Do Labor Unions Raise Wages:

Dear Ben:

It is an empirical issue. It is not a logical contradiction to say that unions increase productivity. But as a matter of prudential judgement, I don’t think this claim has any merit. There are work stoppages, sympathy strikes, tools downed, bargaining, all of which reduces worker productivity, and, hence, wages.

Best regards,

Walter

From: Ben Bachrach

Sent: Friday, February 21, 2020 7:00 AM

To: wblock@loyno.edu

Subject: Unions effect on productivity

Thank you for participating on the Tom Woods show this week.

Your discussion on unions prompts me to ask the following:

My first job after graduate school was working in Manufacturing Engineering Research for Ford Motor Co.

We would have several capital equipment projects ready for implementation that would reduce direct labor necessary to some manufacture parts. The projects, however, were not approved because the projected cost savings did not meet return on investment objectives.

After each union contract negotiation, we would revisit the projects, and some would get approved because the savings based on the new labor rates justified the capital investment.

Implementing the projects would reduce direct labor hours to make the same output.

Later the union would claim that productivity increased because wages increased.

Were the unions right – they caused productivity improvements?

Regards,

Ben Bachrach

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2:38 am on June 11, 2020