@ all
SecretSquirrel wrote:unions raise wages for union members at the expense of general employment rates and higher production costs. A union is a classic interest group, which means that it should not receive any help from governments (though it unfortunately does).
A union that does not receive government support and arrives at employer concessions through mutually voluntary bargaining is not a bad thing. Once the unions (or the bosses too) start getting politicians on their payroll, everyone suffers)
This is again an interesting thread with many useful comments. They illustrate that simple answers are not very helpful. For instance, there are many types of labour unions. Some are federations, and take into account the common good. Others represent one category of workers, and they try to extort the maximum wage, no matter what the consequences are for the society or even for their own future. Still others are political parties in disguise.
Collective bargaining can be beneficial, if it establishes a uniform wage within a branch. For this prevents competition on wage between firms. Consequently only the most efficient and innovative firms will survive. This may harm the employment within the branch, but these workers can move to other branches, where they can be more productive. This is a desirable development, and thus it is understandable that governments support the coverage of collective agreements.
Note that the most productive firms could also lower their prices. Then the nominal incomes would remain unaltered, but all real incomes would increase. However, apparently this rarely occurs. Moreover, unions prevent wild strikes, which is beneficial for society. Good union educate their members, and integrate them into the firm.
As long as high wages stimulate the foundation of highly productive firms, they are evidently desirable. Here the unions act as a whip, which incites the entrepreneurs to make a maximal effort.
Unfortunately, it is nearly impossible to know when the entrepreneurs operate at their top. So many unions keep pushing, even when further productive improvements are impossible. This damages the economic performance. Now the collective bargaining becomes a zero-sum game, or worse.
For instance, firms in export branches can not raise their product price, because he is determined on the global markets. However, many markets are mainly national. In these branches the firms do not have to fear foreign competition, so that they can raise their prices. As a group these firms have a monopoly, which allows them to collude. Unions in such branches are tempted to demand higher wages. For remember that unions install by themselves a monopoly. This kind of labour demands hurt the consumers of their products, because the consumptive purchasing power is degraded. Victims are for instance the workers in export branches, and all types of rentiers, who can not increase their nominal income.
Unfortunately, history has shown that in general labour unions are insufficiently motivated to restrain their wage demands. The union leaders do not know what the optimal wage is. Quite a number of them do not care, and just want to subjugate the management of the firms. Thus the power of the unions must be mitigated, and this is done by means of unemployment.
Red Barn wrote:As you can see, the right to unionize raises wages across the board - just as the suppression of unions lowers them
Indeed it is possible that unions raise productivity. However, in many cases the causality is probably the reverse. That is to say, the firm raises its productivity. Subsequently, the firm is able to raise the wages, and the management will recognize the unions. They have various reasons to do so. Higher wages allow the firm to hire the best workers. Higher wages reduce the number of labour conflicts. Management appreciates this, because it is human, and thus easy-going by nature. Higher wages may stimulate the workers to reciprocate, and work harder. In addition, they fear to lose their magnificent jobs, and will become self-motivated.
Some of my arguments were already advanced by Eran. However, he fails to recognize the positive aspects of unions.
Nunt wrote:In general, I would argue that higher wages are neither always good nor always bad. It depends from case to case and the total net effect of higher wages is very difficult to determine.
Perhaps my suggestions help?