There are a few problems with unions, many of which can be summed up as principal/agent problems. But another issue is that unions are fundamentally democratic, which leads to some misaligned incentives.
Seniority is a completely legible and unambiguous criteria, and it’s one that most workers can eventually benefit from in the long run. Merit is more of a judgment call. Management at least has the incentive to get that judgment call right (which isn’t to say they do get it right, but at least they have the incentive to, modulo the same principal/agent problems that unions also introduce), but unions don’t. So if I’m part of the top 20% of workers at a firm, or part of the top 20% that the firm could reasonably hire, my incentives are actually better aligned with management than with the other 80% of workers who would dominate the union. The classic union solution to this problem is closed shops, but that’s hard to achieve without specific legal and regulatory moats.
Also:
> My guess is in most cases you'd still end up with an avenue for merit based layoffs, they just wouldn't start until new hiring had been completely stopped
This is another common failure mode of unions. People who already work in a given field are in the union, but people trying to break into the field are not. So it becomes harder to hire new people, which actually leads to longer tenures and makes seniority seem like a better deal for the union members.