Market rates by definition are what an employer will pay, and what an employee will work for. If someone will work for less, then that is the market rate.
Today's union artificially inflates wages by restricting the labor supply. The whole point is to obtain higher than market wages. Monopolize the market, and you can artificially inflate the price. I personally know folks who are payed $80+K/year to push brooms and take frequent naps. There is nothing you can say to me that will convince me that many unions (not all) create a class of overpaid and under skilled future unemployed.
I live in the heart of union country. If they were paying true market wages, the auto industry wouldn't be swimming in red ink and moving plants overseas. I was sick listening to the UAW workers complain that they were being asked to contribute $20 a month for their health care. They had no desire to understand the business or the economic situation of the Big Three. They simply wanted to prop up their bloated status quo.
I am also a union member. Our union creates an environment where some are overpaid, and some are underpaid. It is difficult to attract IT talent because of the union pay scale. For IT, it is decidedly below market rates.
Your last two paragraphs I agree with. New union shops only sprout up due to poor work environment, or slick "snake oil" union reps looking for some dumb new dues payers. The latter usually doesn't last too many years. . .