Teacher's Unions and Unemployment

I read a very profound statement in Man, Economy, and State today that, although known to any worthwhile economist, is almost vaguely or not even treated at all in high school and college econ principles texts. I'm on Rothbard's chapter on monopoly. The passage (pp.707-708) is as follows:

"[When] [t]he union has thus achieved a restrictionist wage rate... a sacrifice has been made... there are now fewer workers hired... What happens to them? These discharged workers are the main losers in this procedure. Since the union represents the remaining workers, it does not have to concern itself, as the monopolist would, with the fate of these workers. At best, [the unemployed workers] must shift... to some other-nonunionized- industry. The trouble is, however, that the workers are less suited to the new industry. Their having been in the now unionized industry implies that their DMVP in that industry was higher than in the industry to which they must shift; consequently, their wage rate is now lower."

But this next part is what I find amazing, that I've never read in any formal textbook (but is so elementary). Rothbard continues:

"Moreover, their entry into the other industry depresses the wage rates of the workers already there. Consequently, at best, a union can achieve a higher, restrictionist wage rate for its members only at the expense of lowering the wage rates of all other workers in the economy." [Emphasis added]

I do believe there exists economic laws irrespective of time and place. In this case, an increase in supply will decrease the equilibrium price- in this case, the price of labor, or the wage rate. So not only do labor unions use the heavy hand of the government to force employers into negotiations (and more importantly, settlements), but also these entities decrease everybody else's standard of living in the form of decreased wages by the reallocation of previously employed workers.

Let us not think that unionization in this and other countries is such a small proportion of the labor force, either; this analysis applies in full to occupations and industries that require intense licensing (e.g., medical services) and that outright prohibit competition (e.g., public utilities, public schooling).

Some people might object that public schooling is subject to the constraints of competition via private schools. This is untrue for many reasons, but principally, two: 1) Private schools are subject to many, if not all, of the same requirements concerning curriculum and facilities; they can scarcely operate outside of the realm of what the state legislature will let them. 2) Education is compulsory; kids can't choose whether to go or not. Consumer choice is the backbone of competition: By eliminating a vast array of choices available to children and young adults, be it the workforce or some other way to spend their initial 18 years of life, compulsory education has eliminated a large part of what constitutes competition. Thus, even if argument (1) is granted, the fact that kids have to attend school means that both public and private schools don't have to try nearly as hard to maintain a level of quality and price that would impel ordinarily free children to attend.

It's as if all adults were forced to buy magazines of a certain type. Before such a mandate was enforced, magazines had to compete amongst the thousands of other products that you would have ordinarily bought with your money (not just other magazines). But it's worse than this where schooling is concerned, because on top of eliminating substitute products to spend your tuition money on, the educational establishment is cartelized and monopolized to hell and back. You have the worst of both worlds in the case of schooling, because at least in the magazine example wider profit margins would encourage entrepreneurs to enter the forced magazine industry. Where schooling is concerned, that's not a viable option. To modify our magazine example, adults are forced to buy the kind of magazines that are cartelized and will blow any of its competitors to smithereens with brute force. Now imagine the kind of quality of magazines you'd expect to read.

Back to my original point, this monopolization of sorts not only dis-employs the workers in the original industry but also decreases the wages of everybody else as those workers find work elsewhere. Multiply that by the amount of licensing and paperwork it takes to work in any given occupation, and it's no wonder why U6 unemployment is at 16.9 % (and why we have to use 6 different measures in the first place ;) )