From the desk of Stephen Cabot: According to research conducted by Lee E. O’Hanian, a professor of economics at U.C. L.A., increased unionization will increase unemployment, reduce productivity, and depress economic growth. Increased unionization is the goal of President Obama’s appointees on the NLRB. Its most notorious member, Craig Becker, wrote in 1993 that the NLRB can re-write union election rules without getting the approval of both houses of congress.
In a recent Wall Street Journal editorial (www.wsj.com), Professor O’Hanian wrote: “My research suggests that if unionization rates returned to 1970s levels…and if new unions could achieve the same wage premium as existing unions have achieved over non-union workplaces, then employment would decline by about 4.5million and real GDP could fall by about $500 billion per year.”
The professor provides an apt analogy: When businesses become monopolies, they fix prices. When unions establish base wages and benefits, they force other companies to meet artificially inflated union standards. The effect is to cause small business to hire fewer workers, thus reducing profitability and productivity. Professor O’Hanian points out that “about 55% of union elections occurred at businesses with 30 or fewer employees between 2003 and 2006.” When such small companies become unionized, their profit margins shrink and there is little or no opportunity to hire new workers.
It is a shame that President Obama, who appointed Craig Becker and other pro-union advocates to the NLRB, does not understand how injurious his actions will be to workers, corporate America, and the overall economy.