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Amid Dismal Job Market and Massive State Budget Cuts, Americans Grow Warier of Labor Unions

By: Curtis Ophoven

2/23/2011 - 178 Comments

Faced with massive state budget cuts, the Wisconsin teachers union protests seem to be increasing public awareness of the high wages and benefits paid to public union members, which is further galvanizing public support for Gov. Scott Walker.

It’s not that labor unions are all bad or all good. They serve a purpose that is sometimes more favorable than other times. 

About a year and a half ago a Gallup poll found that the public has become less supportive of unions than at any time since Gallup began asking that question in 1936.

Forty-eight percent of the 1,010 respondents in the Aug. 6-9 telephone poll said they approved of unions, down from 59% a year earlier, Gallup said.

And 51% now say unions "mostly hurt" the economy in general, up from 36% in 2006, the last time that question was asked.

Until now, the previous low in the public approval rating of unions was 55% in 1981 and 1979 -- during the last severe recession.

The nature of labor union contracts are to fix wages and benefits over a period of time. But during a deepening recession these contracts are holding the wages of union workers at elevated levels, which results in fewer jobs for both union and non-union workers.

Labor unions are very useful when businesses take advantage of workers to drive up profits while refusing the pay workers competitive wages or benefits.

But labor unions can also become a hindrance when they drive up wages and benefits much higher than competitive workers.

Recession Brings Awareness

This can also happen during a recession, when the wages of competitive workers suddenly drop and high unemployment lingers while union workers compensation remains the same. 

This is what has happen in Wisconsin and across the nation as much of the private sector has already cut wages and benefits, while entrenched union contracts hold union wages and benefits at elevated levels. 

During sudden shifts in the economy, like during the major recession we are facing, wages need to be free to move up and down with the economy in order to compete with the availability of workers.  A high unemployment rate, such as we have, creates a very strong market force to pull down on wages.

The longer the recession the stronger the market forces pull down on wages.  Labor unions contacts do not typically respond very quickly. If the economy was really recovering we wouldn’t see the major push to renegotiate union contracts.

The primary reason that union wages have become a target for state budget cuts is because Obama’s policies and promises to restore the economy have completely failedObama has failed to restore the economy and that is why labor unions wages are being scrutinized. 

If the economy was recovering, then private sector wages and benefits would have been restored and the difference between private and union compensation wouldn’t remain so wide.

Obama has failed, primarily because he clearly does not understand economics as his policies have shown.  He was hoping the economy would recover on its own, ignorant of the damage of his policies have further burdened the economy with debt.

The economy has not even begun to recover and every state is sooner or later going to have to deal with it. 

Here is a video of Gov. Scott Walker, discussing the budget cuts in Wisconsin.

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