Page 581 - The Principle of Economics

CHAPTER 26 UNEMPLOYMENT AND ITS NATURAL RATE 595
IN THE NEWS
Should You Join a Union?
SOMEDAY YOU MAY FACE THE DECISION about whether to vote for or against a union in your workplace. The follow- ing article discusses some issues you might consider.
On Payday,
Union Jobs Stack Up Very Well
BY DAVID CAY JOHNSTON
With the teamsters’ success in their two-week strike against United Parcel Service, and with the A.F.L.-C.I.O. train- ing thousands of union organizers in a drive to reverse a quarter-century of de- clining membership, millions of workers will be asked over the next few years whether they want a union to represent them.
It is a complicated question, the an- swer to which rests on a jumble of deter- minations: Do you favor collective action or individual initiative? Do you trust the union’s leaders? Do you want somebody else speaking for you in dealings with your employer? Do you think you will be dismissed if you sign a union card—or that the company will send your job over- seas if a union is organized?
But in one regard, the choice is sim- ple—and it is not the choice that most workers have made during the labor movement’s recent decades in the eco- nomic wilderness.
From a pocketbook perspective, workers are absolutely better off joining a union. Economists across the political spectrum agree. Turning a nonunion job into a union job very likely will have a big- ger effect on lifetime finances than all the advice employees will ever read about in- vesting their 401(k) plans, buying a home or otherwise making more of what they earn.
Here is how the equation works, said Prof. Richard B. Freeman of Harvard University: “For an existing worker in a firm, if you can carry out an organizing drive, it is all to your benefit. If there are going to be losers, they are people who might have gotten a job in the future, the shareholders whose profits will go down, the managers because there will be less profit to distribute to them in pay and, maybe, consumers will pay a little more for the product. But as a worker, it is aw- fully hard to see why you wouldn’t want a union.”
Overall, union workers are paid about 20 percent more than nonunion workers, and their fringe benefits are typically worth two to four times as much, economists with a wide array of views have found. The financial advan- tage is even greater for workers with lit- tle formal education and training and for women, blacks, and Hispanic workers.
Moreover, 85 percent of union members have health insurance, com- pared with 57 percent of nonunion workers, said Barry Bluestone, a labor- friendly economics professor at the Uni- versity of Massachusetts.
The conclusion draws no argument even from Prof. Leo Troy of Rutgers Uni- versity, who is widely known in academic circles and among union leaders for his hostility to organized labor. “From a standpoint of wages and fringe bene-
fits,” Professor Troy said, “the answer is yes, you are better off in a union.”
His objections to unions concern how they reduce profits for owners and distort investment decisions in ways that slow the overall growth of the econ- omy—not how they affect workers who bargain collectively. Professor Troy points out that he belongs to a union himself—the American Association of University Professors.
Donald R. Deere, an economist at the Bush School of Government and Public Service at Texas A & M University, studied the wage differential for compa- rable union and nonunion workers be- tween 1974 and 1996, a period when union membership fell to 15 percent of American workers from 22 percent.
In every educational and age cate- gory that he studied, Professor Deere found that union members increased their wage advantage over nonunion workers during those years. Last year, he estimates, unionized workers with less than a high school education earned 22 percent more than their nonunion counterparts. The differential declined as education levels rose, reaching 10 per- cent for college graduates.
“It makes sense to belong to a union,” Professor Deere said, “so long as you don’t lose your job in the long term.”
Source: The New York Times, Money & Business Section, August 31, 1997, p. 1.