The alternative to unions

by Russ Roberts on February 23, 2011

in Inequality

From the Economist:

MY COLLEAGUE asks an excellent question: if stronger private-sector unions aren’t in the cards in America, then what? What other force do progressives think might play the role unions played in the postwar era, providing greater negotiating power for the working and middle class, so that they can try to claw back some of the 52% of all US GDP growth from 1993-2008 captured by the top 1% of the income scale and organise politically for concerns like universal health insurance?

Greater negotiating power? The effect of unions, to the extent they are effective at all, is to make it harder for people to find work in particular areas. Unions try to raise wages above what they would otherwise be. Employers respond by trying to substitute capital for labor or more skilled workers for less skilled workers.

You want negotiating power? Get educated. Get a skill. What keeps wages up in a world of 7% unionization in the private sector is that I have alternatives. So stay in school and study something serious that has value alongside whatever else you’re interested in. Or study something interesting that has little market value. But if you do that, don’t complain about your low salary and lack of a union.

The bottom line–you don’t need a union to protect you from your employer. You need alternatives–you need to have a skill that more than one employer values. If you have no skills, you are in trouble and the union won’t help you either except at the expense of other workers.

Some of the money the top 1% captured (in parts of the financial sector, for example) was unearned and came at the expense of the rest of us. Most of it, I suspect, though this is an empirical question, benefited the rest of us. I’m thinking of Facebook execs, Google execs, Lebron James and Lady Gaga. They’ve done wonderfully well in the last 20 years because they have a very large market for their skills.

Stop whining about inequality, per se. If it bothers you, get to work, get a skill, start a business and tell your representatives to stop bailing out losers in the financial sector.

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