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The Economic Cost of Unions: $50 Trillion
Daily Policy Digest

Economic Issues / Unions and Productivity

Friday, February 07, 2003
While there are no doubt many individual members of labor unions who feel they have benefited from collective bargaining, the overall evidence is overwhelming that labor unions in contemporary America have had harmful aggregate effects on the economy.

  • The economic cost of unions (determined by combining lost income and output over the period 1947 to 2000) exceeds $50 trillion, according to estimates by economists Richard K. Vedder and Lowell E. Gallaway.
  • Unionization lowers incomes for all, albeit more in the relatively higher income states that on average have higher levels of unionization.
  • A state with a 10 percent unionized work force can expect a 0.7 percent increase in its unemployment rate.
  • For each four additional workers who become unionized, one less person works.
In the final years of the 1990s, the decline in union density in the private sector has been sharp, adding to the vitality of the economy at the beginning of the new century. As a result, there has been renewed economic growth and a rising proportion of the working age population that actually works.

Source: Richard K. Vedder and Lowell E. Gallaway, "Do Unions Help the Economy? The Economic Effects of Labor Unions Revisited," Government Union Review, Volume 20, Number 4, December 2002, Public Service Research Foundation.

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