Labor unions are a common organization in today’s world. There are many industries that have labor unions to protect workers rights. (Labor unions aren’t the best way to do that, but I digress.) However, these labor unions have unintended consequences in the economy. For example, one effect of labor unions are price inflation. Yup, labor unions are making you pay higher prices for your everyday goods.
To start, it is important to understand the difference between price inflation and monetary inflation. Price inflation is simply the general increase of all prices in an economy. Monetary inflation is when new money is printed and put into the economy. Monetary inflation causes price inflation because it makes money worth less, as there is more of it. However, they are two different things. In this article I will specifically be referencing price inflation.
Labor Unions Effect on Businesses
Labor unions will cause price inflation because they make it more expensive for businesses to operate. Labor unions are constantly demanding more and more from businesses. They force businesses to provide pay raises, better working conditions, shorter hours, and more for their employees. Plus, there is the cost, in time, of dealing with all the labor unions threats and demands. Or even worse, a strike, which can really hurt a business by making it nonoperational for a period of time. Obviously all of these is going to make it more expensive for the businesses to operate. In order to compensate for these increased costs most businesses will raise prices or lower product quality. This way the increased costs are passed on to the consumer. In the end, you, the average consumer will be paying more for your goods and services because of labor unions.
Please note: I am not saying that it is bad for business to provide better things for their employees. However, the violent, coercive way in which labor unions achieve their ends are wrong. Labor unions are not necessary for workers to get better pay or workplace improvements; the free-market will arrange for these things. This topic is deserving of it’s own article. Click here to see why labor unions are unnecessary.
Conclusion
One of the many negative consequences of labor unions is price inflation. Labor unions make it more expensive for businesses to operate, so businesses raise their prices to make up for the increased costs. Therefore, you will pay more for your goods and services all because of unnecessary labor unions. Labor unions really aren’t the saints they are cracked up to be.
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