Do Unions Make Us Less Competitive?

“If Americans want to live the American dream, they should go to Denmark.”

Over the Thanksgiving holiday I was a part of the usual family dinners and of course the subject of current events get brought up. One subject discussed was the decline of American manufacturing and competitiveness. One family friend declared:

It’s all the unions’ fault!

I understand the logic behind his thoughts: Unions ensure higher wages and benefits, the workers get lazy, making it more productive and cost effective to manufacture somewhere else where unions don’t exist.

But is that really true? Doesn’t seem like it.

Countries that are more competitive than the US have some of the highest rates of union membership.

I swear I’m not shitting you. Even I was surprised at what I found.

The World Economic Forum ranks countries by global competitiveness on a yearly basis. Here are the results for 2010.

The OECD collects useful statistics on countries. Here is a list of countries organized by union membership density.

Here are the top 10 countries ranked by competitiveness. To the right is the latest union membership density for that particular country:

1     Switzerland        17.8%
2     Singapore           N/A
3     Sweden              68.4%
4     Finland               70%
5     United States     11.4%
6     Germany            18.6%
7     Netherlands       19.4%
8     Denmark             68.8%
9     Japan                 18.4%
10  UK                       26.5%

What surprised me was how high the union membership rates were for countries like Sweden, Finland, and Denmark. You’d figure that countries with almost a 70% union membership would rank very low in competitiveness. Quite the contrary. These countries are some of the most competitive in the world and rank higher than the US.

Curiously enough, GDP powerhouse France is ranked way down at number 18 in competitiveness right after Saudi Arabia. Surprisingly, it’s union membership rate is lower than the US at 7.6%!

I think it’s pretty safe to say that union membership rates don’t affect a country’s competitiveness. In fact, it looks like it helps!

The Auto Industry

Usually the dinner table discussions about unions digress to the auto industry. Now these days most people in the US prefer Japanese-made over US-made cars. The narrative here in the US has been that it was the unions fault.

However, I learned that Japan has had an autoworkers union since 1972.  It has 770,000 members. That’s twice that the United Auto Workers union here in the US which has 376,000 members.

Again, if unions stifle competitiveness, how could Japan overtake the domestice auto sales in the US with a union membership twice that of the US?

Income Inequality

I posted a TED talk above about income inequality. You should watch the whole thing. Here in the US we have had an unprecedented rise in income inequality.

So what? Well, the speaker in the TED talk makes some really good observations on how income inequality is correlated with health, murder rate, trustworthiness, mental illness, and other societal characteristics.

The countries that rank the best on income equality are Denmark, Finland, Sweden, and Japan: Countries with very high union membership rates. Here in the US, studies have shown the rise in income inequality is correlated with the decline of union membership which was around 30% in the late 1970’s.

So what does this have to do with the VFX industry? Well it’s further evidence of the epiphany that I had when I was a member of The Animation Guild. I used to be anti-union but when finally getting a chance to be a member and seeing what the union did for me by providing portable health and retirement benefits and the enforcement of labor laws, I strongly felt that is could be a solution that not only makes our lives better, but makes us more competitive.

Soldier On.

11 Responses to Do Unions Make Us Less Competitive?

  1. Dave Rand says:

    The powerful in America will spoon feed you to believe that unions are evil and the root of all labor problems. America used to lead the free world with our high standard of life, Now we’ve become the plaything of corporations. I find it interesting that the capitalism of the studios requires the socialism of the shops, having them chase subsidies like a toy rabbit, running like dogs until they collapse. Ironically this is killing their own bottom line as more and more inefficiency spreads through our sector.

    We’ve been babied into thinking that if we unionized we’d see a dramatic increase in outsourcing….well guess what? Joke’s on us.

    Why is this happening? The same reason most theater owners claim their only profit margins come from the sale of concession popcorn and candy. Those that want you to believe that organization and leverage are bad for us are the most highly organized and leveraged corporations in America. Even strong enough to take IATSE’s “drive” and implode it like bad Goldman derivative…..like a child that plays with it’s toy until it breaks it.

  2. meh says:

    ‘If the corporate brand is protected of the WTO then so should the workers rights who works for the multinational corporation.’

  3. Dion says:

    I worked as a carpenter in SF in the early 90s for a union contractor. Rates were higher but they had great tradesmen and would stand over their work. I am not a carpenter, as much as I enjoyed the work, I went back to college and got and couple of degrees. What unions do is to promote craftsmanship and ensure right first time. This a more efficient and provides better quality. I am in senior management and realise the importance of union labour. It actually improves productivity throu better work practices and better work ethic as employees feel that they have a vested interest in what they produce. Viva la Union

  4. Scott Ross says:

    It’s not ALL the Unions fault…. just like it’s not ALL the Republicans fault…. it’s ‘greed, mistrust and self interests’ fault. It’s lack of leadership’s fault.

  5. […] The reality of course is that none of this is true. Forbes had an article about German auto workers: They are  all unionized, produce twice as many cars as the US, and are paid twice as much. I also found that the most competitive countries in the world have the highest rates of union membership: Do Unions Make Us Less Competitive? […]

  6. […] most competitive countries in the world (which I pointed out a few months ago as also having the highest percentages of union membership) limit the number of hours a worker can work in a week: In six of the top 10 most competitive […]

  7. […] Do Unions Make Us Less Competitive? […]

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