Sunday, April 3, 2011

Unions Create Economic Inefficiency

Unions help employees for the short term in getting wages and benefits, often beyond what supply/demand would provide. But the same employees may not be better off in the long run. Not if their jobs become insecure, as a result.

With unionism, there is often an arrangement forced on employers that has little to do with economic requirements or sense for work done. So there is frequently a poor allocation of economic resources.

In economic life for the long run, employees get what they are worth to an employer. The law of supply and demand works. If your skill is needed, an employer will pay dearly for it. If the worker cannot provide value, the job will pay less or disappear.

Unless it’s subsidized by the consumer or taxpayer.

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