US or the OECD countries. Why can't you refer to any international evidence that supports your premise? Does it exist? I've already documented the important research: the arguments between Card/Krueger and Neumark/Wascher. That led to improvements in the analysis, but certainly- as I've shown- didn't lead to rejection of the positive employment hypothesis. Your comment "only one study has supported minimum wage's proposed benefits" was blatantly false. I already have a detailed knowledge of the literature on the topic. It can be summarised very simply: Early research, typically using particularly flawed methodologies, found small effects on teen employment. The latest research finds that these effects were overestimates and often finds insignificant or positive effects. All studies can be criticised. The important point is that they were good enough to adopt different methodologies and were also good enough to introduce the 'natural experiment'-type approach. That their results have been replicated elsewhere confirm their importance for the topic. I've referred directly to economic evidence. Economists are more likely to reject right wing comment. And, as noted, this forum provides a testing mechanism of the attitudes of us poor plebs. Look at, for example, at the group Quorum. They honestly think Obama is a Marxist. Golly!
Ok, so what I know of distributed knoweledge is that it is the overall combined knowledge of workers, who may not know anything significant individually, but collectively may be onto something. However, based on the figures of decreasing unionized employment, it is obvious that companies dont think that these special "cost savings" are worthwhile in this economy. Thank you. You've just admitted that unions rase operating costs for businesses, thus cutting into profits. that was one of my main points. Unionized workers simply aren't cost effective these days. Once again, unionized workers are not cost effective, and thus any possible productivity is not worth the opportunity cost needed to obtain this. The site is useful when it comes down to interpreting unionized employment. The trend i mentinoned isnt coincidence when coupled with the costliness of unionized workers. Contrary, it is your statement that is blantantly false. If you read my last response, in it was included " Neumark and Wascher (2000) examined actual payroll data from fast-food places in the same geographic location. What did Neumark and Wascher find? The New Jersey minimum wage increase reduced demand for workers by 4%, just as standard theory predicts. Neumark and Wascher also found that the Card-Krueger data set suffered from "severe measurement error." This is not the only published study that contradicts Card and Krueger. " Clearly, neumark and wascher found the OPPOSITE of Card/Krueger's data, thus directly contradicting and disproving the 1992 study in favor of min wage. However, this study was especially criticized as it was largely unprecedented and went against all of economic theory. Their results have failed to be replicated by Neumark and Wascher when they tested the EXACT SAME states but focusing on relevant variables in the study. Their results were actually contradicted. When you have nobel prize winning economists condemning you as politicized partisan whore due to your obvious lack of logic, you know the study is highly questionable if not outright wrong. Mainstream economists tend to follow keynesian economics (for reasons I have yet to find out). However, the Austrian school of economics continues to follow the time tested values that were once championed by Adam Smith, and I see no reason to stray from this school of thought. But It is quite frightening to think about the radical left and right wingers that employ false hyperboles to scare the voting bloc to vote for each party.
Youve simply ignored the point (or still dont understand it). You cannot discount the importance of distributed knowledge and how it negatively impacts on productivity in large organisations. If you tried youd ironically be offering support for socialist planning. I wouldnt go there if I was you! Being repetitive wont make your argument stronger. Why dont you instead try and attack the paper I referenced? Alternatively, why dont you provide a paper that finds different results for me to attack? Youll have to go further than your outsourcing stuff, an argument that you couldnt support at all. I already know of the Neumark and Waschers complaints. I also know of Card and Kruegers responses. Youve been guilty of misrepresenting the evidence. To argue that only one study has supported minimum wages proposed benefits is blatantly false. Theres no point in suggesting otherwise as Ive already referenced some of the research Card and Kruegers multiple studies were especially criticised as they didnt conform to the publication bias (which the authors also empirically test). Can we refer to problems within their research? Of course! Trying to achieve a natural experiment approach is particularly difficult. Can we also refer to other papers that confirm their findings? Most certainly. This is nonsense. Keynesianism is but one school of macroeconomic thought. Even then it doesnt provide one coherent analysis, as shown by the three main sub-schools. Adam Smiths output was mainly focused on the ethics of capitalism. Within modern economic analysis, he would arguably be within the ranks of egalitarianism. Referring to the Austrian school in a labour sub-forum is also rather awkward. They have a very backward understanding of labour economics.
If this was so important, than tell me why companies continue to lay off unionized workers? I'm sure the companies can gather the distributed knowledge themselves if needed. I dont see why thousands of dollars of attorney fees and months of negotiations are needed to gain this benefit. Looking back at your responses, I fail to see any reference to a study besides the Card Krueger study that i did not refut (Neumark/wascher) besides the Addison study. Let's look at the Addison study, shall we? Before i point out some flaws, I'd like to show you that the Addison study did indeed ALSO reject the Card Krueger study results and conclude with the Neumark/Wascher study conclusion. Studies using this approach initially focused on the fast-food restaurant sector, using data collected following or surrounding an increase in the minimum wage (for example, see Katz and Krueger, 1992; Card and Krueger; 1994; Card and Krueger, 2000; Neumark and Wascher, 2000). The general tenor of findings from the fast-food sector offered at most slight support for the presumption that higher minimum wages lead to lower employment But let's move on "This paper examines the impact of minimum wages on earnings and employment in selected branches of the retail-trade sector, 19902005, using county-level data on employment and a panel regression framework that allows for county-specific trends in sectoral outcomes. We focus on specific subsectors within retail trade that are identified as particularly low-wage. We find little evidence of disemployment effects once we allow for geographic-specific trends. Indeed, in many sectors the evidence points to modest (but robust) positive employment effects" That is an abstract of the study. However, there are several flaws with the research. First, it specifically looks at the RETAIL SECTOR! NOT THE MANUFACTURING SECTOR! If it told the whole story it would be a very different result. Secondly, the unemployment rate used in the study is skewered, as many factors besides min wage is to blame. Also, a person is no longer considered unemployed when he goes off unemployment insurance and onto government welfare. Working off the books is not included by this rate as well. Thirdly, it depends on what they tested. If they looked only at companies, then companies such as Walmart are very capable of handling wage increases. If they looked at the industry as a whole, smaller retailers such as Kmart are less capable of handling such increases in wage. And finally and most importantly, this study was conducted during the inflationary boom of the 1990s. With every inflationary boom comes undeniable economic growth and increase in employment. However, this kind of growth is unsustainable and cannot be expected to last for a long-term time period. I've shown you many criticisms with this study, most importantly a flawed approach to collecting data. With their skewered data, their conclusions should not be trusted. Please do refer to these other papers.\ Every time you've come up with a study I've shown you why it's flawed and not to be trusted or why it actually contradicts your points. Please come up with more credible studies that are more legitimate.
Already said! We typically expect higher productivity but lower profitability. We have an example where the profit motive actually encourages economic inefficiency. Unions provide a means to reduce the losses. Only reduce mind you! Youre basically suggesting that there isnt a problem with economic planning! I told you not to go there as that necessarily also leads to the suggestion that we can replace the firm with the socialist planner. Yes, have a look at my responses. Are you going to admit that your comment only one study has supported minimum wages proposed benefits is false? Ive given you several opportunities to apologise for that error. Where on earth did you get that impression? Perhaps you simply misread this quote: Card and Krueger (1995) criticize Kim and Taylor (1995) for the use of inadequate data and for an unsatisfactory choice of instruments. In their re-analysis, Card and Krueger also point out that the results are not robust to the use of a two-year difference (198789), even though the same minimum wage changes are just as relevant to those outcomes as they are to the 198889 difference. We, too, find Kim and Taylor's choice of instruments unconvincing. It actually provides an attack on Neumark and Waschers results: Our panel-data regression framework is similar to that of Neumark and Wascher (1992), allowing for both county and time fixed effects. One important enhancement to their framework, however, is our ability to allow for county-specific trends in sectoral outcomes, which specification materially impacts the estimate of the minimum wage effect. Our results provide little support for the presence of disemployment effects in the retail trade sectors we examine. In fact, many of our estimated elasticities actually suggest that increasing the minimum wage may modestly increase sectoral employment. A very poor reply! The minimum wage literature will typically refer to sectors such as retail because they have a much greater density of workers who are directly affected by minimum wages. Simply put: if significant disemployment effects exist, theyll be shown here. Bogus argument. The authors supplement their data on employment and earnings with additional measures to reflect supply and demand factors that impact on low wage labour markets at county level This isnt even an attempt at critiquing the methodology. If unemployment effects occur, the empirical specification would find them. Of course talking about off the books makes no sense at all when they refer to employment gains. Its county-level analysis that also decomposes the analysis into different sectors (which of course have different firm characteristics). Again, you offer no critique. Business cycle effects are included in the study. So this is a miss too! Youve merely misrepresented the evidence, from suggesting that there was one study to indicating Neumark and Wascher have destroyed the findings. As shown by the Addison paper (which you also misrepresented), thats not the case. Unfortunately for you I know what Im talking about. Spotting your false critique wasnt difficult.
Companies obviously want more profit to higher more non-unionized workers. ok...so addison agrees that the kim/taylor study was flawed. he didn't agree with the conclusion of the card krueger study. It actually provides an attack on Neumark and Waschers results: Ok, but the study still contradicted the Card/Krueger study. i quoted it already: "Studies using this approach initially focused on the fast-food restaurant sector, using data collected following or surrounding an increase in the minimum wage (for example, see Katz and Krueger, 1992; Card and Krueger; 1994; Card and Krueger, 2000; Neumark and Wascher, 2000). The general tenor of findings from the fast-food sector offered at most slight support for the presumption that higher minimum wages lead to lower employment!" While I may not be an economist (Im just learning this terminology), common sense tells me minimum wage increase leads to lower employment. and thats what Addison concluded on the Card/Krueger study in my quote above. That's all thats relevant to this argument.
But, as noted, that isnt necessarily consistent with efficiency. Firms, for example, have valued discrimination... Given it finds positive employment effects, you havent got a leg to stand on. That it actually updated Neumark and Waschers approach and confirms that result provides a severe attack on your argument. Youre either deliberately misrepresenting or making a gross error. They effectively confirm Card and Kruegers results as they confirm that in many cases we find evidence pointing to increased employment from increasing the minimum wage. Common sense? Do you support supply and demand theory? We just need job search frictions (i.e. its not possible to instantly find an acceptable job) for a minimum wage to deliver positive employment effects. See the original work by Burdett and Mortensen (1998, Wage differentials, employer size, and unemployment, International Economic Review, Vol 39 Issue 2, pp 257-274). Youve not understood the quote, particularly as they confirm the existence of Card and Kruegers positive employment effects. Were left with one certainty: your comment about only 1 paper finding positive effects is nonsense.
And the future superpower status and jobs that go with a labor force willing to work rather than sit on their butts and whine about ONLY getting two weeks off a year. I've never known a successful busnessman who actually takes 2 weeks off a year, let alone only works 40 hours a week. That should tell you all you need to know about what labor unions have done to this country. If we got rid off all the crap rules about overtime, vacation time, and other employment blocking legislation, we wouldn't have 10% unemployment. The Chinese would be pissed that we're taking their jobs rather than the other way around. But we allowed labor unions, and now we pay for it with declining power and our jobs going to people actually willing to DO them.
It's true, the Unions put a us against you mentality in the workers, and it's no longer how can I make this business grow, but what can I get out of it for me.
Well... I am a 4th generation ironworker. My family has been Union ironworkers for 3 generations. I am not a union ironworker. I employ many former union ironworkers. Do you know what I hear the most? How pissed they are because the 'slugs'(slow, unproductive workers) got paid the same as they did! And if you sent them back to the hall to sit on the bench you invariably had a steward come out and see you. The steward would raise hell and you'd get a call from your boss. Unions often time protect slugs. They shouldnt. If they would black ball them my outfit would be union. They wont, so we're not.
This is an interesting argument. Why do you think, compared to the US, countries with greater union influence have greater export activity?
I'll be honest, I'm not certain. I did not take a economy class in college.(hat size 4, neck size 40 sort of thing) But I do know that when my grandfather got out of the union(before it really started to go down hill) he said, 'We've gotten soft, we don't kick out the slugs anymore. They are going to drag down the Union.'. And throughout the late 80's and early 90's we watched as the union share of ironworking went to about 8% of the jobs in the state. The philosophy of my dad, grandfather, and great grandfather(and the 5 other Ironworkers in the family) on keeping the union strong was this: Only allow the hardest working to stay in, and outwork the rats(slang for non-union workers). Sadly the Union leaders wanted to get more dues than productivity and started letting slugs and bench warmers stay.
It's not that unions are bad. It's just that they get abused by greedy people who care nothing for the well being of the company they work for. They only care about themselves. Something that was originally designed to protect the workers has now become a tool to bully the very people who sign their paychecks.
You best find out! The standard whinge and whine about unions falls flat when we realise that countries with more vibrant export sectors also often have more activity unions and collective bargaining.
Yes, but do the other countries have unions that protect slugs, or do the unions promote pride in working hard and doing all you can to keep the company going? The problem is that the unions and management cultivate enmity, rather than cooperation.
So somehow US unions, despite not being as powerful as unions in other countries, have somehow evolved to be more damaging? Crikey, sounds rather anti-American.
GM union got their employees pay in excess of $28.00 per hour just to tighten bolts for a living. Something that should be a minimum wage job. A friend of mine got paid $16.00 an hour to not work and go on voluntary lay off because it's cheaper than laying off a new employee. It's bull(*)(*)(*)(*) union rules like this that drive the cost of everything up to the point that we can't compete in the world marketplace. Countries that don't have to deal with these bull(*)(*)(*)(*) rules sell better cars at better prices.
The American union's actions are anti-American. My point is that German unions work with management to get the best outcome for both sides. American unions work to screw over management.
Perhaps you can inform me how American unions, despite not having the same power or influence as their European counterparts, have evolved to achieve this 'apparent' aim? If you can't, then it certainly just comes across as anti-American (i.e. for some unknown reason the American worker is somehow deemed to be inferior to the European worker)
