Las Vegas is familiar with unions wielding significant influence. The Culinary Union, representing culinary workers and allied with the Bartenders Union, orchestrated a 48-hour walkout by 700 workers at Virgin Hotels in May to negotiate an expired contract. Last year, the union approved a Strip-wide strike before the Super Bowl in Las Vegas, resulting in negotiations for 10,000 nonunion workers.
In labor markets, disputes are often perplexing given that both employer and employee must agree on job terms. However, the market is not always free or fair. In "company towns," where one employer dominates, workers may have no choice but to accept offered wages despite producing more value than they receive.
For instance, public school districts dominate local markets for teachers in the U.S., employing over 90% of elementary and secondary students according to the National Center for Education Statistics. This monopoly allows districts to set wages unilaterally.
Economists propose two solutions: breaking up monopolies into smaller firms or introducing competitors into the market. Both approaches aim to increase demand for workers and improve salaries and benefits. However, these solutions can be costly and complex.
When competition isn't feasible, as with public school systems offering free education, unions become an alternative solution. Unions can collectively bargain on behalf of workers, counterbalancing employer power.
Union strikes can burden the public sector significantly. The Chicago Teachers Union's 2012 strike disrupted education for nearly 400,000 students midyear. Parent Gladys Hampton expressed frustration: “How dare you guys stop school in session? How dare you do that to our children? What are you thinking about? Not about them.” Support staff strikes led by Service Employees International Union Local 73 further impacted facilities.
Strikes are also financially burdensome. A class action suit following a January 2022 strike by the Chicago Teachers Union estimated damages at $213 million based on daily educational costs per student.
While pay hikes resolving strikes can lead to unemployment due to increased labor costs, they remain a common resolution tactic. In December 2023, private-sector union employees cost $57 per hour compared to $42 for nonunion workers according to Statista data. The Culinary Union’s new contract in Las Vegas would raise hourly compensation from $28 to $37.
Higher unionization rates correlate with higher unemployment rates; a ten percentage point increase in unionization was linked to a half-percentage point rise in unemployment in 2023 according to statistical models.
Generous pensions negotiated by unions pose long-term fiscal challenges. In Chicago, average teacher pensions reach $73,350 annually with total payouts averaging $2 million per teacher. Despite state laws requiring pension funds to finance liabilities substantially by 2059, funding projections suggest potential future shortfalls impacting city bonds already rated as junk.
In Nevada, teachers contribute 12.25% of their paychecks to public-sector pensions while police and firefighters contribute 20.25%. Public-sector unions like the American Federation of State, County and Municipal Employees may push for reduced obligations since Nevada teachers do not receive Social Security benefits.
Unions offer benefits such as workforce safety monitoring and retraining programs like those included in the Culinary’s new contract in Las Vegas. However, their influence on market dynamics can result in high prices and limited supply akin to monopoly conditions—familiar issues for Las Vegas residents.
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