Artificial Scarcity

Although nobody can deny the fact that labor unions make some working poor people not so poor, they do so at the tremendous expense of other poor people who wish to work but are excluded from the positions. Unionization, especially in non-right-to-work states, like Michigan, employs the “closed-shop,” with brutal inefficiency. Unions create an artifical scarcity of labor, driving the cost of employment through the roof. The end result is that many people who wish to work, and would do so at less-than-union wages, are forbidden from doing so.

A big part of the problem is the Job Bank, a terrible concession won by the UAW in their strongarming of negotiations with the Big Three back in the 1980s, which is currently causing domestic Automakers to hemmorage cash at an unsustainable rate.

Before I found that article, I estimated the costs thusly: the 12000 employees in the Big 3 Job Bank, at an average wage of $30/hr, including benefits I’m estimating conservatively at $60/hr total cost – totals $1.5Billion annually.

Here is the Detroit Free Press analysis of the figures, in chart form for the Captain:

Among other things, this job bank pays for those people whose jobs have been eliminated due to efficient machinery and/or automation, which really makes one wonder – why bother investing in capital, if you’re just going to be penalized for the successful technological innovations?

Bastiat would wonder why we even bother building roads if we’re just going to fill them with roadblocks.