Trade unions are frequently charged of benefiting the insider workers, those having a secure job as well as high efficiency, at the cost of the outsider workers, those who are jobless or at the risk of joblessness or who are not find to get the job that they want in a particular field. The alleged insider-outsider theory studies this problem.
Usually, the trivial benefit of an additional worker decreases as the number of workers raise. This entails that the lower the minimum wage, the more workers a company can gainfully employ. Consequently, while an augment in the minimum wage benefits the insiders, consequently fewer new workers are employed and fewer retiring workers reinstated. This effect is more marked in a work-intensive service company (Baker, (2002).
The economic examination of a cartel applies totally to most unions, to those that struggle to fix the price of work, to limit supply or to limit rivalry. Conversely, unions often have also other jobs than those of a cartel: they may counsel the workers, warn concerning detrimental contracts or terms of employment etc. These latter purposes are typically considered as valuable for both the workers and for the society all together, whereas the opposite applies to cartel-type minimum terms.
Frequently the union on a particular industry puts pressure on politicians to finance the industry concerned. This promotes the companies, workers, shareholders as well as consumers of the product of that industry at a cost to other people. As a result, it depends on the question whether the welfare of a trade union are for or in opposition to the interests of the companies, unemployed, workers, tax-payers or the society all together.
Small unions have grown to enormous size; a huge new federation has developed; and now the old American Federation of Labor and its late rival, the