Thomas Perez’s Smoke and Mirrors

Labor Secretary Thomas  Perez is using smoke and mirrors to make it appear union members make more than nonunion workers.  Diana Furchtgott-Roth debunks the Labor Secretary’s fable about the earning power of union membership in the Manhattan Institute.

. . . Labor Secretary Thomas Perez is resurrecting the old canard that workers do better in unions. His latest blog post uses misleading data to suggest that if workers were unionized, they would receive $200 more per week.

Of course, anyone would want a $200 a week raise. That’s $10,400 a year. But the facts aren’t so simple.

Let’s look at the Bureau of Labor Statistics data itself.

Perez compares median weekly earnings for union members with non-union members. This is misleading because union members are not equally distributed across occupations, industries and regions. Union members are more concentrated in higher-paying government-sector jobs, including teachers and federal employees. Forty percent of union members are public-sector employees. The BLS data that Perez cites do not separate public and private-sector workers.

Unionized workers are more heavily concentrated in urban and Northeast regions, where both the costs of labor and living are higher. BLS data show that 26% of New York workers belong to unions, compared to 3% of South Carolina workers. Yes, New Yorkers earn more, but a nationally averaged $100 bill buys $87 worth of goods in New York and $110 in South Carolina, according to the Bureau of Economic Analysis.

Unionized workers tend to be older, and Perez does not adjust for age. BLS data show that 15% of male workers who are aged between 55 and 64, a peak earnings group, belong to unions. In contrast, 10% of male workers aged 25 to 34, and 5% of those aged 16 to 24, have joined unions. Younger workers earn less. If you’re 25 and you join a union, you’re not going to get a 55-year-old’s salary.

In some industries, such as construction, union workers earn more ($399 a week more). In others, such as professional and business services, union members earn less ($113 a week less). But jobs in unionized industries, with the exception of government, are shrinking. For instance, employment in professional and business services has seen a growth of 16% over the past decade, while construction employment has declined by 13%.

What is clear is that union membership has been declining, and this is worrying Perez. The White House is convening a Summit on Worker Voice on Oct. 7 to, in Perez’s words, “highlight the value of collective bargaining.†The share of wage and salary workers belonging to unions declined from 20% in 1983 to 11% in 2014. The percent of private-sector union members is even lower, at 6.6%.

One reason for this is many workers don’t want to pay initiation fees, around $50, and union dues, which are about 1% to 2% of each paycheck. When public-sector workers in Wisconsin were given the option of not joining a union, the number of members dropped dramatically. The three Wisconsin branches of the American Federation of State, County, and Municipal Employees had over 62,000 members in 2010 compared to fewer than 20,000 today, with an accompanying decline in revenues.

Another reason is that many plants become uncompetitive when they are unionized, and they go offshore. Rather than getting a raise, union members end up unemployed. Consider the case of Pillowtex, a textile firm in North Carolina. In 1999, after a long battle, the plant was unionized. In 2000 Pillowtex filed for bankruptcy, and the firm failed in 2003. Now textiles are primarily produced offshore.

The Labor Department and the National Labor Relations Board are doing their utmost to change the rules to encourage more union membership.