NEW YORK — With the U.S. economy coughing along after years of strong growth, pundits have laid blame for the slowdown at the feet of everyone from gullible investors who bought into the dot-com balloon too readily to the terrorists who destroyed the World Trade Center.

This story first appeared in the June 25, 2002 issue of WWD. Subscribe Today.

A recently released study blames another culprit for the U.S. missing out on an average of over $800 billion in economic growth a year for the last 60 years. That culprit is organized labor, which vehemently disputes the charge.

The study, titled “Do Unions Help the Economy?” was commissioned by the National Legal and Policy Center, a conservative organization, and the John M. Olin Institute for Employment Practice & Policy at George Mason University. It claims that unions ultimately push down employment and wages.

The study contends that the unionization of industries, including manufacturing and mining, has contributed to job losses in those sectors in recent years. It further suggests that many retail and service fields have a low level of union participation and that has contributed to the growth of employment in those areas.

“As unions increase wage rates through the use of their monopoly power, job opportunities in the unionized industries and occupations decrease, increasing the supply of labor in the nonunion sector,” wrote the study’s authors, Richard K. Vedder and Lowell E. Gallaway, both Ohio University economics professors. “This drives wages down in those areas and increases the relative number of lower-wage jobs available to workers engaged in the job-search process.”

The study contends that unions drive the overall per capita gross domestic product down, more than offsetting the higher wages that unionized workers typically earn compared with nonunionized workers.

Ron Blackwell, director of corporate affairs at the AFL-CIO, called the study’s claim that unions have cost the U.S. more than $50 trillion in the past six decades “ludicrous.”

“If you look at the postwar history of the U.S., the period from 1947 to 1973 when union density was the highest, real economic growth was over 5 percent a year, production growth was rapid, real-wage growth came step by strep with productivity growth and real family incomes doubled,” he said. Since then, he said, union membership has slipped substantially and real-wage growth has slowed.

One factor the study does not directly address is the role globalization has played in the migration of some industries, particularly manufacturing, out of the U.S. to developing nations where wages are substantially lower than the U.S. minimum wage.

The U.S. textile and apparel industry in the past year has lost more than 100,000 jobs, largely as a result of the closing of domestic plants as retailers and wholesalers shift more production outside the U.S.

“Manufacturing has been one of the industries that has been the most heavily unionized and so there has been a great deal of movement because it’s harder for manufacturers to stay in business when their labor costs are so high,” David Kendrick, an NLPC representative, told WWD.

Kate Bronfenbrenner, director of labor education at the Cornell University’s New York State School of Industrial and Labor Relations, who was not involved in the study, said she’s found little connection between unionization rates and the migration of manufacturing out of the U.S.

“I’ve done a lot of research on the impact of what’s happening in terms of production shifts to China and other countries, and the impact on wages, and it’s important to note that these industries are doing less manufacturing here whether they’re union or not,” she said in an interview after the study was released. “There is no way that American businesses are going to win the race to the bottom by lowering wages. Employers are moving regardless of whether the industry is unionized or not unionized.”

“This isn’t a matter of whether they were going to be paid $10 an hour or $7 an hour,” she said in an earlier interview. “It’s a question of whether they were going to be paid in cents.”

She cited the wireless-electronics manufacturing business as an example of a nonunionized manufacturing sector that has largely moved overseas.

While unions are currently not a major force in the retail industry, labor organizers are trying to change that. UNITE has made organizing workers at distribution centers a major push, and is in the midst of a battle to unionize a Brylane Inc. distribution center in Indianapolis. Similarly, the United Food & Commercial Workers International Union has been working to unionize Wal-Mart Stores locations.

Some observers suggested that while unions may in some way be culpable for the loss of U.S. manufacturing jobs, the overall U.S. standard of living may also hold some blame.

“In a way, the union has contributed [to the job losses] by trying to maintain a living wage and decent standard of living,” said Peter Rachleff, a professor at Macalester College in St. Paul, Minn. “But you have to ask the question, is it worth keeping the jobs if you can’t have that?”””

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