Labor Pains: Because Being in a Union can be Painful

Unions Hurt Stock Prices

The Investor’s Business Daily featured an editorial about how unions hurt a company’s stock price.

According to a study from the National Bureau of Economic Research, a unionized public company lost, on average, $40,500 per each worker eligible to vote to organize. Researchers also found that a doubling of unionization in the U.S. would lead to a 4.3 percent decrease in the stock value of companies “at risk of unionization.” The study examined data from unionized public companies between 1961 to 1999 and focused on stock performance 24  months before and after a union vote.

Why do equity values fall when unions form? According to the study, a “combination of a transfer to workers” and “lost profit due to inefficiencies caused by the union” cause a company’s equity value to drop.

The results from the NBER study is yet another example of how damaging EFCA will be if passed.


Categories: Center for Union FactsEFACNews