notes-econ-unions

Are unions good or bad? They may be both.

The good:

• Apparently, union pay is higher than non-union pay for similar jobs. This is evidence for the argument that, because management is few and workers are many, the free market price for labor is distorted and is lower than it 'should be', and that unions can correct this.

the bad:

• strikes. it seems inefficient, unnecessarily stressful, and unnecessarily disruptive of the company's reputation for reliability being available for its customers to have to have everyone stop working from time to time. Note: There are also lockouts. While lockouts may not be the union's fault, they are endemic of the same system dynamic.
• bias towards existing workers. Unions represent the workers who are already there, not the potential workers of the future. So they are fine with things that makes it better for the current members at the expense of being worse for future hires.
• uncompetitiveness. As we see with e.g. http://www.businessweek.com/articles/2013-04-04/gm-ford-and-chrysler-the-detroit-three-are-back-right , unions like to negotiate fixed benefits when times are good, and then when the company's profitability falls years later it has trouble renegotiating these, sometimes (often?) leading to bankruptcy.

What to do about this? I'm not really sure.

• I'm hoping that significant employee ownership of businesses will make unions unnecessary. However, that didn't seem to help http://en.wikipedia.org/wiki/United_Airlines , so my faith may be misplaced. On United, anecdotally, in SF, United had bad frequent delays and was expensive.
• The company could try to hold the line on never agreeing to anything that treats future workers better than present workers. For example, if there is an agreement not to have layoffs, then a layoff would not be counted under this agreement if a new worker was hired in place of the old one.
• The company could try to hold the line on never agreeing to thinks like the GM Jobs Bank that would impede the company from restructuring if things got worse; or perhaps could insist on making these things conditional on continued revenue, market share, and profit criteria.
• The company could try to hold the line on never agreeing to transfer risk from workers to the company. E.g. defined payout pension plans are OK, defined benefit pension plans are not.
• What to do about strikes? It seems to me that deadline brinkmanship may be an inescapable part of zero-sum negotiations. I don't know what to do about this. Perhaps have part of workers' pay conditional upon not striking? And how to stop lockouts?