[sshine]

Yes, unions can be protectionist about their work force, but there are international worker unions; maybe this is a European thing.

An econ 101 observation: unions contribute to structural unemployment: Keeping wages above market-clearing levels, and by preventing wage adjustment.

Through collective bargaining, unions can negotiate wages that are higher than what the market would naturally set. This can lead to the cost of labor being too high for some employers, resulting in fewer jobs. Similarly, unions can prevent wages from adjusting to market conditions.

So for the common good, individuals may go without a job.

[brendoelfrendo]

The econ 101 observation feels like it falls apart under light scrutiny. The market sets a rate, but which rate is more "natural?" When individuals negotiate directly with employers, they tend to be at a disadvantage. An individual has less knowledge and bargaining power than an employer in almost all cases; so can we call the rate set by these negotiations to be the "natural" rate? Conversely, when bargaining collectively, employees are able to pool knowledge and resources to bargain more effectively, and they have more leverage as a group which allows them to negotiate on a more even field to the employer. I would consider this outcome to be more "natural," and would argue that it is not that collective bargaining results in higher wages than the market would set but that individual bargaining results in wages that are artificially lower than those of the market clearing rate.

[wat10000]

Unions are part of the market like anything else. If wages are higher, they aren't above market-clearing levels, those are the new market-clearing levels. If workers form a union and bargain collectively, that is what the market naturally set.

Do you apply the same argument for employers? Companies contribute to low wages. By collectively bargaining with employees (e.g. hiring at the local grocery store is centralized, you can't go around to all the individual managers and start a bidding war) they can negotiate wages that are lower than what the market would naturally set.

[abdullahkhalids]

For markets to operate well, prices must be easily accessible by both buyers and sellers. Since corporations do their utmost to ensure that workers don't discover wages and salaries of their peers, corporations suppress wages. So, corporations are bad for the common good.

[_DeadFred_]

And I bet COSTCO membership-based, warehouse-club model is a bad thing too, since they are able to negotiate prices lower that what the market would naturally set?

[Daishiman]

> An econ 101 observation

Econ 101 observations are utterly useless without the specific context in which they're made. This is like talking about spherical cows in a vacuum in the context of aerodynamics.

In the specific case of unions, they always forget to mention that a higher proportion of a company's income going to salaries generally means increased consumer spending for workers, which spurs other kinds of industry and services that may mean a net benefit for the global economy.

Of course second and third-order effects are not really talked about in Econ 101.

[sshine]

> second and third-order effects are not really talked about in Econ 101.

Exactly, the purpose is to teach concepts, not the whole picture.

[Daishiman]

The problem is that second and third order effects _are_ the concepts in many cases.