TRADE AND SERVICE UNIONS


DEFINITION: A number of persons joining together for some common purpose.

TYPES OF UNIONS: Private and public

FACTS: Private and public unions negotiate with employers to obtain specific goals for those persons being represented.

Subjects for negotiations include wages, benefits, and working conditions.
If negotiations result in additional costs to an employer:
A private employer will absorbed those costs or will pass some or all to the customers.
A public employer will have its ‘rainy-day’ funds reduced or will raise additional revenue from its taxpayers.

ANALYSIS:
If a private employer absorbs additional negotiated costs, margins will be affected, which will reduce taxable income, which will cause a reduction in the value of the employer’s business.
If the employer passes on the additional costs to its customers, it would be inflationary and the customers would have less spendable funds for other expenditures, which may adversely affect the economics.
In most instances of higher costs, those costs will be passed on to the customers.

If a public employer raises additional revenue from its taxpayers, the taxpayers will have less spendable funds and that may adversely affect the economics.
When a politician, economist, or anyone else calls for high-paying union jobs, they are implying that there be a shift of wealth from customers to the high-paying union jobs.


mz
February 26, 2011