to raise labor share, unions have to decrease markups or the cost of capital; don’t see evidence or mechanism there
That is from A Macroeconomist, on Twitter. A union which simply grabs for more from the employer will raise marginal cost and induce an offsetting boost in the price, restoring capital’s share (to some degree, depending on assumptions), and of course passing some of the burden along to consumers, most of whom are workers. The tweeter did also note that unions might decrease income inequality within the category of labor, however. Nick Bunker comments on that. Via Kevin Lewis, here is a new and interesting paper on how unions might reduce wage inequality. David Henderson comments on unions and prices.
I am often struck by the conflict between one supposition and one fact. First, employers are supposed to be reaping some big surplus from hiring unskilled labor. Second, when a downturn comes, it is unskilled labor who are laid off.