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In my latest column for AIER I do my best to debunk the economically uninformed notion that American workers need labor unions and collective bargaining to ensure that they are paid fairly [2]. Here’s my conclusion:
Proponents of labor unions correctly insist that workers need bargaining power to ensure that they are paid fairly. But these proponents incorrectly believe that individual workers have no bargaining power. In nearly all cases in fact, each worker’s freedom to quit a job and to search for and to accept another job – combined with employers’ freedom to employ whomever they choose – gives to each worker the bargaining power necessary to keep his or her pay equal to the value of his or her productivity.
In short, the surest source of bargaining power for workers is not collective bargaining but, rather, other and better employment options. Therefore, if America really is filled with underpaid workers, before letting politicians and pundits who express this belief put other people’s money where their mouths are, let them put their money where their mouths [3] are by launching new businesses that can profitably employ today’s underpaid workers. If these politicians and pundits are correct, they have nothing to lose and – along with American workers – everything to gain.