Maybe Not Everything Unions Do Is Good

See Do Labor Unions Promote the Middle Class? posted by David Henderson at EconLog. Excerpts:

"But because the unions drive wages above competitive levels, they cause some of the workers to be put out of work. Many of these workers would have rather driven their own bargain and worked for a lower wage, but they can't do so legally.

What do these workers do? Sit and eat bon-bons the rest of their lives? No, they go out and find other work. If they find work in the non-union sector, that drives down wages there. Indeed, one of the main findings of the late H. Gregg Lewis, the famous labor economist at the University of Chicago, is that unions in their heyday, the 1950s and early 1960s, caused union wages to be 10 to 15 percent higher and non-union wages to be 3 to 4 percent lower.

But what if unions did have the effect that Hacker and Pierson claim? This "threat effect" would undercut my claim above. But to see how, let's take an extreme. Let's say that every non-union employer, seeing the threat of unionization, raises pay and benefits a little. They, just like union employers when faced with a higher wage, will employ fewer people. Then those people put out of work by unions will have more trouble finding work. The wages of those who are working will be higher--and there will be fewer of them. The wages of those who are not working will be zero. Will you have a bigger middle class? Possibly. Will you have a larger lower class with people, especially younger people, having much more trouble finding work? Definitely."