Posts Tagged ‘unions’

Hazlitt on Unions

Wednesday, June 17th, 2020

In his free-market classic, Economics in One Lesson, Henry Hazlitt rightly points out that the fundamental driver of higher wages is the productivity of labor (basically, the ability of people to produce more with better capital), not unionization or labor laws. Yet Hazlitt also points out, “The central function they [unions] can serve is to assure that all of their members get the true market value of their services.” He notes that people are not always fully informed. An employee “is, individually, in a much weaker bargaining position. Mistakes of judgment are far more costly to him than to an employer.” Employers often hire hundreds or thousands of people. “But if a worker mistakenly refuses a job in the belief that he can easily get another that will pay him more, the error may cost him dear. His whole means of livelihood is involved. . . . When an employer’s workers deal with him as a body, however, and set a known ‘standard wage’ for a given class of work, they may help to equalize bargaining power and the risks involved in mistakes.” But when unions get special government-backed powers, Hazlitt continues, they tend to raise (nominal) wages above market rates and cause unemployment.

Colorado Government Collective Bargaining

Wednesday, June 17th, 2020

The Colorado legislature passed a collective bargaining bill for state employees. Saja Hindi writes, “Colorado Workers for Innovative and New Solutions, the union representing more than 28,000 state employees, called the bill a win after a 12-year fight to allow collective bargaining with the state, helping to address issues of systemic inequality for workers who have traditionally been excluded from the right to organize.” Amazingly, Hindi apparently could not find a single person to criticize the bill. The basic argument against collective bargaining for state employees is that it allows government employees to negotiate with other government employees about how to spend other people’s money. And state employees already constitute a solid pro-spending voting block. So the dynamics are substantially different than they are with a private business. I don’t have any comments at this point specific to the bill at hand, HB20-1153.