old fart analysis

guest post
by evo ablinsky


found this noah's ark
of wally world
  union cheap talk ......

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by one
      alan reynolds:


"The departure of the AFL-CIO's 
three largest unions 
has already reduced 
the federation's membership by a third
 and its income by a fourth " 

" All that competition for union dues 
is bad news for the AFL-CIO hierarchy
 but not necessarily for unions in general
 much less for workers in general"
 

" let uz consider 
what a trade union is
 and what it can 
and cannot do:"


" Any union is a nonprofit enterprise
 that markets services for a fee"

" If many existing and potential members
 think the services are not worth the dues
 then membership should be expected to shrink"

" A union's offerings might include
 assistance with training
 career counseling
 help with work-family scheduling
 and financial 
  and other information services" 

" Leaders of the AFL-CIO 
  claim to represent those who pay union dues
 But this introduces an 'agency problem' "


" Just as interests of corporate managers
 can differ from interests 
of corporate stockholders
 the personal interests of union bosses 
may likewise differ 
from the interests of union members" 

 "Being in a position 
to spend other people's money 
is a great source of power and prestige
 including the offer
 of campaign help and money
 to politicians"

" The AFL-CIO uses about 36 percent 
of union dues to support
 the leadership's personal political preferences
 although some 40 percent 
of union members voted for President Bush"

" Even members who agree 
with the union leaders' political tastes
 may nonetheless regard political crusades 
as a huge waste of their money" 

 " Old guys running the "labor movement" 
   tend to depict
    their efforts in quaint Marxist terms
   as a contest between a huge army 
    of wage slaves ("working Americans")
 against a small managerial-professional elite"


" In reality, 
  there were 137.7 million 
  Americans working in 2003
 but only 72.9 million 
   or 53 percent 
  were still being paid by the hour
      and a fourth 
   of those were part-timers
 Compare that with 47.9 million employees 
      34.8 percent 
    who worked 
  in managerial and professional positions"


"  AFL-CIO protectionist lobbying
   aiming to raise the price of imports
       is an unlikely way
          to appeal to
    salaried service workers
  Teamsters and others exiting the AFL-CIO" 

 "Change to Win" union bosses 
dislike the AFL-CIO's emphasis on partisan politics.
 But they, too, define goals
 in terms of their own personal interest
namely, presiding over bigger unions 
with more power, influence and money.
 Nobody explains 
how existing union members 
might benefit from having 
their dues spent on trying to recruit
 more union members "

" a frequently futile task 
estimated to cost as much as 
$3,000 per new member". 

" Although average pay 
is often higher for union workers
 some of that gap 
reflects unions organizing 
the largest firms in the biggest cities 
those that always paid 
relatively high wages"

"unions negotiate compensation packages
 that will create queues 
of job applicants and permit employers 
to cream (select) the best." 

"thus  we're not comparing comparable workers" 

" H. Gregg Lewis famously estimated
 the wage gap between union and nonunion wages
 at just 15 percent from 1967 to 1979"

" In 2003, however,
 David Blanchflower and Alex Bryson 
found the wage premium 
was substantially lower than in the '70s" 

" Labor compensation hovered around
 70 percent of national income 
for decades
 regardless of unionization"

" Whatever gains unions made 
were at the expense of other workers
 consumers and taxpayers
 not investors or owners" 

 "Organized labor can widen the gap
 between union and nonunion pay 
only by making union labor relatively scarce"

" Suppose some unions attain
 sufficient monopoly power 
to force wages up"

" Whenever the price of anything goes up
 demand goes down"

 "There must then be fewer jobs 
at unionized firms
 And that, in turn,
 leaves more jobseekers 
displaced into the nonunion sector
thus, depressing nonunion wages " 

" In 1992, Henry Farber and Alan Krueger of Princeton found that 'virtually all of the decline in union membership
 ... is due to a decline
 in worker demand for union representation'
 That is likely still true
 with the notable exception
 of government employees "

" 35 percent of whom are unionized,
 compared with 8 percent among private workers" 

" In "The Economics of Trade Unions," Albert Rees concluds:
 "The likeliest effect of unions 
on the distribution of income 
is to redistribute it among workers. ... 
First, the money wages of nonunion workers 
may be held down by the reallocation
 of labor produced by unionism;
 second, the nonunion workers 
may have to pay more 
for the products 
produced by union labor." 

"But it is not as easy as it once was
 to pass on higher labor costs to consumers" 

 "Unions are most likely
 to push their members' wages 
above those of other workers 
when (1) there are no good substitutes for union labor
 (2) there are no good substitutes 
for the employer's product 
and (3) union labor 
is a small part of total costs" 

 "A classic example was airline pilots
 under the Civil Aeronautics Board's
 regulated cartel"

" Employers could not replace pilots
 with labor-saving machinery
 consumers were not free to choose 
a cheaper airline
 and pilots' salaries
 were a fraction of airline expenses"

" For similar reasons,
 the "Ma Bell" telephone monopoly 
was another irresistible target for unions
 Computers were too primitive and costly
 to replace many telephone operators
 and consumers were not permitted 
to buy phones
 or long-distance service 
from anyone but AT&T." 

 "The only major sector 
in which competition 
is still legally banned 
is public services"

" Employers in public schools 
and other tax-financed services
 have little incentive
 to economize on costs 
by substituting nonunion workers
 or labor-saving technology"

" No matter how inflated 
the cost of public services may be
 it would be literally criminal
 to refuse to pay for them
 Public service monopolies 
thus allow unions 
to gain at the expense of taxpayers" 

 "Between 1982 and 1993," 
wrote James Poterba and Kim Rueben,
 "wages and salaries grew 69.2 percent 
in the public sector,
 and 52.2 percent 
in the private sector." 

 "Breaking the AFL-CIO's stranglehold
 on union politics and services 
will be beneficial 
for the same reason competition 
is beneficial in economics and politics"

 "Those trying to sell union services
 to workers may actually offer
 more and better services  for a change"

" The economic impact
 on private employers 
is unlikely to change much because
 in a world of intense competition
 excessive labor demands 
just "kill the goose." 

"When it comes to tax-financed 
  public services
 by contrast
 union gains are taxpayer losses" 


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