QUESTION TIME: Unions

I receive a lot of emails and Facebook messages with very good questions from folks in the 3rd District. Here I post the answers.

What are your thoughts on unions?

So long as workers are free to leave one job and go to another, companies will compete to attract the best workers through higher wages and better benefits. Unions short circuit market competition by artificially setting compensation for workers through labor agreements.

Unions arose in response to poor working conditions of the 19th century. Rigid labor markets of one mill towns gave workers little recourse. Union collective-bargaining provided the only way to secure fair wages and decent living standards.

But, in today’s highly competitive global economy, the free market provides a far better mechanism to improve living standards for workers. Companies that are highly unionized have difficulty competing. A nonunion company can make a product of similar quality. at a better price because their labor costs reflect market value rather than the skill of union negotiators.

The result can be seen in the hollowing out of the American auto industry in the highly unionized rust belt and the strong growth in automotive manufacturing job in the nonunion south.

In a flexible labor market, gains in wages and benefits set through union collective-bargaining agreements will generally prove short-lived and more often than not come at the expense of long-term prosperity. If you don’t believe me, go visit Detroit.