[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

Internet Connection
UNIONS ON THE INTERNET
The American Federation of Labor–Congress of Industrial
Organization (AFL-CIO) is the largest union organization in
the United States. Its home page is at www.aflcio.org.
Traditional unions such as the United Automobile Workers
(UAW) (www.uaw.org) organize workers in manufacturing
industries. Today, many workers are employed in public-sector
jobs, and AFSCME, the American Federation of State, County
and Municipal Employees, is a major organizer of public-sector
and health industry workers (www.afscme.org).
Though total union membership has fallen, today’s union member is much more
likely to work in the public sector than was true in the past. In 1960, the percentage
of union members working in the public sector was only 6 percent. Today it is closer
to 40 percent, while only about one in ten nongovernmental workers belongs to a
union. Why the recent and continuing decline in union membership among workers
in the private sector?
One explanation is that working conditions for workers—whether as a result of
union pressure or technological progress—have improved enormously. Workers
therefore see less need for unions.
A second reason is related to the changing nature of the American economy.
Unions have declined as the traditionally unionized sectors (such as automobiles
and steel) have weakened, and the service sector, in which unions have been and
continue to be weak, has grown.
Third, unions may be less effective in competitive markets. When competition
is limited, there are monopoly (or imperfect competition) profits or rents. Unions
may be successful in winning a share in those rents for their workers. But when
markets are competitive, firms cannot charge more than the market price for their
goods; and if they are to survive, they simply cannot pay their workers more than the
competitive wage.
In the late nineteenth and early twentieth centuries, for example, high wages in
shoe and textile mills in New England drove plants to the nonunionized South. High
wages also drive American firms to manufacture abroad. Unless unions manage to
ensure that their workers are more productive than average, it is only when these
sources of competition are restricted that unions can succeed in keeping their wages
above average for long. In this view, the increased competition to which American
industry is subjected, both from abroad and from the deregulation of trucking, oil,
airlines, banking, telephone service, and so on, has led to a decline in the ability of
unions in the private sector to garner higher wages for their workers.
A final explanation of the growth and decline of unions is the changing legal
atmosphere. When laws support or encourage unions, unions prosper. When they do
not, unions wither. Thus, the Wagner Act set the stage for the growth of unions
in the 1930s. The Taft-Hartley Act paved the way for their decline in the post–World
War II era.
358 ∂ CHAPTER 16 IMPERFECTIONS IN THE LABOR MARKET