Labor Union's Negative Impact On The Economy

In the paper you will learn how unions negatively impact the economy. For those who are unaware of what a labor union is, it is an organization of workers dedicated to protecting members’ interest and improving wages, hours, and working conditions. Unions were created to protect the workers from being taken advantage of and unsafe working conditions; however, through many decades they have become corrupt and harmful to the economy. There are many effects of the union that ties together in some way; however, there are three that affects the community in a massive way. You will be informed how the union negatively impacts education, how its presence condemns firms and industries to decades of struggle, and how they ultimately cause taxes to rise. Unions in the workplace may be considered a good thing for employees, but they have a negative effect on the economy. The biggest issue that parents would find alarming is the negative impact on the education system, because children rely on teachers for academic growth. American Federation of Teachers, the U.S Teachers’ Union, consistently undermines efforts at badly needed education reform. During the 1980s and 1990s, teachers’ salaries increased while the number of students per classroom decreased. The U.S. spent nearly 300 billion dollars per year on education, yet students continued to struggle to meet minimum proficiency standards in reading, math, and other basic skills (Pearson, 2016). Well aware of their contributions, this is not a ploy to undermine the importance of teachers. However, unions keep the education system stagnant, because there are no incentives for competition amongst teachers to achieve greater heights with students. Unions are more favorable for salaries that reward veteran teachers over teacher achievements, even when such a way do not appear to produce increases in student achievement outcomes. One should ask …show more content…
Unions have condemned many firms and industries to decades of struggle. Unionized wage does not appear out of nowhere, but they are taken out of business revenue. Unionized companies must raise prices to compensate for unions’ cost, which causes them to lose customers in the process. Unions also have a hand in reducing company investments. Lower investments hinders the competiveness of unionized firms, which in time reduces jobs. Economists would expect reduced investments, coupled with the intentional effort of the union cartels to reduce employment, to cause unions to reduce jobs in the companies they organize (Sherk, 2009). Union contracts gives employees group identities instead of treating them as individuals, and they do not allow employers to base pay on individual performance but on seniority. For those of you individuals, who are hard workers and give your all, would you want someone who slacks off to make more money than you simply because they have been at the job …show more content…
Hiring takes place when company wages fall or the demand within a company increases. If union contracts keep wages falling in a recession, the market process that encourages hiring and begins the process of recovery is impeded. Labor Cartels attempt to reduce the number of jobs in an industry in order to raise the wages of their members (Sherk, 2009). There are policies such as, Employee Free Choice Act, which was created to expand union membership whether workers were against it or not. Economic research has demonstrated that policies adopted to encourage union membership in the 1930s deepened and prolonged the Great Depression (Sherk,