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Unions Condemn NLPC’s Economic Impact Study

Mon August 19, 2002 - National Edition
Tracy Carbasho

Labor groups such as the Teamsters and the AFL-CIO had strong words to say about a recent study that faults unions for negatively impacting the economy.

“This study was conducted by entities that support Right to Work laws and are sponsored by businesses that are anti-union, so any numbers they come up with to show the negative effect of unions are suspect at best,” said Rob Black, spokesman for the Teamsters. “It’s clear that workers benefit from unions because their rights are guaranteed by law. Workers who know they will get good wages and retirement benefits are the same consumers who can spur the economy.”

Published jointly by the National Legal and Policy Center (NLPC) and the John M. Olin Institute for Employment Practice and Policy, the study offered conclusions that were offensive to labor leaders. In particular, the study states, “While there are no doubts many individual members of labor unions who feel that they have benefited from collective bargaining, the overall evidence is overwhelming that labor unions in contemporary America have had harmful aggregate effects on the economy.”

The study, titled, “Do Unions Help the Economy: The Economic Effects of Labor Unions Revisited,” was written by professors Richard Vedder and Lowell Gallaway of Ohio University. The NLPC and the John M. Olin Institute, both located in Virginia, are responsible for the publication of “Union Corruption Update” and the Journal of Labor Research, respectively.

Vedder and Gallaway maintain that labor monopolies in the transportation, construction, manufacturing and mining industries have decimated employment in these fields, increased the supply of employment in less unionized fields and lowered wage growth. For example, they state that union-monopolized industries lost approximately 10 million new jobs from 1983 to 2000 compared with their less unionized counterparts.

The authors also said, “The cumulative effects of union labor monopolies dating back to the Great Depression have reduced the total national income by more than $50 trillion.”

Black was among the pro-union spokesmen who stressed that the NLPC study fails to paint an accurate and complete picture of organized labor. He said the study never takes into consideration the purchasing power of a consumer who has a guaranteed income.

“We have more than 1.4-million members and that number has been holding steady in recent years, although some unions have seen a drop in their numbers,” said Black. “We represent all kinds of workers, not just truck drivers, but also nurses, attorneys, state troopers and even the characters at Disney World.”

Ray Abernathy, spokesman for the Building and Construction Trades Department of the AFL-CIO, said the NLPC and the John Olin Institute are noted for touting anti-union and anti-working family ideals and are funded by anti-union interests. He referred to the study as “flimsy,” and added that unions are the only thing standing between workers and lower wages.

“We hold up the wages and this is especially true for construction workers,” said Abernathy. “We represent 14 AFL-CIO construction unions that have about 3-million members. Unions have not cut the number of employees in unionized fields. We have about 13-million members in the AFL-CIO and that number is about the same as it was 25 years ago. We don’t represent as large a portion of the work force, though, because the work force has grown.”

Abernathy said a recent study completed by his group compared the economic impact between 10 states where unions were the strongest and the 10 where they were the weakest. The 10 states with the highest union density are New York, Hawaii, Alaska, Michigan, New Jersey, Washington, Illinois, Rhode Island, Ohio and Minnesota.

The states with the lowest union density are North Carolina, South Carolina, Virginia, Texas, Mississippi, Arizona, South Dakota, Arkansas, Florida and Utah.

According to Abernathy’s study, the average hourly earnings in the 10 strong union states was $15.61 in 2000, while the wage was $12.49 in the weak union areas. The average annual pay for the same year was $36,705 and $29,804, respectively.

The study, which relied on information from the U.S. Department of Labor and the Bureau of Labor Statistics, shows the average household income in 2000 for the strong union states was $46,378, while it was only $38,854 in the states where unions are much weaker.

“Union members get better pay, better benefits, health care and pensions,” said Abernathy. “In a non-union industry, the workers might have limited health care and pension benefits at best. When people earn a decent income, it helps the economy because they have protection for their old age and when they get sick. Someone who makes money can spend it and save it.”

Abernathy noted the study also reveals a greater percentage of civic participation and a lower crime rate in the highly unionized states, enhancing the overall economic picture.

“In the construction industry, all of our unions have aggressive training programs to help employees become skilled craftspeople,” added Abernathy. “This is done through joint funding between the employers and the unions. Many non-union groups train their employees on the job.”

The NLPC study concludes that workers in highly unionized states such as Michigan lost as much as $6,000 per person in 1999. The professors who completed the study also highlight what they call the disastrous effects of union monopolies in the steel and mining industries.

“In coal, the United Mine Workers [UMW] were already the largest union in the country before the Depression,” stated the NLPC study. “Thanks to pro-union laws passed during the New Deal, UMW President John Lewis gained an even greater share of the mining labor force. Ironically, that labor force began its long decline from 471,000 in 1937 to 150,000 when Lewis gave up his presidency in 1960. By 1999, only 70,000 production workers were left in coal mining …”

Ken Boehm, chairman of the NLPC, said the two professors who wrote the “Do Unions Help the Economy” report found that as the price of labor went up, the number of workers decreased and the industry became less competitive.

“If union wages go too high, that could be a problem. There is nothing wrong with unions zealously going after increased pay and benefits, but if they do it in a way that’s not consistent with productivity, they could put people out of work,” said Boehm.

“Union members have been declining in numbers across the board, with the exception of government workers, for the past three decades. Union dues, in general, have been increasing and members don’t always know where the money goes.”

Boehm said he is not totally opposed to unions as long as members have the right to voluntarily join and can see how their money is being spent.

“In light of the recent accounting scandals, people are getting to see how their money is spent with the exception of union members,” added Boehm. “There’s too much corruption because people don’t see how the money is being spent. If unions would keep up with reforms and let the workers see where the money is going, that would be a deterrent to corruption.”

Boehm said the mission of the NLPC is to promote ethics, openness and accountability in government through research, education and legal action. The John Olin Institute aims to enhance the understanding of issues related to employment practices and policies among policy makers, the public, practitioners and the academic community.

Nancy Mills, executive director of the AFL-CIO’s Working for America Institute, described the NLPC study as “first and foremost a methodologically sloppy piece of work.

“You don’t need to be an economist to see that they’ve started with their conclusions and then tried to prove them,” she said. “This study does not take the workers into account. Workers in unions can reduce turnover, force the management to operate more efficiently and allow managers to make more rational decisions.

“Union workers are also likely to be better trained because the higher wages and reduction in turnover creates an incentive,” added Mills. “Even anti-union folks have concluded that unions raise productivity. We don’t deny that jobs are moving away from highly-unionized areas, but there are clear incentives being put forth by public policy arenas to make that happen.”

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