Op-ed written in collaboration with Matthew Lau* published exclusively on our website.
May 1st is celebrated by many labour unions in Canada and around the world as International Workers’ Day, which recognizes workers trying to improve their wages and working conditions. According to union leaders, this is the purpose of unions—to protect and represent the interests of workers, fighting for better pay and more favourable terms of employment.
The reality, however, is that while unions benefit some workers, they actually harm other workers, both directly and indirectly. This is because unions lobby governments for special privileges that help their members to the detriment of everyone else. The main victims of such discrimination are often relatively poor and low-skilled.
Take supply management. Dairy unions say that the benefits of this system of production quotas, fixed prices, and tariff barriers are widely shared, ensuring stable prices for farmers and a stable supply of high quality dairy products for consumers. In reality, the purpose and effect of supply management is to benefit thousands of unionized domestic dairy farmers, to the detriment of some 35 million Canadians, who as consumers have to pay more for dairy.
By preventing agricultural workers in other countries from competing to serve Canadians, supply management forces the average Canadian household to spend hundreds of dollars more on food each year. This extra cost hits poorer households especially hard, even having the effect of pushing 130,000 to 190,000 Canadians below the poverty line, depending on the measure used.
Workers in the sharing economy are also the targets of union activism. Some union leaders have called for Uber to be banned across Canada, for instance. Most municipalities have long managed the supply of taxis much the same way dairy is controlled in this country, limiting their number with special permits and fixing rates. In order to protect taxi drivers from the increased competition represented by Uber, unions want governments to take away the jobs of Uber drivers, which would reduce choice for consumers.
Union support for minimum wages similarly helps some while hurting others. When Quebec raises the minimum wage to $12 an hour as of May 1st, the predictable result will be to encourage businesses to discriminate against the least-skilled workers, as employers will be unable to provide jobs to those whose productive output is worth less than $12 an hour, unless they want to lose money.
This effect, furthermore, will be more pronounced in rural regions where average wages are lower to begin with. A 2016 MEI study found that an increase to a $15 minimum wage (from $10.75 at the time) would put between 56% and 41% of the workforce at risk in the 25 most-affected regions of Quebec, far more than in the regions surrounding the big urban centres of Montreal, Quebec City, and Ottawa–Gatineau. Ontario’s jump to $14 an hour this year and $15 an hour next year will surely have similarly disproportionate effects on the rural regions of that province as well.
These examples of union-supported discrimination against workers and consumers should not surprise anyone. Since unions do nothing to improve workers’ productivity, they can only inflate the price of labour by creating artificial scarcity, restricting the supply of labour through government-enforced discrimination against workers who are not part of the union.
Despite the pro-worker talk from union leaders, the effect of many labour union actions is to hurt workers and consumers, not to help them. This is a reality that Canadians should be aware of—especially as International Workers’ Day approaches.
Jasmin Guénette is Vice President of Operations at the Montreal Economic Institute, Matthew Lau is an independent writer. The views reflected in this op-ed are their own.