absence of an employment effect is that unions use the collective
bargaining process to pressure firms to hire more workers than they
otherwise would. This practice is known as featherbedding and for years
was infamous in the railways, where union contracts required the
railways to hire firemen (whose job was to keep the coal fires burning)
long after the widespread adoption of diesel locomotives.
If such featherbedding is pervasive in unionized firms, it may be the
explanation for the absence of an observable union effect on
employment. The employment reduction caused by the higher wage may
be offset by the employment increase due to featherbedding.
Another possible explanation for the absence of a union employment
effect is union campaigns to increase the demand for the goods produced
by their members. We sometimes see labels on products that proclaim
them to be “union made” or “made with union labour.” Unions also spend
considerably on magazine and television advertising stressing the value
of union labour. Some unions also lobby the government to restrict the
import of foreign-made products in an attempt to increase Canadian
consumers’ demand for the domestic products made with union labour.
To the extent that these campaigns convince consumers to buy more
union-made products than they otherwise would, the result will be an
increase in demand for union labour.
Figure 14-8 shows how the combination of the union wage premium
and the increases in demand for union labour (either through