2 + 2 = 5

Another month, another recruitment drive at Tesco in an attempt to encourage as many staff as possible to join the Union of Shop, Distributive and Allied Workers. It is usually a very predictable affair, with my refusal to join coming just seconds after they’ve finished saying their brief piece of recruitment spiel. Sadly, pushing trolleys offers little chance for diversion, so this time I thought I’d pass a bit of time and discuss with him the impact of unions on the labour market, given his insistence on asking me why I refuse to join (aside from the fact I’m only there for another month or so).

Many in unions, including the fellow who was talking to me, are good, decent people who do genuinely want to help those they represent. Yet I was struck by the fact that he seemed unable to move from premises to the conclusions that must follow. He agreed with me that if a wage rate is artificially increased above market-clearing level, then there must be people who are left without employment because their skills do not result in the marginal labour product to justify their hiring. Put a more blunt way, unions benefit those who are members but only at the expense of others, those who are not members. His response to this was, with some justice, that those people could find employment in another job. There are of course arguments on economic efficiency grounds that could be made against having this position, but I didn’t have an opportunity to go into them at the time. The main problem with this view is that the representative of USDAW explicitly supported the full unionisation of the workforce which would increase all wages above equilibrium levels and leave some permanently unemployed. If this is not the case, as would have to be argued to support the view that unions don’t create unemployment, then it seems union membership loses one of its main benefits, viz that they help improve substantially the pay of their membership. The union representative, however, refused to believe this was the case – he supported all the premises I put forward, but still argued that unions don’t cause excess supply of workers in the labour market, for reasons that seemed to elude both he and I. He could see how the impact of unions on a single company or sector, but was unable to apply that logic to the economy as a whole.


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