Unions and the Obama Administration-Becker

Are the Democratic-controlled Congress and President Obama very much pro union? Unquestionably. Do the economic effects of unions on the welfare of workers as a whole justify that union bias? No. Has their pro-union orientation seriously retarded the recovery from the recession? Probably. The following discussion tries to justify these answers.

The pro-union orientation has been demonstrated in many ways. Posner gives a few examples, and I will add some more. The automobile industry would not have been bailed out so generously were it not for the political power of the United Auto Workers. The alternative would likely have been bankruptcy without a federal bailout, which I favored. Bankruptcy without government involvement would have cut health and other fringe benefits of autoworkers more sharply, and might have led to more plant closings in the industry. It would also, however, have led to a more robust recovery of the surviving American auto companies, and possibly even in the longer run raised employment in auto plants located not in the South because wages and fringe benefits would then have been lower at these plants.

An important example this past week offers another illustration of the pro union orientation. For the first time the US has cited for labor violations a country, Guatemala, that is a free trade partner with the US. That the American government has the presumption to interfere in the labor policies of another country is disturbing in itself. All commentators agree, however, that it was done at the urging of American unions. This was likely an attempt to reduce the competition of goods and services from Guatemala and especially from other free trade partners-such as Mexico-for goods made by unionized American companies.

Congress tried to pass, and President Obama supported, The Employee Free Choice Act to eliminate private elections for union certification. Fortunately, enough moderate Democrats and Republicans have been able to beat back these proposals, and they have been shelved, perhaps only temporarily.

Economists distinguish competitive from monopoly unions. A competitive union system, like Japan’s, has unions at companies when the employees of these companies prefer to bargain collectively. However, competitive unionism does not allow a single union to control the majority of companies in the same industry, which is monopoly unionism. The US typically has monopoly unions, such as the steelworkers union, autoworkers union, or service workers union, but a long time ago the Clayton Act of 1914 explicitly exempted unions from anti-trust laws under most circumstances.

Monopoly unions do tend to raise the earnings and fringe benefits of workers in the industries where they exist. This is seen from the ridiculously high fringe benefits that the United Auto Workers unions squeezed out of American auto companies during the days when they were profitable but not well managed. Higher union earnings come partly at the expense of the profits of the industries unionized, but also at the expense of lower employment than would have occurred with more competitive wages and other benefits. The prospective employees priced out of jobs in unionized sectors seek employment in other sectors, which lowers the earnings of workers in these latter sectors. The net effect is a misallocation of labor compared to an efficient allocation, and possibly even a reduction in the income received by workers as a whole, including workers in the non-union sectors.

During this recession, wages did fall for many workers, but mainly among non-union workers. A telling example is what happened at many state and local governments that are in serious fiscal difficulties. Since wages of their union workers have been set by contract, they were forced primarily to cut wages of administrative staff and other non-union employees. For example, the state of Illinois has the largest fiscal deficit as a percent of its budget of any state. It required many of its high level non-union employees to take 24 unpaid leave days, or about a 9% cut in their salaries, since the state government cannot touch the wages of their many unionized employees.

As Posner indicates, only about 7% of all non-government American workers are unionized, compared to over 35% of workers at federal, state, and local governments. During the past 40 years, the fraction of unionized civilian workers fell steeply-and not only in the United States- while the unionization of government workers fell only a little. It might seem unlikely that workers which comprise only about15% of the total labor force would have a major effect on the speed of the recovery from the recession. 

The real threat to a robust recovery on the labor side has come from employer and entrepreneurial fears that once the economic environment improves, a Democratic Congress and administration will pass pro-union and other pro-worker legislation that will raise the cost of doing business and cut profits. In this way the obvious pro-union-pro-worker bias of the present government has contributed to a slower recovery, especially in labor markets. This helps explain the depressingly slow decline in unemployment rates and in the number of workers who have given up looking for jobs.

 

 

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[Alex]

As one to often be enlightened, and as metoinned before, there can be some good out of some bad. And thanks UJ for an eye opening situation. Although I still question, if you enjoyed what you were doing, and knew there were financial gains within the field why didn't you look at other educational facilities? That is really what our country stands for. Unfortunately our local University (UNCW) has a similar situation, more than 15 administrative/executives make more than the professors. More than $140k per year and they aren't teaching!!?? I completely agree this is a flawed system and why our professors aren't the higher of the paid positions I'll never understand. Unfortunately this is the demise of our republic. Our government officials can vote themselves a raise, every year. This not only happens in universities and schools but city, county and state government positions. So what did the Union do? Increased your pay as you mention, but what else did it do? Brought attention to to the university, more grant money requested from the state, most likely increased will affect tuition for many years to come. Unfortunately I also worked for a Union, when I was hired for xx amount of dollars per hour during college, I thought to myself, heck ya! But then I on my first pay check, I noticed Union dues, well there went my heck ya feeling. And what does the company have to do when a they pay for the Union, increases their prices to compete in the market. And to my original point, While to some extent, I can see where a Union may be of benefit, I mostly have the stance, there should be no unions. If you feel your pay or benefits are inadequate, go find another job. But if our government is being run properly, a similar position regardless of location, race or gender, should equal the same pay (Unions shouldn't be required to implement this theory). But here again were in a republic and elected officials can easily vote themselves pay increase without public consent. While I'm happy for you personally, is it really the right thing for our government to write a check to the Union execs? And while a professor in a teaching position is of high stature I also question government position in general, political representatives and their intent? longevity? The government offers quite the pension, which is a rarity in the private sector these days. Even the folks who work for the road system, maintenance crews, and administrative staff who work for the government are getting better financial securities than privately held positions. Which seems a bit contrary to the way it should be. The company I work (pharma) has the same pay for a new person coming into sales regardless of location, gender or race. In addition, we don't get paid on tenure, contrary to government teaching positions. Meeting objectives, both performance and peer observations is the only way for us to increase our pay. The harder you work, usually come with results and the more you get paid. Again, contrary to the government teaching positions, the longer you work the more you get paid, regardless of any objectives. Unfortunately it sounds like it quite specific to different locations throughout the US. Here again, if I like what I do, but my company were limiting my opportunities and pay, I would look outside the company, but to keep quality and hard working individuals they know what they need to do. The government tenure teaching position is a bit flawed in general and should be evaluated.To our state colleges: My UJ's point, why are administrators, staff and assistants making more than our professors? Maybe our chancellors and a couple executives (and unfortunately a few coaches), but in reality its our professors that make the difference! God Bless America and our Freedom.

[Marcos]

Bank on itWith all the hullabaloo rnetcely with too big to fail and people occupying various locales, many folks have started taking a look at who they let hang on to and invest their money. Traditionally, unless you are like my grandmother and hide money in various odd locations throughout your house, you probably keep your . Recently, however, have been surging in popularity. So what exactly is the difference between a bank and a credit union? Well, both hold on to your money for you and offer you easy access to it, but they do differ in some key ways let's take a look.Credit where credit is dueI'm not going to argue one way or another for which is better, that's entirely up to you and your banking needs. What I will do is compare and contrast these two types of financial institution, so you can make your own decision. With that said, here we go.BanksCan be nationwide, even worldwideOperate on a for-profit business modelTypically owned by private investorsGoverned by a board of directors chosen by stockholdersOffer business as well as consumer accountsCredit unionsTend to be regionalOperate as a non-profit financial cooperativeOwned by their members, i.e. their account holdersGoverned by a board of directors chosen by the membersStrongly consumer orientedBecause credit unions don't need to turn a profit, any interest they earn by investing your deposits is returned to you in the form of a member dividend. They also tend to have lower fees and on savings and checking accounts.Banks have their advantages, too. If you frequently travel or work outside of your home region and require physical access to your financial institution, a nationwide bank might be a better option. Yes, you can withdraw money anywhere, from any ATM with a credit union, but if you need to make a deposit when the nearest one is 500 miles away, this may present a difficulty.The payoffObviously, your particular needs will determine which type of financial institution suits your needs the best. Don't just automatically assume that one is correct for you based on what I've written here go and do your research. Find out what banks and credit unions are popular in your area, and talk to people about what they like and don't like about them. When it comes to money, the best decision is an informed decision.GD Star Ratingloading...

[Mohammed]

The State of Illinois doesn't respect any unnios. The governor for the last two years has worked to tell the people who work for the state that they would be getting a pay raise this year. After not having any raise for two years in a row..Now he is going to recant those very words he promised. How can anyone take this adminstration seriously if they barter to lessen the burden only to lie about when they are going to honor the contract they signed. Anyone else would have to pay up no one can tell the person they owe money to that they can't pay this month don't have the money. All creditors would take back what you owe them for. Amazing all the crap that politicians do to the very people who got them elected. I personally can't stand anyone who is going to lie right to my face and then slap me on the back to congratulate me for being a good sport and understanding. Again what to do with these types of people they want their 100k pension when the rest of the state will only be able to live month to month. Just my thoughts .enjoy your day!

[Kimberly]

You dam fools Credit Unions will be gradually dinimished and legislated out of existence congress and senate will never allow American Citizens to have a safe untouchable place to put their wealth. This hidden legislation will maneuver the rules to the point where banks can annex the credit unions. What a bunch of full fisted morons ,credit unions will never be allowed to exist in their present forms. American people are the dumbest animals on the planet GOLDMAN SACHS BABY, BANK AMERICA BABY.

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[Lorraine]

Im in a Credit Union and I virtually have auolsbtely zero problems with it. I just have a Checking account. I dont have to keep a certain amount in either. Just put whatever I earn in and I just use my Debit Card. Im college student so I dont have any real responsibilities as of yet.

[Sudhir]

Eric, the Clintons started the morgatge crisis. The dems in power the last two terms of Bushs Presidency (Frank, Dodd and others) claimed everything was okay after Republicans called them out and predicted this housing crisis/morgatge crisis would happen. Bush was asleep at the wheel, Yes! But Obama has given trillions to his financial buddies (along with obscene bonuses). More in his first 59 days than Bush did in all 8 yrs.!!This administration is a disaster for the country.Healthcare- we already have the best socialized healthcare, No one is turned away if they cannot pay. The cost is passed on to those who can. Obamas plan will ration out healthcare where people will die waiting (even those who can afford to pay) and the cost will be passed along to EVERYONE in higher health costs.Education- We need to stop the quotas of passing kids when they cant read, write, speak, add memorize, learn properly, PERIOD. Its the quotas for raises that cause teachers to pass kids whether theyre ready or not. And funding depends on it, etc. etc. And parents are not as proactive as they should or can be.Housing is not a right. Just like anything else in the American Dream, you have to work for it. There is plenty of help out there (at the goodness of Americans hearts, and programs that are govt. funded, and by corporations that get an incentive to Give til its practically ridiculous.-Obamas policies will change charity for the worse.Labor unions while started out protecting people that couldnt protect themselves have become a mobster society. They threaten and bully people and act like common thugs and law breakers. Labor Unions have lobbyists who pay politicians a LOT of money! Its in the best interests of the politicians to get labor unions in everywhere they can. The fact that this will put small businesses out of business, and raise prices at Walmart beyond what families on a budget could affordwill effect everyone adversely.Labor unions can now bulldose their way in and a business owner, and the employees dont have the right to vote privately whether they want this or not. This is dangerous.This isnt America anymore.

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