Unions help businesses, but even if they’re right, inequality outweighs---creates long-term economic risks and drags society

But unions are by no means all bad for business. In representing worker interests, they can help make a company a more attractive place to work, reducing turnover and increasing employees’ commitment to business success. Higher union wages and benefits also attract more job applicants, allowing management to select the best workers.

But a benefit to society

Most importantly, from a societal point of view, unions reduce pay inequalities. They increase the relative pay of lower skilled workers. They help to establish pay norms that extend beyond unionised companies.

Inequality is bad for economic growth, because it discourages investment in education and innovation.

It is bad for democracy. It widens social divisions within societies and reduces participation and political engagement. It drives the rich to oppose democratic reforms that might lead to wealth redistribution.

The increase in inequality in wealthy nations as union membership has declined over the past half century suggests unions are a pivotal institution for promoting equality. In OECD nations the average rate of unionisation was about 46% of the workforce in 1980. By 2015 it was 27%.

Meanwhile, the average income of the richest 10% of the population in OECD countries is about nine times that of the poorest 10% – up from seven times 25 years ago.

The trade-off of lower profits and reduced managerial autonomy, with managers forced to work harder as they negotiate and compromise with unions, should be considered a cost-effective price to pay relative to the long-term costs of rising inequality.

So Alfred Marshall, a founder of neoclassical economics, had a point when he said in 1890 that trade unions “benefited the nation as well as themselves”.