Rez O. Lewshun
Save the Profession
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Bloomberg
Wrecking U.S. Economy Didn’t Start With Labor: Harry J. Holzer
March 02, 2010, 9:15 PM EST Commentary by Harry J. Holzer
March 3 (Bloomberg) -- Conservatives are attacking labor unions and President Barack Obama’s relationship with them. The charges? Unions are corrupt and engage in “thuggery”; they destroy jobs and the economy; and Obama is increasingly “in the tank for the labor movement” and has ruined his signature initiatives by kowtowing to them.
A lightning rod for many of these attacks has been Obama’s nomination of Craig Becker to the National Labor Relations Board. Becker is a highly respected labor lawyer with a distinguished career. Can’t conservatives disagree with him without calling him “radical” or his appointment “obscene”?
For decades, Republican appointees to the board have weakened the laws protecting workers who want to organize. The balance in current law to which conservatives are so committed has tilted the playing field in favor of management -- the precise reason why they are so enamored of the legal status quo.
Some argue that a few pro-union provisions (such as “Buy American” requirements) ruined the stimulus package, which Obama should have vetoed in response. But, whatever the merits of those provisions, most economists -- including Mark Zandi, an adviser to Republican Senator John McCain -- say the stimulus package helped jumpstart an economic recovery and created or saved millions of jobs. Conservatives shouldn’t sacrifice those gains because of a few small provisions favorable to unions.
‘Death Panels’
And the notion that a single pro-union provision in the Senate health-care bill destroyed its public support is silly. Clearly, Republican demagoguery about the bill -- including charges of “death panels” and “socialized medicine” -- were vastly more destructive to public support than the exemption from the “Cadillac tax” for union members.
Conservatives are very upset about union financial contributions to the Democrats and Obama. But they aren’t so outraged at the enormous reliance of Republicans on contributions from the business sector and the wealthy. And when George W. Bush’s administration rewarded these contributors with huge tax cuts that were never paid for and that wiped out our nation’s fiscal balance, they didn’t seem to be so troubled.
A lot is written about union corruption, especially among the Teamster. But whatever sins some Teamsters have committed, tarring the entire movement with such charges because of one union is akin to claiming all business leaders are corrupt due to Bernard Madoff. “Thuggery” and violence are prominent parts of American labor history, but most of it has been perpetrated by employers and their cronies against pro-union workers.
Complex Relationship
Perhaps the weakest of these arguments are those on unions and the economy: Unions invariably lead to lower employment, higher rates of business failure, and lower economic growth. Economic analysis implies a complex relationship between union wages and employment. It depends on a range of things, including how competitive the markets are in which the company operates; how flexible its production techniques and locations are; how collective bargaining affects workers’ skills and productivity as well as management’s human-resource policies; and the strength of demand for workers in the nonunion sector.
If markets are less than fully competitive, if alternative modes of production are limited, if unions generate more skilled and productive workers, or if nonunion demand is strong enough to absorb any workers displaced by unions, economic analysis predicts unions won’t reduce employment by very much or at all.
Unions Reduce Inequality
For decades, economists have researched these issues, and a substantial body of evidence has emerged. Without a doubt, unions raise the wages and benefits of their workers and tend to reduce economic inequality. The increase in economic inequality in America over the past three decades was at least partially caused by the decline in private-sector union coverage.
Beyond that, evidence shows unions reduce costly worker turnover, raise the skill levels of employees, and often lead to more productivity. And any negative union effects on employment or economic growth in the U.S. and abroad are mostly modest.
Unions aren’t to blame for recent firm closures and bankruptcies. Richard Freeman, of Harvard University, and Morris Kleiner, of the University of Minnesota, found no statistical effect of unionization on corporate-bankruptcy rates in a 1994 study. The U.S. economy destroys and creates millions of jobs each year, with tens of thousands of establishments closing and opening, often in the same industries. Little of this is driven by unions.
As an economist, I don’t always agree with America’s union movement, the American Federation of Labor and Congress of Industrial Organizations, and I wouldn’t argue that union actions are always beneficial or costless. But a sensible discussion requires a careful, dispassionate look at the theory and evidence on unions -- rather than right-wing ideology and stereotypes dressed up as analysis.
(Harry J. Holzer is a professor of public policy at Georgetown University and a former chief economist at the U.S. Labor Department.
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