Book assignment: Paper # 2
Claim: Critical Analysis of Worker’s Benefits and Protection as Presented in Milton Friedman’s Free to Choose.
In Chapter eight of his popular Free to Choose, Milton Friedman takes on labor unions and government intervention in labor markets. He disputes the commonly held notion that labor unions and government spending are the cause of improvements in the living standards and wages of workers over the 19th and 20th centuries. He argues that because only “3 percent of workers” were members of unions as late as 1900, and because government regulation of the labor market was minimal prior to the New Deal, ...view middle of the document...
Second, unions lobby government for protections for labor unions, with much the same effect (229-243).
Keynesian economists dispute this analysis of their impacts on the labor market. First, Friedman’s conception that the impact of labor unions is determined solely by the concentration of unionized workers in the labor market is one that is open to dispute. This argument ignores the differential distribution of unionized workers—in some industries most workers are unionized, while in other industries there are almost no unionized workers. The impact of labor unions might be better analyzed on an industry-by-industry basis. Mischel and Walters argue that “strong unions set a pay standard that nonunion employers follow. For example, a high school graduate whose workplace is not unionized but whose industry is 25% unionized is paid 5% more than similar workers in less unionized industries.”
Friedman also argues that unions (and minimum wage laws) increase income inequality by increasing unemployment as well as racial disparities in income and employment. Using recent data, Mischel and Walters claim that unions decrease income inequality “because they raise wages more for low- and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree.” They also point out that the benefits of union wages accrue most dramatically to African American and women workers. Several studies conducted Free to Choose was published conclude that minimum wages have little, none or even a positive impact on employment, contrary to Friedman’s predictions (Bernstein and Schmidt 1998).
Finally, the state of the overall labor market today seriously calls into question Friedman’s argument that a reduction in the power of labor...