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A few caveats:
I have only one relative who has ever been in a union and though we've spoken on the subject only once, his defense of unions was not strong. I've certainly heard better here.
Not having much exposure to the topic, I haven't given it enough thought to feel that my opinions are fully formed.
Having been born in 1978, the time periods to be discussed below precede my age of reason by at least a decade, so my understanding of them can only be the result of secondhand information.
That said, I would offer the following challenge to the role that unions play.
It seems to me that unions exist to negotiate wages/benefits that would not be attainable if each employee were alone in negotiations. This suggests that each employee would be willing to work for less than the union negotiated benefit package. If we accept that there exists a supply-demand curve for the labor provided, then it seems reasonable to assume that the employer demands fewer workers at the union price than at the market price.
Those who are hired at the higher rate are now in a position to spend more money in the community than they would have been able to do otherwise. If all goes well, this extra spending money will provide jobs for those workers not hired at the union rate, though taxes and secondary business overhead limit the percentage of that wage which can be available to such secondary beneficiaries. The union workers are also likely to be able to afford more expensive houses which can be expected to increase the price of houses.
There are likely to be many similar effects to that of the housing market which result in a higher cost of living in the union influenced town than in a neighboring town without a union employer. This would create the impression that the union was providing a better situation for its workers because the citizens of the non-union town would not be able to afford the costs of the union town, while the converse would not be true. That said, it shouldn't take long before the union employees discover that they really aren't getting ahead, so they return to the negotiations (once the contract expires), with data on the new cost of living and an understandable expectation that the employer increase wages to compensate. So long as times are good (as they generally were between 1950 and 1975 or so) the employer would be in a position to do so.
Once the rest of the world began to recover from WWII, the situation changed and the employers appear to have begun to use delayed compensation as a way to reduce short-term costs but saddling themselves with a looming responsibility that they likely miscalculated based on the actuarial charts of the day which did not (and could not) take into account the advances in medical technology for extending life expectancy. I include this here as I believe that it is true, and related to the current crisis, but I don't blame the unions for it. The employers were the short-sighted ones and I feel that they shouldn't be allowed to change the terms of delayed compensation since that was a way for them to persuade workers to accept lower wages. A deal, after all, is a deal.
Back to the topic at hand. I am beginning to feel that the aforementioned period (1950-~1975) produced in America an unreasonable expectation that we deserved to have a better life than our parents. It seems to me that we must have felt entitled to a better life than much of the rest of the world as there is quite a difference in cost of living from country to country. Globalization was the natural consequence of this disparity and it could only be thwarted by legislative means. As that has not taken place, the workers are finding themselves in a bad position. The cost of living can only fall so fast and the need to compete with the global markets appears to be reducing incomes faster.
Returning to the subject of full disclosure, my thinking on this matter was born from my age and career choice. Graduating with a masters degree in 2002 as a software-centric electrical engineer, I read with concern the stories of H1-B Visas and off-shoring. I wondered at the capacity of Indian programmers (many of whom paid a similar amount for their education as did I) to work for such low wages. The point was made in such discussions on slashdot that those wages were upper middle class in India. On such a salary, my indian counterpart could provide for his or her parents and pay for the education of his or her younger siblings. I could not fault that enterprising soul. The fault lay only with the disparity in cost of living.
From this, I arrived at my view that the protectionist and reactionary (with respect to wage following cost of living) attitudes of unions are likely to contribute to an unsustainable disparity in cost of living which will ultimately price the American worker (and barring off-shoring, the American companies) out of the global market. The global impact of the credit crisis provides evidence that it hasn't yet taken place, but within my lifetime, I expect the economies of the rest of the world to be decoupled from ours. Once that occurs, we will no longer be able to set the terms of international business in our favor.
As a parting thought. How can there be a sustainable system in which workers in other countries are willing to accept so much less for the same work? Mustn't the jobs necessarily gravitate toward those labor markets?
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