Quote:
Originally Posted by Tyrone Slothrop
This started from something Sebby said about the effectiveness of stimulus. If the entire point of making infrastructure spending go to union jobs is that they are more expensive and you think you get more of it, OK, but I think what actually happens is that Congress appropriates whatever it's going to appropriate and if it goes to union projects then there are fewer of them, and the same aggregate spending.
You guys keep explaining the concept to me as if I don't understand it. I get it. I just think the delta is pretty small. I concede I'm not backing that up with anything other than an intuition that in all the money spent on an infrastructure project on materials and land and etc., the delta between union and non-union wages is a pretty small thing. It's not small to the workers involved, but it does seem pretty small when you are trying to assess the stimulative effects. Also, (a) the money that goest to the wealthy has some stimulative effect, just not as much, and (b) if the non-union projects are really cheaper, then the mix of work is different -- e.g., your federal highway spending bill gets you 28 highway projects instead of 26, so more non-union workers are getting work than union workers are.
To this, GGG offers me a hypothetical where union wages are 3x non-union wages, and TM asserts theres "a much highly stimulative effect," as if just saying that way answers the question instead of restates it. Hey, I just spent a few minutes Googling and I couldn't find anything useful on point, so it's not like I'm saying anything new at this point either. If I were designing federal infrastructure spending packages, I would still steer the work to union shops, but I wouldn't tout the heightened stimulus effects as the reason to do it.
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Union wages have a uniquely high multiplier effect because union workers tend to consume in more sectors than non-union workers. Non-union workers are paid as little as management can pay them. Right there, a significant amount of purchasing power is eliminated. Non-union workers typically do not have benefits. They are more likely to have health care costs, interest on payday loans, and all other variety of debts that dog people living on the margin. These people do not have safety nets and acquire debt to survive in payoff periods. In short, non-union fungible construction labor tends to have very little discretionary income.
Union labor, otoh, gets paid more, has safety nets for periods of layoff or disability, and consequently tends not be in debt servitude. Union members can go to lunch and dinner at local establishments, drink at local bars, buy at local grocers, etc. They grow the local economy.
So the delta you're citing (union wage - non-union wage) is an incomplete assessment of the difference between union and non-union labor. It's not a question of one guy being able to spend $50 on dinner after work versus another being able to spend only $25. It's one guy being able to spend $25 versus another guy being able to spend $0. It's multiplier (union) vs. no multiplier (non-union).
