Monday, March 29, 2004


It's the irony of the year that the AFL-CIO stopped in Greenville to hold a "Show us the Jobs" rally this weekend. It is organizations like the AFL-CIO that advocate such job-killing measures as forced unionization and living wage laws that end up increasing unemployment.

It is a pretty well-established fact in the world of economics that unionization, especially forced unionization, increases unemployment. Why? A brief explanation: unions limit the size of the workforce because they require higher wages to do jobs that could be done at lower wage levels. The result is that the supply curve of labor is skewed by higher-than-market wage levels. Employers, in order to remain profitable, are able to hire fewer people with the same amount of money. Therefore, some workers get more money per hour, but fewer workers are employed, increasing unemployment.

There has been an extensive amount of research on "right to work" states where forced unionization is outlawed (you can't be required to join a union in order to work in a union show in a right to work state). Right to work states have seen faster rates of growth in employment, wages, and decreases in poverty rates that non-right to work states do not show.

In addition, organizations like the AFL-CIO advocate in favor of so-called living wage laws, requiring companies and government units to pay higher wages. Again, economists understand that the minimum wage increases unemployment (due the same principle as unionization), but the living wage magnifies the problem. Increasing wage levels artificially through regulation distorts the labor market and, once again, forces employers to hire fewer people, once again increasing unemployment.

And the real sticker is that those hardest hit are minorities, unskilled laborers, and the disabled, since they are the first to go when these types of laws go into effect. Why hire someone who doesn't have the skills at a high wage when you can find someone who does and pay the same?

So, go ahead AFL-CIO and drive the big bus around getting people whipped up into a frenzy over job creation, but know that you're a big part of the problem.

No comments:

Post a Comment