Union Wages Don’t Matter if Cost of Living Rises

Union wages seem better until you realize they cause price inflation.

Union Money

Unions are desperately trying to make progress using illegal aliens but Republicans are getting ready to fight them. In preparation for that struggle, no doubt, The Daily Signal has published, “6 Myths About Right-to-Work Laws.”

Many states and local governments are considering right-to-work laws. These laws make union dues voluntary. Without them, union contracts make paying dues a condition of employment.

While most Americans support the concept of right-to-work, unions argue strenuously against them. However, most of the arguments against right-to-work have little basis in fact.

While all of their myths are valuable for you to learn about so that you can refute media sophistries, I thought the last one they dealt with is especially important.

Myth: Right-to-work laws lower wages.

Fact: Workers have the same or higher buying power in right-to-work states. Opponents often deride voluntary dues as “right-to-work for less.” Average wages in right-to-work states are indeed slightly lower than in non-right-to-work states. This occurs because almost every Southern state has a right-to-work law, and the South has a lower cost of living. Studies that control for differences in costs of living find workers in states with voluntary dues have no lower – and possibly slightly higher – real wages than workers in states with compulsory dues.

This is important because it involves many other economic superstitions that are pushed in our media. For example, much of the pretense that higher fuel prices are good for the economy is related to this fallacy.

The assumption is that artificially higher wages will “stimulate” the economy. After all, since wages are stagnating while cost of living is rising, we need to make wages higher.

But such wages will not reflect any increase in economic efficiency or productivity. All such wages will do is produce even more price inflation. In other words, the cost of living will go even higher and wages will still be “stagnant” relative to the cost of living. Letting people negotiate wages freely, however, without the government intervening in such prices, makes everyone more efficient. This efficiency means that the cost of living sinks for everyone. The relative wages rise.

This should not surprise us. Do you really want to believe that prosperity comes from the barrel of the gun? After all, governments that force companies to deal with “unions” rather than with free workers are adding nothing but coercion into the bargaining process. It is absurd to claim that such coercion can create more wealth than free people will create among themselves.

When God commanded, “Thou shalt not steal,” he was not trying to reduce the standard of living of the working man. He was liberating them.