Score for the Middle Class…. Right?

By Joanna Solloway

In the midst of the presidential elections, AFL-CIO announced that workers at First Transit Region 3 overwhelmingly voted to form their own union with the Amalgamated Transit Union (ATU) Local 757.  The honorable objective of this new union is to give a stronger voice to Region 3 in efforts to promote collective bargaining between the employees and the employer.

But what of the effect on the economy? AFL-CIO argues that unions are capable of achieving higher wages and benefits for its members, thus strengthening the middle class. However, economic research, as well as common sense, provides that the money to support increased wages and benefits must come from somewhere – and somewhere is not only the inflated salaries of company executives.  Unions operate by limiting the total number of jobs in the economy, which allows union member to achieve higher wages and other benefits. In other words, if an employee is not in a union, he or she might be shut out of a job altogether. In addition to harming nonunionized workers, employers might try to pass some of the increased labor costs to the consumer.   The problem with this solution is that the employer then becomes less competitive and then runs the risk of going out of business altogether. As a result, employers are loathe to increase the prices of their goods and services to consumers. Research abounds regarding the union employer relationship and the potential benefits and harms that unions provide.

As for Region 3, First Transit is a large, international employer that already works with many unions across the country.  Region 3 workers admittedly received less pay then their unionized counterparts.  Perhaps the company can absorb the region’s increased labor costs with little trouble. Perhaps it can pass costs on to its customers without becoming less competitive. Of course, this assumes that both First Transit and Region 3 are willing to negotiate to reach an agreement.  Otherwise, as was the fate of Twinkie lovers everywhere, the disabled and elderly consumers will pay the price.