Do unions raise wages?

[SimpleDon]

It is apparently far easier for you to go off on bizarre insinuations and red herrings than to actually address the content of the OP. Duly noted.

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Unions, inequality, and faltering middle-class wages

• The union wage premium—the percentage-higher wage earned by those covered by a collective bargain*ing contract—is 13.6 percent over*all (17.3 percent for men and 9.1 percent for women).
• Unionized workers are 28.2 percent more likely to be covered by employer-provided health insurance and 53.9 percent more likely to have employer-provided pensions.
• From 1973 to 2011, the share of the workforce represented by unions declined from 26.7 percent to 13.1 percent.
• The decline of unions has affected middle-wage men more than any other group and explains about three-fourths of the expanded wage gap between white- and blue-collar men and over a fifth of the expanded wage gap between high school– and college-edu*cated men from 1978 to 2011.

An expanded analysis that includes the direct and norm-setting impact of unions shows that deunionization can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.

As the video mentions, unions do in fact raise wages for the few lucky ones who are able to obtain membership in one, but at the expense of everyone else, resulting in a net loss overall (higher prices, lower wages, less efficient companies, lower levels of employment). This is evidenced by analysis of countries with high union membership vs those with lower union membership - there is no increase in prosperity to the working class in the high union membership countries.

And this is why most economics is pseudoscience, because they don't do any controlled studies and just make completely invalid comparisons, controlling for hardly any of the other factors, then draw causal conclusions. A major reason for the lack of Unions in some European countries is that government regulations on wages, prices, mergers and monopolies, combined with government services make unions unnecessary. In addition, there are strong cultural factors that impact wages. There is far more suspicion and negative views toward corporations in most of Europe, and demand and public pressure on ethical business practices. They do not buy into notions that excuse lack of ethics like "business is business". Without controlling for all of these factors and more, no between country analysis can reveal anything valid about the impact of unions. Their impact is context specific and they tend to arise where they are most needed and would likely have the largest impact.

I worked in Germany where all of our workers were in the union. But it wasn't as contentious there as in the US. The union was a single one that covered everyone who worked for our company. As a union whose future was tied to the same thing, the company's future, there was more cooperation with the union. They had a seat on the executive board that I was on.

And we didn't negotiate wages directly with them. Wages were set for the entire industry sector. Everyone paid the same wages for the same work. These wages were negotiated between the lande government, roughly the state governments, the association of all of the like companies and the umbrella association of the unions.

======================

Economics is a social science. It is not like physics where there are absolute laws that define it. Instead, its study is loaded with the preconditions of the people who are doing the study. It is problem with many more variables than equations that define the interaction of the variables. Therefore assumptions have to be made to simplify the problem to try to solve it. Here is an economics professor on this problem, that I was reading when I saw this thread. It was still open in my browser,

Economics (indeed every discipline of the social sciences) has never been, and never will be, value-free. Social scientists have always relied, and will continue to rely, on sets of elaborate positions, perceptions, and views about the ultimate nature of reality; essentially, it is the reliance on preconceived notions of how the world works, and how it should work, when analyzing manifest phenomena. Aspects of conscientiousness precede investigation and thus one cannot separate the knowing mind from the object inquiry. What constitutes a fact perceives the observation and hence the conception of what is determined as socially significant; the mind is active in constructing and determining the lens through which observation deciphers what of social phenomena is worthy of factuality.

All theorizing is based on first order principles (Lawson, 1989). Thus, what underlie all theories of human behavior are general apperceptions and ideological convictions of the relationship between the individual and society. They are epistemological foundations-what Joseph Schumpeter labeled as 'preanalytical visions'-which dictate modes of examination and inquisition. Hence, different pre-analytical visions predispose the focusing on different social and economic problems and lead to entirely different attitudes towards social settings and human actions within those settings. Preanalytical visions have pertinent implications for normative assessments of the human condition.

By David Franks of the University of Utah. Mr. Frank is I believe, a Marxist. It is often those who sit further away who see the most clearly. Heterodoxical economists who teach at universities have to spend most of their time teaching the marginalistic, neoclassical synthesis, Econ 101 to undergraduates. Orthodox economists don't generally feel the need to study the heterodoxical economics, like Marxism, Austrian or post-Keynesian/Sraffian economics, and as a result aren't aware of the many valid arguments against their house of cards.

Austrian economics, the economics of the George Mason University professors whose work is in the video are an exception to this. Rather than being an alternative to the marginalistic neoclassical orthodoxy they are really more of a simplified, subset of the orthodoxy. Their house of cards is more fragile than the orthodoxy.

 

[SimpleDon]

Sorry, Mr. Franks post is here.

I might add that for all of its flaws economics is arguably the most important social science and probably the most important science, period.

 

[ronburgundy]

It is apparently far easier for you to go off on bizarre insinuations and red herrings than to actually address the content of the OP. Duly noted.

- - - Updated - - -

Unions, inequality, and faltering middle-class wages

• The union wage premium—the percentage-higher wage earned by those covered by a collective bargain*ing contract—is 13.6 percent over*all (17.3 percent for men and 9.1 percent for women).
• Unionized workers are 28.2 percent more likely to be covered by employer-provided health insurance and 53.9 percent more likely to have employer-provided pensions.
• From 1973 to 2011, the share of the workforce represented by unions declined from 26.7 percent to 13.1 percent.
• The decline of unions has affected middle-wage men more than any other group and explains about three-fourths of the expanded wage gap between white- and blue-collar men and over a fifth of the expanded wage gap between high school– and college-edu*cated men from 1978 to 2011.

An expanded analysis that includes the direct and norm-setting impact of unions shows that deunionization can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.

As the video mentions, unions do in fact raise wages for the few lucky ones who are able to obtain membership in one, but at the expense of everyone else, resulting in a net loss overall (higher prices, lower wages, less efficient companies, lower levels of employment). This is evidenced by analysis of countries with high union membership vs those with lower union membership - there is no increase in prosperity to the working class in the high union membership countries.

And this is why most economics is pseudoscience, because they don't do any controlled studies and just make completely invalid comparisons, controlling for hardly any of the other factors, then draw causal conclusions. A major reason for the lack of Unions in some European countries is that government regulations on wages, prices, mergers and monopolies, combined with government services make unions unnecessary. In addition, there are strong cultural factors that impact wages. There is far more suspicion and negative views toward corporations in most of Europe, and demand and public pressure on ethical business practices. They do not buy into notions that excuse lack of ethics like "business is business". Without controlling for all of these factors and more, no between country analysis can reveal anything valid about the impact of unions. Their impact is context specific and they tend to arise where they are most needed and would likely have the largest impact.

I worked in Germany where all of our workers were in the union. But it wasn't as contentious there as in the US. The union was a single one that covered everyone who worked for our company. As a union whose future was tied to the same thing, the company's future, there was more cooperation with the union. They had a seat on the executive board that I was on.

And we didn't negotiate wages directly with them. Wages were set for the entire industry sector. Everyone paid the same wages for the same work. These wages were negotiated between the lande government, roughly the state governments, the association of all of the like companies and the umbrella association of the unions.

======================

Economics is a social science. It is not like physics where there are absolute laws that define it. Instead, its study is loaded with the preconditions of the people who are doing the study. It is problem with many more variables than equations that define the interaction of the variables. Therefore assumptions have to be made to simplify the problem to try to solve it. Here is an economics professor on this problem, that I was reading when I saw this thread. It was still open in my browser,

Economics (indeed every discipline of the social sciences) has never been, and never will be, value-free. Social scientists have always relied, and will continue to rely, on sets of elaborate positions, perceptions, and views about the ultimate nature of reality; essentially, it is the reliance on preconceived notions of how the world works, and how it should work, when analyzing manifest phenomena. Aspects of conscientiousness precede investigation and thus one cannot separate the knowing mind from the object inquiry. What constitutes a fact perceives the observation and hence the conception of what is determined as socially significant; the mind is active in constructing and determining the lens through which observation deciphers what of social phenomena is worthy of factuality.

All theorizing is based on first order principles (Lawson, 1989). Thus, what underlie all theories of human behavior are general apperceptions and ideological convictions of the relationship between the individual and society. They are epistemological foundations-what Joseph Schumpeter labeled as 'preanalytical visions'-which dictate modes of examination and inquisition. Hence, different pre-analytical visions predispose the focusing on different social and economic problems and lead to entirely different attitudes towards social settings and human actions within those settings. Preanalytical visions have pertinent implications for normative assessments of the human condition.

By David Franks of the University of Utah. Mr. Frank is I believe, a Marxist. It is often those who sit further away who see the most clearly. Heterodoxical economists who teach at universities have to spend most of their time teaching the marginalistic, neoclassical synthesis, Econ 101 to undergraduates. Orthodox economists don't generally feel the need to study the heterodoxical economics, like Marxism, Austrian or post-Keynesian/Sraffian economics, and as a result aren't aware of the many valid arguments against their house of cards.

Austrian economics, the economics of the George Mason University professors whose work is in the video are an exception to this. Rather than being an alternative to the marginalistic neoclassical orthodoxy they are really more of a simplified, subset of the orthodoxy. Their house of cards is more fragile than the orthodoxy.

I'm not ragging on economics merely for being a social science that is forced to use "soft" methods. There is perfectly valid social science. I am ragging on the fact that the vast majority of economics "research" that makes its way into popular media makes such bullshit claims that do not follow from those soft methods. I shouldn't have said "most economics" but rather "most economic research you've heard about". Using soft methods is not the problem, failing to recognize how those methods greatly limit what the data implies is the problem. In my experience, economic is among the worst at this. There methods are as soft or softer than any social science, yet their is an air of unapologetic arrogance in their causal conclusions they draw. Their methods are especially soft and non-causal because their theories are about how individuals behave and yet they almost never measure any variables at the level of individual persons. Instead, they measure at highly aggregate levels like countries (such as the OP study) which exponentially increases the number of confounding factors and potential ways they could give rise to the observed covariances or mask true covariances among the variable of actual interest.

 

[AthenaAwakened]

Unions raise the wages of their members versus non-members. I don't think that anyone is disputing that.

So the question of if overall unionization increases wages in aggregate is pretty much settled, ignoring the fallacious lump of labor arguments that is. It does.

10% of the population receiving 20% higher wages results in 2% higher wages in aggregate from simple mathematics.

But there are also spill over effects. Increased unionization will result in higher wages being paid to non-union workers. In part from the increased competition but also non-union employers will increase wages to try to keep the unions out of their shop, to avoid having the union voted in to their shop.

This spill over effect increases as the percentage of workers covered by unions increases.

There is also what we have been seeing recently a negative spill over effect where decreasing unionization results in the premium that union worker earn.

This negative spill over effect increases as the number of workers covered by the unions decreases.

Very nicely and succinctly put.

 

[Loren Pechtel]

You're assuming there is no downside--lower wages paid to non-union workers because the money has to go to the unions. This assumption is invalid.

It's worth pointing out that the good professors seem happy with the idea that unions raise wages within a particular company - so the effect you're arguing for is that higher wages in company A lead to lower wages in company B. Since it's not the same money, I'm not sure why you reckon this is a thing. It seems more likely, by raising standards and competition for workers, that the opposite would occur.

The issue is industries that are highly unionizable versus those that aren't. The effect is to transfer money from one field to another.

In the US that's to a large part those that work for the government.

 

[Loren Pechtel]

The answer is no, says professor Alex Tabarrok - we see no empirical evidence that unions raise wages of workers as a whole, evidence between heavily unionized countries and countries with low rates of unionization is discussed. They can, however, raise wages for some workers, primarily by restricting supply:

[youtube]https://www.youtube.com/watch?v=S3EUrI63SnA[/youtube]

Do any of the pro-union supporters who believe they raise wages have evidence they can post to suggest otherwise, that they raise wages for workers across the economy as a whole?

If the worker is valued for his work and not considered a cost overhead, then higher wages means he/she spends more in the economy, thus creating new jobs. This means the worker on a lower wage does not spend but will have to pay a little extra social security to support the unemployed

And if your aunt had balls she would be your uncle.

You can't just ignore the fact that workers cost money.

 

[ksen]

So do executives and shareholders and yet I never see you complaining about how much they get.

 

[Bronzeage]

If the worker is valued for his work and not considered a cost overhead, then higher wages means he/she spends more in the economy, thus creating new jobs. This means the worker on a lower wage does not spend but will have to pay a little extra social security to support the unemployed

And if your aunt had balls she would be your uncle.

You can't just ignore the fact that workers cost money.

We once had a system where you paid up front for the worker and after that, you paid him in food and shelter for the rest of his life. That didn't work out so well.

Workers cost money. This is not a shock to anyone. The question becomes, who benefits when wages are kept low, and beyond that, how do we keep wages low?

It took a while, but in the past couple centuries, most civilized countries decided that a man's labor was his to sell and no one could compel him to work against his will. That seems straightforward enough. These same countries also decided that things like land, trees, and rocks could be owned by a single person and the rest of society would help him keep his stuff. This requires armies, policemen, judges, courts, and all the rest. We all pay a little to maintain this system which dictates that some people can keep other people's hands off their stuff.

This is kind of strange in a way. A person can be born and own property the moment they breathe. They haven't actually done any work at all, and an infant could be the Duke of Norfolk. If one man could not keep more stuff than he could use in the immediate future, there would be no talk of labor unions. Labor unions only appear when the one man-lottastuff system arises. This one man can't plow it all by himself, he can't dig it all by himself. He needs help. So, he goes to the guys who got left out when the world's trees and rocks were being divided and offers them a little of the proceeds, if they will dig and chop, while he watches. This only works because the people who are doing the digging and chopping give their consent. It's a fairly efficient system, because humans can't accomplish much by themselves.

The critical thing about this system is it only works if the workers like the deal. Those trees and rocks were not granted by God. Private property is a construct of society, and society is people.

This wailing and gnashing of teeth about the evil of unions and how they have such unfair advantages over the tree and rock owners is ridiculous. The owners hold their privileges by consent of everyone who has less than they do and consent can be withdrawn, if the shit gets too bad. Owners have no special place in Heaven and there is no objective morality which grants them the privilege of living off the work of other people. It's all a deal and deals can be renegotiated at any time.

The reason we have unions in the USA is because in the 19th century and going into the 20th century, smart people realized that working people could not be controlled by force and would react to violence with violence. Since there has never been a time in history when rich people outnumbered rich people. Most rich people are not stupid, so they offered a better deal to the workers. They lost a little, but let's face it, how many rocks and trees does one man need? Why risk losing all of them?

The things said about unions have been repeated decade after decade for a centuries, and always by the same people.

Contemplate this little passage about what happened in 1914,

Upon striking, the miners and their families had been evicted from their company-owned houses and had set up a tent colony on public property. The massacre occurred in a carefully planned attack on the tent colony by Colorado militiamen, coal company guards, and thugs hired as private detectives and strike breakers. They shot and burned to death 18 striking miners and their families and one company man. Four women and 11 small children died holding each other under burning tents. Later investigations revealed that kerosine had intentionally been poured on the tents to set them ablaze. The miners had dug foxholes in the tents so the women and children could avoid the bullets that randomly were shot through the tent colony by company thugs. The women and children were found huddled together at the bottoms of their tents.

Burning women and children alive is something right out of an ISIS playbook. When the nation saw what owners were capable of doing and proved they were prepared to do, there was a change in the deal. Owners had to give in, or lose it all. It could happen again.

 

[Nexus]

All of you pro-union people are going to look silly once Loren starts presenting evidence showing how well workers were compensated in addition to the much better work place conditions before unions ruined everything.

 

[Loren Pechtel]

So do executives and shareholders and yet I never see you complaining about how much they get.

The problem is that you don't recognize the difference between demand-driven wages (which do not cause unemployment) and imposed wages (which do.)

 

[ksen]

The problem is higher wages is higher wages irrespective of what lead to them and you and axulus are on record stating that higher wages for some means less for others.

Now why is it ok for executives and corporations to have higher wages but not laborers?

 

[Canard DuJour]

I'm not ragging on economics merely for being a social science that is forced to use "soft" methods. There is perfectly valid social science. I am ragging on the fact that the vast majority of economics "research" that makes its way into popular media makes such bullshit claims that do not follow from those soft methods. I shouldn't have said "most economics" but rather "most economic research you've heard about". Using soft methods is not the problem, failing to recognize how those methods greatly limit what the data implies is the problem.

The ideological slant is way way too heavy and persistent to be any mistake. Otherwise I agree with everything in the post I'm quoting from.

 

[lpetrich]

Now why is it ok for executives and corporations to have higher wages but not laborers?

I think that some people are plutocrats, believers in rule by an economic elite. They give that away by the hysterics that they go into when anyone challenges those that they consider society's legitimate rulers. Also by their hero-worship of business leaders and the like, something out of Ayn Rand's novel Atlas Shrugged.

Also notable is their unwillingness to support pacifying the lower classes with latter-day bread and circuses, and also a complete lack of noblesse oblige. Such people often seem like they scream noblesse n'oblige jamais!!! until they lose their voices.

 

[coloradoatheist]

The problem is higher wages is higher wages irrespective of what lead to them and you and axulus are on record stating that higher wages for some means less for others.

Now why is it ok for executives and corporations to have higher wages but not laborers?

You have your dissertation thesis right there if you want to pursue your PhD in economics. But the answer is, it depends because you have countering forces for both and the question is which one wins for each group.

 

[Loren Pechtel]

The problem is higher wages is higher wages irrespective of what lead to them and you and axulus are on record stating that higher wages for some means less for others.

Now why is it ok for executives and corporations to have higher wages but not laborers?

You still don't see the difference between higher wages paid based on value vs forced higher wages.



It's the difference between a business transaction and a robbery.

 

[lpetrich]

You still don't see the difference between higher wages paid based on value vs forced higher wages.

Define "value", Loren Pechtel.

 

[Bronzeage]

The problem is higher wages is higher wages irrespective of what lead to them and you and axulus are on record stating that higher wages for some means less for others.

Now why is it ok for executives and corporations to have higher wages but not laborers?

You still don't see the difference between higher wages paid based on value vs forced higher wages.



It's the difference between a business transaction and a robbery.

What I see is a share of the profits my labor produces. When productivity is higher, wages should be higher.

It is a mystery to me how people who have MBA's from Harvard could go into a negotiation and come away robbed by a bunch of guys who barely made it out of high school. I think the robbery talk comes up after the handshakes and signatures on the contracts.

Everyone walked away smiling, but the suits claim they were robbed when discussing contributions with politicians. The politicians work to change laws which make it easier to deny a fair share of productivity.

After all corporations are people, but labor unions are not.

 

[Loren Pechtel]

You still don't see the difference between higher wages paid based on value vs forced higher wages.



It's the difference between a business transaction and a robbery.

What I see is a share of the profits my labor produces. When productivity is higher, wages should be higher.

The problem is most of that productivity increase is from equipment, not from the workers producing more. The extra money goes to the supplier of that equipment.

 

[Bronzeage]

What I see is a share of the profits my labor produces. When productivity is higher, wages should be higher.

The problem is most of that productivity increase is from equipment, not from the workers producing more. The extra money goes to the supplier of that equipment.

I hope the workers at the factory which made the equipment get some of that money, since their labor increased the productivity of their customers.

Do you really think corporate accountants are unable to calculate what percentage of productivity increases are due to labor?

Which would be a better deal for the company, one man operating a $300,000 bulldozer, or a 1000 men with shovels? Maybe 10,000 men?

 

[ronburgundy]

I'm not ragging on economics merely for being a social science that is forced to use "soft" methods. There is perfectly valid social science. I am ragging on the fact that the vast majority of economics "research" that makes its way into popular media makes such bullshit claims that do not follow from those soft methods. I shouldn't have said "most economics" but rather "most economic research you've heard about". Using soft methods is not the problem, failing to recognize how those methods greatly limit what the data implies is the problem.

The ideological slant is way way too heavy and persistent to be any mistake. Otherwise I agree with everything in the post I'm quoting from.

I agree that the right wing bias and free-market faith evident in most of the "errors" of inference in media-touted economics research reveals that they are not honest errors but deliberate misrepresentation and an effort to paint political ideology as "fact". OTOH, maybe some of the directional bias comes from the corporate media and what research they choose to push. IOW, maybe the scientific incompetence is more honest and sometimes favors invalid right wing claims and sometime invalid left-wing claims, but the corporate media mostly pushes it on us when it makes wrong claims that make labor and regulations look bad and the capitalists and owners look good.