Ep32 “Labor Unions and Detroit Struggle” with Larry Katz

Wage Dynamics

Jules van Binsbergen and Jonathan Berk explore the implications of union-driven wage increases in the automotive industry, particularly in Detroit. They discuss how competitive pressures from both national and international markets, such as Tesla and foreign carmakers, complicate the ability to raise wages without affecting car prices 1. Larry Katz highlights the challenges unions face due to international competition and the shift towards electronic vehicles, which are often non-unionized 2.

The union's hope is to spread it there and then use that to try to organize Tesla.

--- Larry Katz

The hosts question whether the current wage negotiations will lead to long-term benefits for workers or if they will face diminishing returns as the industry evolves 2.

   

Historical Impact

The discussion shifts to the historical impact of unions on wages and the complexities of measuring their true effects. Jules van Binsbergen points out that comparing union and non-union wages is complicated by selection effects, as certain workers and industries are more likely to unionize 3. Larry Katz notes that while unions have historically increased the share of revenue going to workers, they have also faced declining membership due to increased competition and shifts in the manufacturing sector 4.

Unions have been declining in their membership in the US since the mid 20th century.

--- Larry Katz

The hosts emphasize the need for careful research to understand the causal effects of unions on wages and labor market dynamics 3.