Why Labor Unions Look Like They Are Helping Members

Economics: Lesson 70

“Do Labor Unions Cause Price Inflation?”

Labour unions are focused on the improvement of working conditions and wages for their union members. No matter the field that the union is in, it will constantly be fighting for the fair treatment of the workers. A union will impose costs on a business that might not have otherwise spent the money on. Some examples of this are; higher minimum wage, longer breaks, overtime pay, vacation pay, increased health and safety, and more workers. This long list of expenses quickly empties the pocket of the business which then must find a way to increase profits. The workers can’t be fired, you will always be dealing with a union, so the only option left is to increase the prices of the products or services that the business is offering. This increase in prices happens in multiple industries. Soon every part of the market will be touched by the increased prices due to union intervention. This results in price inflation.


On the surface, it looks like the unions are helping their members, after all, they are getting greatly improved working conditions and a lot more pay, but this is not so. The prices of everything have also increased, so now the members will have to pay more for goods they want to purchase. They are no better off than they were before. The market always makes up for some unbalance. And this is true for labour unions and price inflation.

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