Sunday, September 11, 2016

Devious Union Efforts

A Don Boudreau  letter to the Washington Post:
In “5 Myths about unions” (Sept. 2), Moshe Marvit argues that labor unions help all workers, not just labor-union members.  To support this claim, he writes that “Groups like the Service Employees International Union have spend millions in a fight to raise the minimum wage to $15 an hour, even though they are unlikely to get an increase in membership in the short term.  Call it the tide that lifts all boats.”
Mr. Marvit’s analysis is superficial.  Had he analyzed more deeply he would have discovered that low-skilled, lower-paid workers often are substitutes for higher-skilled, higher-paid workers (such as SEIU members).  Firms often find that certain jobs can be done at lower costs with larger numbers of low-skilled, lower-wage workers than with smaller numbers of higher-skilled, higher-wage workers.  Because raising the minimum wage does not increase low-skilled workers’ skills but does increase firms’ costs of using low-skilled workers relative to the costs of using smaller numbers of higher-skilled workers, lobbying for minimum-wage hikes is a means that labor unions have long used – and use still – to artificially eliminate the competition that low-skilled, lower-wage workers pose both today and tomorrow to these unions’ relatively well-paid members.
Suppose that George Will, E.J. Dionne, Maureen Dowd, David Brooks, and other prominent newspaper writers organized to lobby the government to force all newspapers, magazines, websites, and other publications to pay even the greenest of writers wages and fees much closer to those paid to highly skilled writers such as Will, Dionne, Dowd, and Brooks.  Would Mr. Marvit interpret this effort as a magnanimous gesture by these high-income writers to help their lower-paid comrades, such as Mr. Marvit?  Or would Mr. Marvit see this move for what it really would be: a devious effort to drive from the market the competitors of these high-paid writers?
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University

The above originally appeared at Cafe Hayek

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