Authors libby rittenberg 765
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One way that unions can increase the marginal product of their members
is by encouraging investment in their human capital. Consequently, unions
may pressure firms to implement training programs. Some unions conduct
training efforts themselves.
Another way to increase the MRP of a factor is to reduce the use by firms of
substitute factors. Unions generally represent skilled workers, and they
are vigorous proponents of minimum wage laws that make unskilled
workers more expensive. A higher minimum wage induces firms to
substitute skilled for unskilled labor and thus increases the demand for the
skilled workers unions represent.
Still another way to increase the MRP of labor is to increase the demand for
the products labor produces. The form this union activity generally takes is
in the promotion of “Made in the U.S.A.” goods. Unions have also promoted
restrictive trade legislation aimed at reducing the supply of foreign goods
and thus increasing the demand for domestic ones.
Reducing Labor Supply
Unions can restrict the supply of labor in two ways. First, they can seek to
slow the growth of the labor force; unions from the earliest times have
aggressively opposed immigration. Union support for Social Security also
cut the labor supply by encouraging workers to retire early. Second,
unions can promote policies that make it difficult for workers to enter a
particular craft. Unions representing plumbers and electrical workers, for
example, have restricted the number of people who can enter these crafts
in some areas by requiring that workers belong to a union and then
limiting the union’s membership.
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org
765
