Unions have zero effect on manufacturing productivity---300 studies prove
Doucouliagos ‘19 [Chris Doucouliagos, Professor of Economics, Department of Economics, Deakin Business School and Alfred Deakin Institute for Citizenship and Globalisation, Deakin University, 5-8-2019, "Unions do hurt profits, but not productivity, and they remain a bulwark against a widening wealth gap," Conversation, https://theconversation.com/unions-do-hurt-profits-but-not-productivity-and-they-remain-a-bulwark-against-a-widening-wealth-gap-107139, St. Mark's School of Texas, Ashrit Manduva '24]
Some advocates of laissez-faire capitalism argue that trade unions are bad for productivity. “With few exceptions,” according to one American economist, George Reisman, “unions openly combat the rise in the productivity of labour.”
Other economists disagree. “Unionisation and high worker productivity often go hand-in-hand,” say Harley Shaiken and David Madland. “Fairness on the job and wages that reflect marketplace success contribute to more motivated workers.”
So who’s right?
To answer this question, my colleagues Richard Freeman and Patrice Laroche and I surveyed the global evidence from more than 300 studies on the economic impact of unionisation.
We conclude that unions do not, overall, reduce productivity, though it varies according to specific circumstances.
Unionisation does make businesses less profitable for the owners. But importantly, it also reduces income inequality, a useful social function given the problems that flow from a widening wealth gap.
National differences
Productivity refers to the efficiency of turning inputs into outputs. It’s a key measure of economic performance. A nation’s productivity raises its per capita GDP.
The evidence from Australia is too thin to draw a credible conclusion (there are just a handful of studies), so our overall findings reflect evidence from other nations.
That evidence is mixed. In Britain, for example, union influence has reduced company productivity. In the US, unionisation appears to be associated with higher productivity in the construction and education sectors, but has made no difference in manufacturing. In developing countries, the overall effect is generally positive.
Such differences can be explained by variations in labour market institutions. These include employment protections, minimum wages and unemployment benefits. Laws influence social attitudes, and vice versa, which in turn affect relative negotiating power and whether unions and employers value cooperation over conflict.
In theory, the more labour and capital cooperate, the more productive an enterprise is likely to be, providing higher wages and greater job security to workers and higher profits to shareholders. Less cooperation means lower productivity.