When labor has a voice, everyone suffers! According to a new research

Michael Moore has long been fighting for workers’ rights to have a voice in managing corporations. “We can do it too!” he always argues.

Professors  Olubunmi Faleye, Vikas Mehrotra, and Randall Morck did a study on the consequence of labor control and paint a rather sad picture for us on what will happen.

They find that:
“Relative to other firms, labor-controlled publicly-traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more slowly, create fewer new jobs, and exhibit lower labor and total factor productivity. We therefore propose that labor uses its corporate governance voice to maximize the combined value of its contractual and residual claims, and that this often pushes corporate policies away from, rather than towards, shareholder value maximization.”

When labor has a voice in corporate governance, a corporation actually creates fewer new jobs!

This is good for those already in the union shop as their jobs are secure and they don't care about other Americans. But this is absolutely bad and unfair for other hard-working Americans.

Think twice before buying into the idea that all workers are brothers for one another! For unionized workers, the size of the pie is fixed; they will be mad at you when you, a hardworking young worker more eager and better equiped for the job, wants to “steal” their lunch.

Reference:
When Labor Has a Voice in Corporate Governance, (PDF file)  forthcoming in the Journal of Financial and Quantitative Analysis, alos covered by MIT Sloan Management Review