Study Links Unions, Strong Trade Nations

Most countries that compete successfully with the United States for trade have stronger labor unions than this country has, according to figures put together by an American economist.

“The U.S. has among the lowest unionization rates in the world today,” wrote Thomas Karier, who teaches economics at Eastern Washington University in Cheney.

“It is especially difficult to argue that unions have impaired U.S. competitiveness when much stronger unions in Japan, Canada and West Germany seem to have had no such effect,” Karier said.

His study, “Trade Deficits and Labor Unions,” was done for the Economic Policy Institute. The group is financed by labor unions, foundations and corporations.

Unions bargain for higher wages and better working conditions that raise the costs of production. Higher production costs raise the prices of products and make them less competitive with products from other countries. But Karier argues that Japan, Canada and what used to be West Germany--which together account for most of the U.S. trade deficit--are already high-wage countries.

But Fariborz Ghadar, professor of business administration at George Washington University, found Karier’s reasoning too simplistic. Competitiveness has to be judged over time and industry by industry, he contended in an interview.

“The fact is, the industries where the United States is most competitive--biotechnology, aircraft, computers--are the least unionized,” he said. “If I were doing a study, I would start from there and try to find the relationships.”

At the Brookings Institution, senior fellow Robert Z. Lawrence also suggested that the approach to competitiveness should be broader, taking into account standards of living.

Labor union strength in the United States has declined in recent years. Karier estimates that 18% of the U.S. work force was unionized in 1985.