Happy Labor Day

Sep 5, 2011 by

In honor of Labor Day, I think an analysis of Unions is in order.  Now, let us analyze, first and foremost, the purpose of a Union.  A union is put in place to negotiate on behalf of the workers and protect them from any unfair business practices of the employer.  Unions are an organization designed around promoting the workers.

Now, this sounds like a noble cause.  Who wouldn’t want workers to be protected and have people fighting on their behalf?  Well, the problem is that people fail to see the business and free market solutions to the problem that do not involve labor unions.  When a company oppresses its workers, the skilled workers no longer work for that company.  For, in the employer world, there is a competition for the best workers.  Thus, companies will compete for these workers.  Better workers means better product.  However, the consumer is not without his role to play.  If a company hires bad workers but offers a cheaper product, the consumer must decide.  A consumer’s dollar is his vote, does the consumer vote for the cheaper labor and cheaper product, or does the consumer go with the higher quality labor, thus better, more expensive product.  This is a decision of the consumer, in the end.  If companies see the consumers breaking for the better product, they will hire better workers.   Vice versa, if cheap is what the consumer goes for, cheap workers is who the companies will hire.  Now, if a company outright oppresses its workers, there are two solutions.  Either the workers can unionize, by choice, or the consumer can stop buying the product.  I support union forces to stop real oppression.  However, that kind of oppression does not exist today.  The other solution is the consumer vote.  If people hate worker oppression, do not buy products from those companies.  Either the companies will change, or those that do not oppress will succeed.  Thus, all the problems that unions claim to solve, are either extreme irregular cases, or they are things that can be solved with the consumer vote.  Unions are superfluous.

Unions, in the end, do harm to businesses.  Take the minimum wage laws currently put in place.  Minimum wage sounds like a good idea.  Businesses cannot pay people an unlivable amount.  Thus, this program must be good!  Well consider this, there are two outcomes from this.  Either a business will fire people or raise prices.  A business has a limited amount of money to spend on labor.  If labor is too costly, they have to either gain income or lower expenses.  In the case of lowering expenses, this means that more people get laid off.  Generally, the businesses that do this are the one’s hiring teens and young adults.  Those are the businesses that pay minimum wage.  These people will fire the newest or least qualified people on their task force.  This raises the amount of unemployed, thus raising the amount of community aid needed to help people live.  The second option is raise prices.  If a business raises prices, then the raising of wages is meaningless, for higher wages is equated with a higher cost of living now.  The only people this has made a difference for is the people who did not have minimum wage jobs.  Now, there is a higher cost of living with no pay raise.  Thus, they have less money.

I hope as you contemplate all that Unions did to protect against evil businessmen, which there were, you keep this in the back of your mind.  Unions may have a noble goal, but intent in economics means nothing without results.  No matter how noble you were, if you fail, things are worse.  I would rather be a poor free market worker, then a rich socialist union leader.

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