Why are unions declining?

Two great economics blogs, Marginal Revolution and Jane Galt recently asked why are unions on the decline in the private sector. There are numerous interesting comments on the Jane Galt post (I'm sure Marginal Revolution will get some interesting comments as well - I encourage my students to read the comments as well).

Here is my quick take: it is simple supply and demand. On the supply side, unions cannot effectively deliver on their promises of higher wages and better work conditions in competitive sectors of the economy (the auto and airline industry examples noted in some of the comments as areas where unions are strong are, in my view, perfect examples of what I'm talking about - as these industries become more and more competitive the wage and benefit structures negotiated when the industries were more like oligopolies are now unsustainable). There is just less wiggle room for companies to pass monopoly rents to unions - thus unions have a lot less to "sell" potential members than they did in the past. As one would expect, the "price" of union membership (dues, fees, assessments) has risen considerably in the face of this problem.

On the demand side, notwithstanding union hyperbole to the contrary, most (certainly not all) companies in America provide good work conditions and competitive wages. These may not be "living wages" according to unions, but they are not so unlivable that most people believe unions will (given the increased price and reduced effectiveness of unions) make them better off. Employees are protected by numerous laws and regulations that keep the employment situation within a reasonable range of "acceptable" to the average worker. Workers just don't have much demand for the bundle of services most unions are selling today.