Saturday, October 3, 2009

Disadvantages of Labor Unions

Last time I talked about the advantages of labor unions. There are also disadvantages to labor unions, both to the employees and the employers. First, employees lose their individual voices. Employees give up their right to negotiate for themselves or to have their individual concerns and benefits recognized. Being part of a union means allowing the elected union leadership to negotiate for the group as a whole. Decisions for the group are made based on what is best for the majority, not necessarily by what is best for any individual employees. Majority rules. An example of when this may be a significant disadvantage to individual employees is when the majority votes to strike. A strike is never guaranteed to end positively for the employees. It can last an extended amount of time and the union may never get what they wanted from the employer. Also, employers are permitted by law to take the necessary steps to continue their business during the strike. Replacement employees can be hired and once the strike is over the union employees' jobs may not be available. A strike always has the potential to be financially devastating to the individual employees, even if that employee was not in favor of the strike.

Strikes are not the only financial disadvantage of trade unions. Unions cost employees money in several ways. All union employees pay dues to the unit in order to help financially support that union. In addition, unions can fine employees for conduct or activities the union views as detrimental to the union or it's membership. Examples of when an employee may be fined are crossing the picket line during a strike and exceeding productivity quotas. Unions view higher than average productivity as harmful to the other members of the union; therefore, the union establishes maximum production levels that union members must stay under.

Employees are not the only ones effected by unions. There are many disadvantages to the employer involved with a union also. The production quotas that union employees must maintain can have a negative effect on employers. There is no incentive for employees to work harder to gain promotions or pay increases. There is no such thing as individual recognition. All employees are viewed the same and treated the same. In fact, employers are limited by the union in their ability to discipline or terminate an employee. A combination of no incentives and potential union fines mean the employer can suffer from reduced productivity. Reduced productivity can mean the employer is less competitive which can lead to job losses. In addition, unions typically demand much higher pay rates, sometimes increasing at a rate higher than inflation. Reduced productivity, loss of ability to be competitive and higher pay rates can lead to layoffs or even cause the company to go out of business.



  1. Kelly,

    Good informaion and resources to consider. My topic is General Motors, a company that has long been associated and affected by its relationship with labor unions. I will continue to watch your blog!