Lecture Notes
Finally, the last piece of this lesson that I want to talk about is what do unions actually do? Not what do different scholars and practitioners think about union, not what is the ideological position the different sides take to whether unions are good or bad, but what do we know from existing empirical evidence about the outcomes associated with unions and we know a lot about unions actually do. One of the reasons we know a lot is a book that came in 1994 by Freeman and Medoff, Richard Freeman and James Medoff, two economists from Harvard who did an exhaustive study, an extensive study about the outcomes, both for employers and for employees associated with unions and that book again came out in 1984 and set the stage for a long array or broad array of studies that followed looking at the effects that unions had on outcome and as I noted on one of the early slides in this lesson, this empirical evidence suggests that the effects that unions have on outcomes is mixed, is nuanced, is complex and is not as simple as we might otherwise think. For example, unions effects on job satisfaction is actually negative, meaning unionized employees compared to their nonunion counterparts in similar jobs, similar industries, tend to be less satisfied than their nonunion counterparts. That's interesting. It's kind of surprising and we can maybe speculate about that during the live session if you would like. Okay, so that's one interesting empirical piece of evidence that's held over many, many years and lots of studies looking into this paradox. It's a paradox because on the one hand, unionized employees make more money as I'm going to talk to you in a moment, have higher wages and better working conditions and yet are less satisfied and this is something you might want to think about and again, we can reflect on during the live session.
Turnover. What about turnover? Turnover of unionized employees is on average lower than turnover for nonunion employees in similar jobs, similar industries and so forth, about 15% lower. Even though employers often bemoan having to contend with unions, there's a clear benefit, substantiated by lots and lots of empirical evidence that unions are beneficial to this one outcome, namely turnover. They reduce turnover by about 15%.
What about productivity? Core important outcome for employers and for employees as we've talked about in one of the previous slides. The evidence on productivity despite what some might think that the effect on productivity would be negative, the actual effect is mixed. There is substantial evidence to suggest that unionized workplaces can be or are more productive than their nonunion counterparts. There are a number of studies in the healthcare domain that point to better outcomes in terms of quality and performance for unionized hospitals as compared to nonunion hospitals and there is evidence from a host of other industries that supports that effect as well. This, too, is something we might to expand on or talk about in the live session.
Finally, on this slide, profits. Unions raise wages, which I'll talk about on the next slide and so almost by definition, they eat into managerial or employer profits. They reduce profits.
