Battle Over Union Relevance Wages On This Labor Day

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Labor Day isn’t just a celebration of the American worker, it’s a tribute to the labor movement, but this year supporters and critics are debating whether unions are still relevant in modern America.

Labor Department Secretary Tom Perez is one of the more vocal supporter of organized labor. Last month he took time to write an opinion piece for Medium about how important unions are to the American worker. He argued the decline of union membership in recent decades is the reason the share of income going to the top 10 percent has steadily climbed. He also noted union workers make about $200 more than non-union workers.

In the weeks leading up to Labor Day, unions were quick to use the argument to highlight their importance. Randy Johnson, senior vice president of labor at the U.S. Chamber of Commerce, on the other hand, took issue with the claims.

“There’s a lot more to the story,” Johnson noted at a Labor Day conference Thursday. “There’s a fundamental problem with what the unions are selling.”

The problem is Perez made his claims by using data in a misleading way, argues Johnson. The Bureau of Labor Statistics (BLS), which originally published the data, noted the income levels it states do not control for many factors such as geographic, demographic and occupation. It was more meant to be a general view on wages.

“He has misinterpreted the data,” Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute and director of Economics21, noted to The Daily Caller News Foundation. “He’s trying to persuade people to join unions.”

At the same time, a different debate on how unions impact wages has formed between the Heritage Foundation and the Economic Policy Institute (EPI). This time involving the impact of right-to-work laws. The policy, which has become law in 25 states, outlaws mandatory union dues or fees as a condition of employment. While EPI claims workers in right-to-work states get paid less on average, Heritage argues the assertion is misleading.

After several months of going back and forth on the issue, Heritage scholar James Sherk held a press conference last week to reaffirms his findings. According to Heritage, EPI needs to adjust for cost of living. Once that is factored in, the difference in wages disappears. Essentially, right-to-work states may have lower wages but it costs less to live in them.

“In there I address his concerns on cost of living,” Elise Gould, a senior economist at EPI, told TheDCNF. “We tried some different ways.”

Gould noted in response to Heritage’s criticism, she went back and looked at the numbers again. After running them in several different ways, she found her original findings to be true. That workers in right-to-work states make less. The debate is likely to continue with both Heritage and EPI sticking to their findings.

Union got good news in the weeks leading up to Labor Day as well. According to Gallup, their approval jumped to 58 percent after nearly a decade of dismal numbers. According to the poll, up until this most recent spike, unions have struggled to come close to the 60 percent approval they enjoyed prior to 2009. Unions touted the findings as yet another reason they are still relevant. The poll does, however, leave out one critical piece of information. Despite union approval going up, their membership rates are still going down.

“There are many reasons why there’s been a decline in union membership, probably the biggest one is a lot of benefits unions used to bargain for are now provided by the government,” Johnson also noted.

Another reason, Johnson states, is that employers have done a much better job at being fair to their employees. This makes it incredibly difficult for unions, which are supposed to protect workers from their bosses. The poll may just indicate that people like the idea of unions but don’t actually want to be a part of them. As noted by Furchtgott-Roth, a more accurate way to determine what people think is what they actually do. This is known as of revealed preference.

“When given a choice, they choose not to join,” Furchtgott-Roth stated. “They are losing relevance.”

The decline in membership has prompted action by President Barack Obama. Between the Department of Labor and the National Labor Relations Board, his administration has dramatically changed decades old labor laws. The changes, some have argued, benefits unions while hurting employers and their workers.

“This Labor Day, many Americans will enjoy a well-deserved three day weekend,” Mark Mix, president of the National Right to Work Foundation, declared in a video released last week. “After the festivities, vacations, and beach trips have ended, however, several important fights for employee freedom loom on the horizon.”

As detailed by the Competitive Enterprise Institute, the changes include shortening the amount of time union elections are held and new overtime rules along with a new rule which some argue could undermine the franchise model and contracting. The changes to contracting make it easier for large corporations to be considered employers over the small companies they contract with. This rather then those small companies being considered their own operations that do work with a larger corporation.

“Its much easier to unionize people in large groups,” Furchtgott-Roth stated. “That’s why they are trying to get rid of contracting.”

Despite all this, Furchtgott-Roth notes there still could be a place for unions in modern America. That being job training and making sure workers are able to take on different roles in the same industries. She notes some unions are already doing this and seeing success because of it.

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