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Friday, January 21, 2011

Labor Union Membership Decline Continues

As reported by the Bureau of Labor Statistics, the decline in labor union membership continued in 2010. That extends a long and, yes, positive trend in the economy.

Overall labor union membership fell from 12.3% in 2009 to 11.9% in 2010. That compares to 20.1% in 1983.

Even more striking is the tiny portion of the private sector that are now union members. That level dropped from 7.2% in 2009 to a mere 6.9% in 2010. Back in 1983, 16.5% of private sector workers were union members.

Why is this declining union trend positive? In the end, the objective of labor unions is to maximize compensation while minimizing work and work effort. The resulting obstructionist work rules and artificially jacked up compensation -- particularly problematic as performance and pay are decoupled -- obviously are bad for productivity and competitiveness.

We've seen over time that heavily unionized industries suffer from excessive costs and an inability to make the adjustments necessary to stay competitive in the marketplace.

A smaller unionized workforce means a more dynamic, comeptitive and entrepreneurial work force.

Raymond J. Keating
Chief Economist

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