Unions will harm economy if they do this: Expert

Could labor unrest hurt the US economy?
Could labor unrest hurt the US economy?   

As the nation watched two prominent labor disputes play out across the country, one expert had a warning on Monday: If unions manage to impose work rules, pay increases and compensation schedules that undermine a business' international competitiveness, it will hurt the U.S. economy.

"I have no objections to unions winning these battles but they need to keep in mind that if you bankrupt an industry or make it uncompetitive in the long run, you're actually cutting your own wrists," Dan Mitchell, senior fellow at the Cato Institute, said in an interview with "Power Lunch."

On the West Coast, the dispute between dockworkers and shipping and terminal operators has been dragging on for months. On Monday port operations resumed after being temporarily shut down over the weekend because of mounting congestion. The shippers and dockworkers have blamed the cargo backup on each other.

Members of the United Steel Workers union picket the Tesoro refinery in Carson, Calif., Feb. 2, 2015.
Bob Riha, Jr. | Reuters
Members of the United Steel Workers union picket the Tesoro refinery in Carson, Calif., Feb. 2, 2015.

The snarls have rippled through the U.S. commercial supply chain, disrupting the delivery of goods in a wide range of industries. The National Association of Manufacturers projects a new 10-day port shutdown could cost the U.S. economy $2.1 billion a day.

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Separately, U.S. refinery workers are striking against 11 plants for what they call unfair labor practices by oil companies.

With the economy coming back, especially manufacturing, unions have a little more bargaining power, said Philip Dine, a U.S. labor expert and author of "State of the Unions," on "Power Lunch."

"Unions realize they are in the fight for their very existence at this point. They've taken it on the chin. The middle class has taken it on the chin for decades and they're fighting back now," he said.

On top of that, labor's biggest issues are income inequality and that issue is in the forefront of the American consciousness right now, with most people agreeing with labor, Dine noted.

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However, Mitchell thinks unions are wrong to make income inequality their top focus.

"If all we're concerned about is re-slicing a shrinking pie, sort of like a southern European stagnant weak economy, that's not good for workers in the long run," he said.

He suggests the focus should be getting back to 3 to 4 percent growth, because that produces a tight labor market, and tight labor markets increase workers' wages.

—Reuters contributed to this report.