Did Obama’s opposition to off-shoring jobs lead to off-shored jobs?

Posted by Marc Hodak on November 7, 2008 under Unintended consequences | Be the First to Comment

Coyote found a concrete instance where the mere threat of possible unionization may have killed jobs. A Honeywell plant near Phoenix had, a couple of times over the last decade, barely prevented unionization in secret ballot voting. Well, a day after Obama and the Democratic horde won the election, the company announced it would shut down that plant and offshore 700 jobs.

Recall that Obama promised two things in his campaign. First, he has pledged his support for “card check” unionism, where the secret ballot is replaced by face-to-face cajoling. Second, he promised to penalize companies that “move American jobs overseas.” It’s not a stretch to believe that the Phoenix plant was a highly likely target for successful unionization. It’s therefore not a stretch to think that the company decided to move its operations to Mexico and the Czech Republic while it still had the freedom to do so.

It’s well documented that job growth in unionized companies is far slower than in non-union companies. Labor organizations will never track such a thing. They will track union vs. non-union wages or benefits–the visible benefits of union negotiations. But they don’t have to track job growth. Everyone knows that within any industry–airlines, trucks, auto manufacture, etc.–job growth is much higher among the non-union firms. Everyone knows that unions spend much of their energy trying to prevent further job losses. This is just economic common sense.

The problem for workers is that, while they can see the tangible gains of unions in terms of wages and benefits, they can’t see all the jobs that weren’t created, or were created off shore because the union priced them out of the domestic market. The market penalty of unionism is largely invisible. Of course, the market is working whether workers or politicians or anyone else notices it or acknowledges it. But it is quite possible, if not likely, that Obama’s outspoken support for pro-union policies led to the loss of hundreds of jobs in Phoenix, and goodness knows how many more in the rest of the country between now and the point where he takes those rights away from workers and companies.

Postscript: Those with the jobs, and therefore union votes, have a strong incentive toward blindness about this feature of the market. They could care less about those without the jobs, especially if the reason those jobs aren’t there is because their jobs pay too much. They only care to the extent that the lack of labor competitiveness might affect their job.