This article is republished with permission from the Foundation for Economic Education.
There’s a fierce battle going down in Alabama, and unlike most of the state’s skirmishes, this one does not revolve around football.
Instead, the arena is Amazon’s Bessemer, Alabama warehouse where employees have taken a vote on whether or not to unionize. It’s unclear when the final count will be tallied, but the process is underway.
The event has drawn national attention as the power of unions has languished in recent decades, especially in the South. Given Amazon’s size and prominence, many believe a successful vote in Bessemer would have a ripple effect on other Amazon locations, the technology sector, and perhaps the entire South.
Smelling blood in the water, prominent Democrats have been investing a lot of time, money, and energy in the effort, with Senator Bernie Sanders holding pro-union rallies in the town.
For its part, Amazon is not taking the effort lying down.
Amazon’s Consumer Chief, Dave Clark recently stated, “If you want to hear about $15 an hour and health care, Senator Sanders will be speaking downtown. But if you would like to make at least $15 an hour and have good health care, Amazon is hiring.”
Clark and other leaders at Amazon have told workers that they might sacrifice certain benefits if the push succeeds. And a glance at history indicates that these warnings are not hollow.
Here are the top three ways workers would actually be worse off if the vote to unionize prevails.
1. Unions Reduce Real Wages and the Number of Jobs
In economics, we often talk about the law of demand. It’s a relatively simple principle that shows that, as the price of a good or service increases, the quantity of that good demanded decreases. So when the cost to hire an employee goes up, companies will naturally hire fewer workers.
This is an inescapable reality. Unions artificially push the price of hiring an employee upward, and thereby reduce the number of jobs in the economy. This hurts all non-union workers.
There is also reason to doubt that unions cause average real wages to rise.
As FEE’s founder Leonard E. Read said, “Regardless of their claims, unions have had no more to do with the general level of wages than with the general level of the seven seas. They have, it is true, succeeded in obtaining increases for their members at the expense of nonmembers; they have destroyed property and done other damage to their employers; and they have thrown many of their own members into unemployment.”
If unions cause wages to rise at all, it is for the few at the expense of the majority.
Pushing companies to pay employees more than their productive value would otherwise demand also harms real wages in another way. Companies pass the increase in pay on to the consumer, making products more expensive and decreasing the buying power of all workers.
2. Unions Trample Freedom of Association
If unions had to be summed up with one word, the most appropriate would likely be “coercive.”
In practice, today’s unions are powered by force. To keep their wheels turning they rely on all kinds of government incursions into the market to set the playing field to their advantage. One way they do this is by frequently working to eliminate the ability of non-union workers to secure employment in jobs they would otherwise be eligible for.
Most recently, unions have backed the PRO Act in Congress (which passed the Democratically-controlled House of Representatives). This is an especially troubling piece of legislation that would restrict independent contracting and attempt to push workers into full-time, union-controlled employment (or more likely, out of work altogether). The bill would also force employers to violate the privacy of their workers and hand over personal information to union organizers.
Unions already tried to implement a similar law in California but failed at the ballot box. They then sued over the election results, seeking to overthrow a landslide vote—showing they aren’t actually all that concerned with democratic processes.
Further, unions work to prevent the association of non-members and members, block employees from negotiating on their own behalf, and prevent workers from choosing alternative forms of group negotiation.
3. Unions Undermine Innovation and Competition
Unions can only work to exploit the capital that has already been invested in an industry or a company, they cannot create more of it. Because unions cause companies to produce less of a profit, and because they are also often a drain on productivity, these companies struggle to attract new investments.
A paper published by the National Bureau of Economic Research found that the average effect of a union win at a workplace is to decrease the market value of the affected business by at least $40,500 per worker eligible to vote (based on monthly stock prices for 24 months before and after a vote to unionize).
As part of their benefits package, Amazon offers employees stock options, meaning that many of their employees would be harmed and lose investments should the stock of the company decrease.
This lack of new investment also leads to a decrease in expansion, modernization, and maintenance—all of which ultimately reduce competition in a market.
There’s No Reason to Repeat History…
Unions have been losing ground and popularity for many years, and for good reason. They are coercive, stifling, and a net drain on our economy. Having failed to convince the majority of workers or voters of their value, unions are increasingly turning to government intervention to entrench their power.
The late, great Alabama football coach Paul “Bear” Bryant once said, “When you make a mistake, there are only three things you should ever do about it: Admit it. Learn from it. Don’t repeat it.”
Too many American workers have made the mistake of unionizing. It’s time we learn from our history and stop repeating it.