Pros & Cons of Union Representation from Individual, Organizational and Society Perspective

1627 Words Jun 1st, 2013 7 Pages
Pros & Cons of Union Representation from Individual, Organizational and Society Perspective

The rise of unions from the 1930s through the early 1950s was due to the convergence of a number of events, an economic policy that attempted to restrict competition beginning in the 1930s, the belief that labor markets were noncompetitive and that individual workplaces were unfair and union premiums were low. The passage of favorable legislation, in the form of the Wagner Act, was a reflection of the idea that unions could actually improve the functioning of labor markets and serve as a countervailing power to big business. Over the past several decades, union membership has declined because government policy became pro-competitive, it
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The result is there are few industries of the economy that are insulated from competition. As a consequence, these industries will not serve as a source of reliable rents for business and labor to negotiate over. Increased competition produces more winners than losers, but it does produce losers. Among the losers are the companies and their employees with cost structures that are above those of competitors and potential entrants. My thought is that unions do indeed raise wages above competitive levels. For a time, some researchers contended that the increase in union wages reflects an increase in productivity, but there has never been any reliable evidence to support this conjecture. The result of the wage premium is to put unionized firms at a competitive cost disadvantage. All else equal, one would expect that the union compensation premium would decline as industries became more competitive. In fact, the reverse occurred, particularly over the 1970s and early 1980s. Although the union wage premium has declined from historically high levels reached in the early 1980s, the premium or percentage wage differential is still above levels existing in earlier decades. In other words, while the American economy is much more competitive than say in the 1950s or 1960s, union wage premiums are higher today. The private-sector