NLPC Study: Union Monopolies Cost Economy Trillions

Union monopolies in manufacturing, transportation, and other industries have cost American workers some $50 TRILLION over the past six decades, according to a new study published by the Nat’l Legal & Pol’y Ctr. and the John M. Olin Inst. for Employment Practice & Pol’y at Geo. Mason Univ.

Written by Ohio Univ. professors Richard K. Vedder and Lowell E. Gallaway, the study is entitled Do Unions Help the Economy? The Economic Effects of Labor Unions Revisited. According to Vedder and Gallaway, union labor monopolies in manufacturing, transportation, mining, and construction have decimated employment in those industries, increased the supply of employment in less unionized fields, and lowered their wage growth.

For instance, the rate of job growth in such low union-density industries as retail and services from 1983 to 2000 was more than twice that of highly unionized industries like manufacturing.  Those union-monopolized industries lost about ten million new jobs compared to their less unionized counterparts. Then, demonstrating the impact of labor monopolies on income growth, Vedder and Gallaway show that for every 1% increase in union density, per-capita income growth falls 1.24%.  Thus, if all states had the same union density rate as North Carolina’s, the lowest in country, their income growth would have been about 17% higher than it really was. Poorest of all was Michigan, where per-capita income would be nearly $6,000, or 21% higher, than today if that state’s unionization rate was equal to that of North Carolina. The cumulative effects of union labor monopolies dating back to the 1930s have reduced the total national income by more than $50 trillion, Vedder and Gallaway conclude.

The professors go on to highlight the disastrous effects of union monopolies in the steel and mining industries. After U.S. Steel granted monopoly bargaining rights to the Steelworkers in 1937, for instance, manhours worked plummeted by 51% in just over one year.  In coal, the United Mine Workers were already the largest union in the country before the 1930s. Due to excessively pro-union laws passed during the so-called New Deal, UMW president John L. Lewis gained an even greater share of the mining labor force. Ironically, however, that labor force began its long decline, from 471,000 in 1937, to 150,000 when Lewis gave up his UMW presidency in 1960. By 1999, only 70,000 production workers were left in coal mining, barely one-tenth of the jobs number in 1919, when Lewis first assumed the UMW presidency.

“It breaks new ground,” stated Investor’s Business Daily in profiling the study. “Surprisingly little has been written about the effects of unions on the economy as a whole, or on how unions distort market activity.” NLPC President Peter Flaherty said “America continues to suffer, in terms of lost jobs, wages, and wealth, because of poor policy decisions made decades ago. NLPC help put this study together so that today’s policy makers would be aware of the true costs that labor unions impose on our economy.” [IBD 6/11/02]