The Effect Of Public And Private Unions On State Economic Activity: Evaluating The Benefits To Organized Workers, Policymakers, And Companies

Abstract

Freeman and Medoff’s analysis, “What Do Unions Do?” concluded unions were beneficial to organized workers, somewhat beneficial to the economy, yet not beneficial to the corporate bottom line. While there is some evidence to support these statements for 1983-1996, we determine that neither public nor private unions’ presence are correlated with wage or growth benefits at the state level from 1992-2005. A reduction in private sector unionization increases state productivity, with no adverse impact on growth, wages or unemployment rates. Public unions are statistically less detrimental than private unions, particularly in regard to unemployment rates.