Opposition to trade unions comes from a variety of groups in society and there are many different types of argument on which this opposition is based.
Unions are sometimes accused of holding society to ransom by taking strike actions that result in the disruption of public services.
They increase wages by forming a group of people to provide a skilled service with companies that sign a contract that they may only "purchase" workers only from the group [i.e] union. The demand for the work is usually lower than the supply and therefore the contractor signatory can "hire" and "fire" at will. A contract is often entered into at the beginning of "apprenticeship." This contract is binding and normally requires that if one does not work for the duration stated in the contract, one will owe the amount of the "training" received.
By raising the price of labour, the wage rate, above the equilibrium price, unemployment rises. This is because it is no longer worthwhile for businesses to employ those labourers whose work is worth less than the minimum wage rate set by the unions. As such, Governments may seek to reduce union powers in order to reduce unemployment.
Trade unions are often accused of benefiting the insider workers, those having a secure job and high productivity, at the cost of the outsider workers, consumers of the goods or services produced, and the shareholders of the unionised business. The ones that are likely to lose the most from a trade union are those who are unemployed or at the risk of unemployment or who are not able to get the job that they want in a particular field.
While the disadvantage to exceptional workers, who are forced to take lowest common denominator pay, is obvious, as they could have commanded higher wages by themselves, union contracts also harm inexperienced or below-average workers, as they cannot negotiate lower pay in order to be worth hiring while they seek to improve their skills and experience. Getting a first job in a union industry therefore sometimes becomes a matter of "who you know", shutting out many people who could otherwise start a career in the occupation.
Some union-negotiated contracts may impose limits on companies' power to dismiss their employees. In cases where a company needs to dramatically restructure, this can result in more layoffs than would otherwise be necessary, or in extreme cases, a company filing for bankruptcy.
Where closed shops or union shops have been established, unions can become monopolies, where the worker is not allowed to choose not to belong and the company is not allowed to hire non-union workers. This can result in the same problems faced by any other monopoly. By charging higher prices than the equilibrium rate, unions promote deadweight loss.
Advocates of unions claim that the higher wages that unions bring come at the expense of profits. However, as Milton Friedman pointed out, profits aren't high enough. 80% of national income is wages, and only about 6% is profits after tax, providing very little room for higher wages, even if profits could be totally used up. Moreover, profits are invested leading to an increase in capital: which raises the value of labour, increasing wages. If profits were totally removed, this source of wage increase would be removed.
Instead of harming profits, unions increase the wages of about 10 to 15% of workers by about 10 to 15% by reducing the wages of the other 85 to 90% of workers by about 4%.
There can be little doubt that union activities lead to continuous and progressive inflation.
By causing wage increases above the market rate, unions increase the cost to businesses, causing them to raise their prices, leading to a general increase in the price level. Austrian economists such as Robert P. Murphy, however, dispute this, arguing that the increase in the cost of labour simply means that less of other goods can be bought. He writes:
If unions succeed in wage hikes, and employers raise the prices they charge consumers to maintain their own profit margins, and the supply of money remains the same, then something else has to "give." Either the prices of goods and services in nonunion sectors have to fall and offset the union sector hikes, or people's cash balances need to fall, in terms of their purchasing power.
The ultimate question here really tends to be whether the capitalist of the unionized firm is selling an elastic or inelastic commodity. If there are many substitutes, perfect knowledge, and few barriers to market entry, then the capitalist is going to be more competitive, and absorb the price increase as a cut in profits. Whereas if there were no other substitutes, imperfect knowledge, and legal or resource barriers to market entry, then the consumer is much more at the will of the capitalist; and thus, in that case, the cost will be more likely to carry on to the consumer. Of course, at the oligopoly level, the corporate executives are constantly toiling over their numbers to see what cost is ideal for a certain demand level, whether or not union activity is on the rise.
A consequence of unions' zeal to guard its special interest is that some unions have actively lobbied for racist and anti-immigration policies. An example is the creation of the notorious Asiatic Exclusion League, which was composed mainly of the various labor unions.
The Pictorial History of American Labor observes,
The early A.F. of L. did not draw the color line, but expressed an "ideal of solidarity irrespective of race." Before long, however, the feeling changed. Whether a tendency to exclude black workers from craft unions was based more on fear of competition or racial prejudice carried over from slave days, it is difficult to decide. But the developing exclusion of the Negro worker from many neighbor unions brought with it serious problems—not just for the black worker seeking job security, but for the white worker seeking the same end...
The record shows that black workers...have been used to break strikes. This availability has usually ended when the black worker has been shown that the union is open to black as well as white.
However, in a study called The Black Worker, Spero and Harris observe that more strikes [in American labor history] have been broken by white workers than by black workers.
Most blacks were barred from membership in the AFL not because of their skin color, but because they never had a chance to learn a skill, and "most A.F. of L. unions did not admit unskilled mass-production workers. While the AFL-CIO is the modern version of the AFL, it is much more open to membership by women, immigrants, and different nationalities.
Other unions, such as the Industrial Workers of the World, which was formed in 1905, organized without regard to sex, skills, race, creed, or national origin from the very start.
Attempts to reduce the effects of trade unions may include union busting activities by private companies or state action including governments of authoritarian regimes such as Adolf Hitler's Nazi party and Burma's military dictator, Ne Win.
The political left is often associated with support for trade unionism. However, some groups and individuals have taken a less positive view. In the nineteenth century, a belief in the iron law of wages led some socialists to reject trade unionism and strike action as ineffective. In this view, any increase in wages would lead manufacturers to raise prices leaving workers no better off in real terms. Karl Marx wrote a pamphlet, Wages, Price and Profit, to counter this idea, which had been put forward in the International Workingmen's Association by a follower of Robert Owen.
Some early Social Democrats were also skeptical of trade unionism. Usual criticisms were that unions split workers into sections rather than organising them as a class; that they were dominated by relatively privileged skilled workers who were mainly concerned to defend their sectional interests; and that industrial action and organisation were incapable of bringing about fundamental social change. H. M. Hyndman of the Social Democratic Federation summed up some of these views when he wrote in The Historical Basis of Socialism in England (1883):
Trade unionism is criticised by those of council communist and left communist tendencies. Here, trade unionism is seen as being more useful to capitalists than to workers, and as a kind of "safety-valve" that helps to keep working-class discontent within reformist channels and prevent it from evolving into revolutionary action. They think the government to be the ultimate union to where all workers in the country belong; private unions can go against that. In contrast to other left critiques of trade unionism, these tendencies do not accept that the problems they identify could be remedied by changing the structure, leadership or objectives of trade unions. Instead, they argue that trade unionism is inherently reformist and that revolutionary action is possible only if workers act outside trade unionism through workers' councils or other channels.
There is also a philosophical difference between the craft unionism of many AFL-type unions, and the industrial unionism of organizations such as the Industrial Workers of the World. Industrial unionists decry a practice that they call "union scabbing," in which craft unionists are required by the no-strike clause in their contracts to cross the picket lines of other unions.
Is There a Potential 'Representation Gap' in the New Irish Economy? an Examination of Union Density Levels and Employee Attitudes to Trade Unions
Jan 01, 2008; ABSTRACT In many countries between 1980 and the mid-1990s trade union density registered a considerable decline. Using data from...