Wednesday, June 9, 2010

Are unions bad for the economy?



It's odd when you see income groups in the U.S. that have been historically helped by unions speak out so strongly against them.

I looked at the data to see what effect, if any, unions had on the economy and earnings.

Here are the facts:

In the period from 1950 to 1980, which saw the most union membership, GDP grew at a compounded annual rate of 3.53%.

From 1980 to 2009, which saw a dramatic decline in union membership, GDP grew at a compounded annual rate of 2.7%

From 1950 to 1980, which saw the most union membership, corporate profits rose at a compounded annual rate of 8.0%.

From 1980 to 2010, the period where union membership declined dramatically, corporate profits rose at a compounded annual rate of 7%.

Furthermore...Real average weekly earnings of workers today are below where they were in 1968.CEO compensation has gone from about 40 times a workers salary to over 400 times a workers salary.

Therefore...the decline of unions has led to more income inequality, less output and lower corporate profit growth.

To say that unions are bad for the economy is revisionism far greater than anything ever attempted by a Communist state.

***All data from the BLS and Commerce Department.

10 comments:

Philip said...

I have to say -- I'm with you on the MMT understanding of the economy. But this point about the unions is a hard one to swallow. I don't disagree with the data, it's just that my experience with unions has not been pleasant personally and I don't want to be part of one if at all possible.

Was there something different about unions between 1950-80 compared to now?

Ronald Doan said...

Come on Mike, don't you think that maybe some other influences may have been at work? How about the rise of Japan, the restoration of Europe after WWII, China? You diminish yourself with these outlandish claims.

Mike Norman said...

These are facts, not outlandish claims. I never diminish myself. Never!

RSG said...

what an asinine assertion...the yankees had a better record from 1950 - 80...must have been because of the unions!

StaticNoise said...

Public unions are! They should be illegal - again... My opinion.

Eric said...

If you're taking your investment advice from someone who does not understand the term spurious correlation, nor the implications of trading on correlations that are spurious, then you get what you deserve.

Mike Norman said...

Eric,

Spurious would be the claim that you have any intelligence.

Eric said...

Honestly, Mike, these cannot be your math skills. You have made yet another silly argument, and now that you've been called on it, you want to insult. A better move would be to try and argue why this nonsensical blathering is not a classic example of spurious correlation. (that would be hard, because it is) In the age of HFT when you're trading against PhDs in physics and math you have to have a stronger grip on stats, etc. I've been an options trader for almost 10 years, and I make mistakes all the time. But the sign of a truly bad trader is one who is unwilling to admit when he's wrong and stands by clearly erroneous information to make his decisions. You can simply admit that this was a silly argument, or you can continue to lash out and not admit you're wrong. Your choice.

Mike Norman said...

You've been an options trader for 10 years??? WOW, now I'm REALLY imppressed!! So, genius, explain to me why the data is giving a false picture.

Mike Norman said...

I can take guys like you and mop the floor with you when it comes to trading, punk.