Are American Unions Increasing Poverty Rates?
American unions are a major cause of unemployment in the U.S. and they have greatly increased the number of children and families living in poverty by stunting the U.S economy.
In the Concise Encyclopedia of Economics, President Obama’s own former economic advisor Lawrence H. Summers said, “Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy.”
There are reasons other than relatively inflated union workers’ wages and benefits causing an undeniable increase of outsourcing and overseas placement of production facilities from this country – for example high taxes and government overregulation. However, the AFL–CIO, national trade union center, the largest federation of unions in the United States, and other large unions, are major culprits.
While American steel companies, automobile production and other traditional industries continue to downsize and increasingly outsource production of components, unionized Green companies like Solyndra are failing within months of receiving massive, low-interest loans from the federal government that amount to taxpayer-funded union slush funds. Solyndra was touted as a successful Green company by President Obama months before the company went belly-up and left taxpayers to pay the company’s half-billion-dollar government-backed loan. Solyndra claimed it could not compete with foreign companies but where the government money went is the subject of an ongoing FBI investigation.
In the U.S., unionized workers are on average paid much higher wages than non-union workers and generally receive superior benefits and pensions. The result of such artificial wage inflation through union negotiations, strikes, political campaign donations and sick-outs is that American companies lose the ability to compete with foreign companies. The relentless phenomenon of economically downsizing America is no longer a 600-pound gorilla that voters can simply ignore. American companies are moving entire operations overseas and outsourcing jobs to foreign companies leaving more and more union workers and non-union employees standing in the unemployment line or permanently unemployed. Many recent polls indicate that Americans’ patience and empathy for union strikes and protests are wearing thin.
States like California are choosing Chinese companies to supply major U.S. infrastructure because unionized American companies can’t compete. For example, over $6 billion of a $7.2 billion contract to rebuild the Oakland –to-San Francisco bridge was awarded to the Chinese because unionized American companies could not successfully compete. The massive steel work for the bridge was built and assembled in China and shipped to California on Chinese vessels while American unionized companies sat on their hands. Americans were relegated to assembling and paving the complex new bridge.
If unions remain strong, expand and continue to demand inflated wages and benefits for union bosses and their workers, an ever-more globalized economy will continue shrinking the share of jobs available to unionized workers and other Americans.
The results will include permanently higher unemployment, soaring government deficits, double-dip recessions and further increases in American poverty rates. The situation will surely become more severe for the U.S. and most of Europe as more developing nations offering the same products for less enter a global economy in mass.
Unionization is the 600-pound gorilla in the unemployment line and it doesn’t discriminate between union workers, non-union workers or small businesses.