Professional Associations Raise Workers’ Wages More than Unions

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Almost every American knows the feelings of excitement and relief that come from getting that brand new job. American workers live in a unique time in history and a uniquely privileged part of the globe where the combination of a capitalist economic system, a cultural tradition of voluntarism and entrepreneurship, and a government that grants strong civil liberties means that, for the first time in history, human beings can theoretically choose their occupation and the height to which they climb in their careers.

But even historically privileged workers come to realize that no workplace is a perfect place and the people who control their working lives make mistakes like everyone else. There will always be some need for worker advocacy groups and American workers who feel like they need collective representation have two choices: joining a professional association or a union.

Nearly everyone has heard of a union but not as many people know about professional associations, which is interesting because both groups do basically the same thing: they represent employees who function in a specialized role and they offer training and networking opportunities for workers of specific skill sets.

So why are professional associations not as well known?

While I don’t claim to have all the answers to that question, I can think of two major reasons. First, professional associations lobby for pay raises whereas unions demand them and are supported by powerful government bureaucracies like the NLRB, which coerce employers into meeting those demands. Second, professional associations don’t have as much of a historic propensity for corruption like, for example, being indicted on racketeering charges for threatening employers with violence.

The average worker may think, “Well, I’m not too keen on my advocacy group using my membership fees to protest with Al Sharpton and I’m a little disturbed that unions routinely get accused of corruption, but I have bills to pay and if the union has a better chance of getting my paycheck a boost, what the heck.”

Pay raises are unions’ ace in the hole in the popularity contest between them and professional associations.

But the Competitive Enterprise Institute’s High Cost of Big Labor series has shown in one study that those all-important pay raises are actually damaging to state economies, which has the effect of lowering real per capita income for a majority of a state’s workers. These findings are definitely counter-intuitive, but think about the large-scale effect that artificial pay raises have on companies from an economic standpoint. When a company has to pay a higher cost for labor, they don’t hire as many new workers. If enough companies are unionized and forced to pay more in wages, they turn large numbers of potential workers away into less unionized industries, which drives down nonunion workers’ wages because the supply of their labor exceeds the demand.

Heavy union density in states not only drives wages down for a majority of workers, it also discourages new businesses from investing in states because of the threat of higher labor costs.

You might say, “Okay, so professional associations are the more economic-friendly worker advocacy group, but that doesn’t help me get a raise.”

Actually it does. When companies aren’t forced to pay wages above the market price for labor, they can put more toward expansion, which helps economic growth and only real economic growth can produce natural wage increases. A company can only produce a surplus if it is able to produce more at a lower cost. With the surplus, companies can either give workers a raise or invest in the company’s infrastructure. Even if they decide not to increase their employees’ pay with some the surplus, their investment in infrastructure goes to paying construction crews and other workers, which stimulates economic growth.

Improving everyone’s wages can only come from real economic growth so workers should choose professional associations as their advocacy groups instead of unions that burden state economies with dead-weight loss.

To read more about the High Cost of Big Labor series, click here and here.

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