While trade unions may have many of the benefits stated in the article, they also have some negative effects on markets. Many of these are covered (briefly) by Wikipedia in Opposition To Trade Unions, as are the responses to these arguments. I would like to present one further argument:
Having options is valuable. If you are considering buying a business valued at $110,000, which of these two options would you prefer?
- Six months from now you must pay $100,000 for the business.
- Six months from now you have the option of paying $100,000 for the business.
An option gives you the right but not the obligation to do something. Options are valuable because you can choose not to exercise them if conditions become unfavorable. In the previous example, arrangement (b) is far preferable to (a) because in six months if the business is worth less than $100,000, then under (a) you must still buy the business while under (b) you can forgo the transaction. If you are forced to buy the business in six months, you must purchase it whether the business is doing well or poorly. If you have an option to buy, you need only acquire the business when it is doing well.
Options mitigate the danger of uncertainty. With an option you are not locked into a transaction, so if circumstances move against you, you can withdraw. Options are valuable because they eliminate downside risk while allowing you to capture the upside benefit. Options are more valuable the greater the underlying level of uncertainty. If, in the previous example, you know that the business will be worth $110,000 in six months, then arrangements (a) and (b) are identical, because you will always exercise the option in (b). If, however, there is some chance that in six months the business will be worth, say, $50,000, then you should much prefer having the option to having the obligation to buy.
Now, you are considering hiring an employee. Which of these two options would you prefer?
- You may not fire the employee for a period of 5 years.
- You may fire the employee at any time.
Obviously, as an employer, I would prefer the second option. The option value of an employee is directly proportional to how easily they can be fired – to how optional their employment is. To the extent that unions make it harder for employers to fire employees, they reduce the option value of those employees.
While this may seem bad for the employer, you might also think it's quite good for the employee. But let's consider the ramifications of this for a moment. The technology industry, and especially startups, is largely dependent on the short-term availability of skilled workers. Low-risk options like at-will employment and contract-to-hire give employers much greater option value on potential hires, making it more likely that they would choose to hire. This means that while it's easier to get fired, it is also easier to get hired. This also means that "human resources" tend to be allocated more efficiently, and that the job market is more efficient as a whole. This also explains in part why Milton Friedman and other Chicago School economists believe that unions increase unemployment.
Now, this is not to say that a cost/benefit analysis of unionizing the software engineering profession wouldn't result in a net positive. If history is any guide, unionization here is about as likely to succeed as it is to fail. However, articles that present all the benefits of unions while ignoring all of the costs are not dealing fairly with the issues.