AEI: More Unions Means Fewer Jobs

In April Lee Ohanian of the American Enterprise Institute published a paper on the Employee Free Choice Act (EFCA) that is a must read. But this month he published a shorter piece that is just as interesting. In it, Ohanian claims that if we increased unionism as the Obamaites want to do, we’d actually lose jobs; 4.5 million of them to be precise.

Obama has spent his entire year in office (hard to believe this much destruction only took a year) looking for ways to pay unions big dividends and despite that Congress has been dragging its feet on unions’ most cherished legislative agenda, the EFCA, Obama has been bending over backwards for them (as we discussed here).

Despite that the EFCA isn’t yet a reality, Ohanian reminds us that unions have already damaged the nation under Obama. And they want more. If they get more, though, we will really be in trouble.

Those that want more unionization claim it is necessary to raise wages. Instead it will further depress the economy. My research suggests that if unionization rates returned to 1970s levels (roughly in the mid 20% range of the private work force), and if new unions could achieve the same wage premium as existing unions have achieved over nonunion workplaces, then employment could decline by about 4.5 million and real GDP could fall by about $500 billion per year.

The American economy is in bad enough shape without this sort of onerous force applied to it. But why is this all true? What did Ohanian base his conclusions on? Ohanian maintains that union wages hamper competition, small businesses would be severely impacted by spreading unions, and less educated workers would find it even harder to get work. Ohanian says that increased unionism will mean that job loss will “tend to fall disproportionately on the lowest-paid workers.” All this will tend to destroy jobs, he says.

So, in this day and age, unions are bad for us all. And why is Obama pushing unionism on the nation? How about the $450 million that unions spent getting him elected, for a start?

On any case, go on over and give Mr. Ohanian’s piece a read.

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