Wednesday, February 23, 2011

A little enlightenment

While unions continue to dominate the news, I figured I would give you a few little facts I found from the Heritage Foundation. Take these facts, absorb them and continue to ask yourself .... are unions making a positive impact on our economy? I'll bet you can already answer that question. But here are some specifics to fill in the blanks.

Unions function as labor cartels. A labor cartel restricts the number of workers in a company or industry to drive up the remaining workers' wages, just as the Organization of Petroleum Exporting Countries (OPEC) attempts to cut the supply of oil to raise its price. Companies pass on those higher wages to consumers through higher prices, and often they also earn lower profits. Economic research finds that unions benefit their members but hurt consumers generally, and especially workers who are denied job opportunities.

Economists consistently find that unions decrease the number of jobs available in the economy. The vast majority of manufacturing jobs lost over the past three decades have been among union members--non-union manufacturing employment has risen. Research also shows that widespread unionization delays recovery from economic downturns.

Some unions win higher wages for their members, though many do not. But with these higher wages, unions bring less investment, fewer jobs, higher prices, and smaller 401(k) plans for everyone else. On balance, labor cartels harm the economy, and enacting policies designed to force workers into unions will only prolong the recession.

Studies typically find that unionized companies earn profits between 10 percent and 15 percent lower than those of comparable non-union firms. 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.

In essence, unions "tax" investments that corporations make, redistributing part of the return from these investments to their members. This makes undertaking a new investment less worthwhile. Companies respond to the union tax in the same way they respond to government taxes on investment--by investing less. By cutting profits, unions also reduce the money that firms have available for new investments, so they also indirectly reduce investment.

Research shows that unions directly cause firms to reduce their investments. In fact, investment drops sharply after unions organize a company. One study found that unionizing reduces capital investment by 30 percent--the same effect as a 33 percentage point increase in the corporate tax rate.

Economists have found that unions delay economic recoveries. States with more union members took considerably longer than those with fewer union members to recover from the 1982 and 1991 recessions.
Now imagine if our government - state and federal - were forced to run like a business, without its unique ability to levy and collect taxes ...... me thinks our country would have gone Tango Uniform (T-U-or Tits Up for you non-military folks) ages ago.