Are Unions Doomed to Being a “Niche Movement” in a Competitive Economy?

Professor Wachter has done something quite extraordinary in the long-running scholarly debate over the causes of union decline: he has said something new. Wachter contends that the “corporatist” regime inaugurated in the early New Deal served as the necessary incubator for union growth in the 1930s and 1940s, and that unionization has inexorably declined with the gradual dismantling of the complementary institutions and the restraints on competition that made up that corporatist regime. That is because unions’ goal of “taking wages out of competition,” as well as union wage gains, fit with a corporatist commitment to “fair” rather than “free” competition, but are unsustainable in a free market in which cost-based competition is inevitable.

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