Loss of job

A possible cost of union membership is the loss of the job due to layoffs (2010 - over 1,000 TWU Local 100 members were laid off) or the closing of the plant (Stella D’oro in the Bronx closed its cookie plant and sold the plant to real estate developers who will raze the site and build a shopping center - Bakery Workers Union (Local 50 BCTGM) who were shut out of their jobs since August 2008). When a union wins higher wages, greater benefits, or restrictive work rules, the general result is to increase the  employer’s cost of labor per hour. However that is a red herring the executives who over pay themselves award themselves exorbitant bonuses (definitely they keep the share holders happy by providing dividends).

As usual the management claims an increase in labor cost leads to a decline in employment as the firm is forced to move up its labor demand. Another ruse is that should labor costs increase to the point where the revenues of the firm are less than its total variable costs of production, the employer will close the plant and all union members will lose their jobs.