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Unions Sink Businesses: A Myth?

Institute's study finds "zero correlation" between companies being unionized and going bust.

By Dave Lindorff | Updated on March 30, 2009

The Employee Free Choice Act (EFCA), organized labor’s key legislative priority for the new Obama administration and the Democratic Congress, appears to be losing steam in the Senate, where 60 votes are needed to move the legislation past a likely Republican filibuster. Sen. Arlen Specter (R-Pa.) and Sen. Diane Feinstein (D-Calif.) both withdrew their support last week, each citing in some degree one of the measure’s opponents’ major arguments, that making unionization easier could lead to more business failures and job losses.

But a new study by labor economist John DiNardo of the University of Michigan, released by the Economic Policy Institute (EPI), suggests Specter and Feinstein needn’t worry: The data do not support the notion that unionization increases the risk of business failure. DiNardo’s study cites a pair of surveys of similar enterprises where workers either narrowly won union votes by 51% or narrowly lost by 49%. The surveys, which cover the period from 1961 to 2004, found there was “zero correlation” between a company’s being unionized and the likelihood of its going bust.

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