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Labor unions tend to operate in a very short sighted manner, most often by attempting to maximize the pay and benefits of their members in the short term even as it ends up costing their jobs in the long term by bankrupting the employers. But while current employees might collectively benefit in the short run, the high cost of employing workers results in fewer employment opportunities for those who are unemployed.
On an individual level, because labor unions tend to bargain for wages collectively on behalf of their members, employers aren't free to pay individual employees based on merit or productivity. When employees are given equal pay for unequal productivity, it not only results in lower wages for better employees, it also reduces a company's productivity as a whole by reducing employee incentives to be more productive.
While labor unions are a legitimate force in a free market economy, they become a detrimental one largely because they're able to use their political clout to persuade politicians to enact laws which mandate union membership and certain worker benefits and protections which make hiring costs prohibitively expensive across the board, and as a result, most of the American companies which were heavily unionized have simply been bankrupted, resulting in a sharp decline in private union membership.
On the other hand, when it comes to government worker unions, these extra costs are simply passed on to tax payers in the form of higher taxes and rates. In fact, the entire process is corrupt because these unions help to elect the very government officials who they then negotiate with for exorbitant pay and benefits. In effect, nobody is looking out for the tax payer at the negotiating table while the unions are calling their own shots.
Economist, investment advisor, author and commentator, Peter Schiff
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