Why unions can’t help workers adapt to today’s economy
W and beyond their union rates. United Food and Commercial Workers Local 23 promptly filed suit. It wanted seniority alone to determine pay. The arbitrator sided with the union and ordered the performance-raises rescinded. This mindset turns off many workers.
Alan Krueger, the former chair of President Obama’s Council of Economic Advisors, has found that almost all the decline in U.S. union membership is “due to a decline in worker demand for union representation.”
Employees have a federally protected right to unionize. The fact that union membership keeps falling suggests the White House has misdiagnosed workers’ problems. A far greater challenge facing many workers is how to adapt to the ongoing transformation of the economy.
For the past generation, employment has fallen in jobs that require routine skills and grown in non-routine jobs. Routine jobs tend to lie in the middle of the skill distribution; non-routine jobs at the hat is the largest challenge workers face today? President Barack Obama believes the answer is not enough union representation. That’s why the White House recently hosted a summit arguing for expanding union membership.
But what unions have to offer now appeals to few workers. Focusing on them diverts attention from greater barriers in the workplace.
Of course management gets the union it deserves. Employees have a statutory right to unionize. Employees mistreated at work will probably exercise that right. But union representation has fallen primarily because most workers see little value in it.
Unions have little ability to raise wages anymore. In today’s competitive economy, unionized firms cannot pass on those costs as higher prices; their customers will go elsewhere. The average union member makes more than the average non-union member, but primarily because union organizers target higher-paying companies to begin with.
Economists have compared companies whose workers vote to unionize to those that vote not to. Pay grows just as fast at the companies that remained non-union.
But without higher pay, unions only offer workers general representation. Many workers do not want these services. Collective union contracts necessarily ignore their individual contributions.
Consider what happened when a Giant Eagle grocery store in Pennsylvania tried to reward its employees’ hard work. Managers gave two dozen workers performance-based raises above
top and bottom of it. The economy needs far fewer secretaries and assembly line workers than it once did. It also needs far more homecare aides and IT specialists.
MIT economist David Autor has found this “job polarization” has occurred in every major EU country. It has happened in countries with strong unions and weak unions, with high taxes and low taxes. This strongly suggests that factors like globalization and technological advances—not union’s decline—drive this trend.
On the whole, these changes have raised living standards. But they have created serious challenges for many workers who formerly held routine jobs. Union membership can’t change this. A better response is to improve and expand access to education. This would better prepare workers for the new jobs the economy is creating.
Just as importantly, the government should remove barriers that prevent workers from taking jobs they could succeed in. One-third of jobs in the economy now require a government license to perform. Some of these requirements make sense; surgeons should have considerable training before operating on people. But many of these licenses involve jobs without safety concerns.
Louisiana licenses florists. Florida licenses interior designers. Maryland counties license fortune tellers. Every state licenses barbers—requiring an average of a year of training before they can cut hair. Does it really take a year of training to avoid bad haircuts?
In fact trade associations— not consumer groups—lobby for these restrictions. Licensing keeps potential competitors out. That benefits incumbent practitioners, at the cost of higher prices for consumers and reduced opportunities for those changing jobs. It most hurts disadvantaged workers; they can least afford to stop working to jump through bureaucratic hoops.
For example, Dallas police arrested Isis Brantley for braiding African-American women’s hair without a cosmetology license. That license required 1,500 hours of training and had nothing to do with hair braiding. So the mother of five did not obtain it. For that she went to jail and lost her job.
Earlier this year the Texas legislature eliminated that unnecessary requirement. Brantley can now freely teach and practice hair braiding. But similar licensing requirements in other states and occupations wall off a third of the economy to job-switchers. Similarly, many states are attempting to regulate new-economy companies such as Uber and Airbnb out of existence.
Policymakers should allow more Americans to work without needing government permission. That would do far more than union membership to address their current challenges.