Wednesday, March 24, 2010

Union Demands and Economic Inefficiency

Unions help employees for the short term in getting wages and benefits beyond what they may get elsewhere. But the same employees may not be better off in the long run. Not if their jobs are insecure, as a result. The work contracts may be such that there is a tenuous form of permanency.

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

In real economic life and in 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 for it.

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