importance of unions essay

Ten reasons why unions are important

Today, working people in the UK are facing unprecedented attacks on their right to organise, including their right to strike – with the last UK government introducing the most repressive legislation in decades. A anti-strike law undermines hard won workers’ rights and aimed to silence those who challenged the last UK government’s broken economic policies.  

War on Want is proud to stand in solidarity with workers in the UK and around the world — many of whom face intimidation and retaliation for organising into trade unions.    

There are so many reasons why unions are important — here are just ten of them:  

1. Unity is strength

Unions enable workers to come together as a powerful, collective voice to communicate with management about their working terms and conditions – and to push for safe, fair and decent work.  

Working people need the protection of a union now more than ever. Many employers around the world have tried to divide workers and cut through workers’ rights legislation by shifting the focus away from their own responsibilities towards their workers. Whether by arguing that ‘gig-economy’ workers are self-employed ‘contractors’ rather than employees; or by distancing themselves from the workers in Global South supply chains, who produce the products they profit from.  

Global corporations and fashion brands are keen to point to the thousands of jobs they create. However, without ensuring the essential rights of workers are respected and maintained, this is not decent work.  

Decent work is about the right to employment to begin with, and that employers should provide a living wage for the employee and the family. It should ensure workplace safety without discrimination and the right of employees to organise as trade unions. Anton Marcus , Joint Secretary of FTZ&GSEU in Sri Lanka

2. Better terms and conditions

Workers who join a trade union are more likely to have better terms and conditions than those who do not, because trade unions negotiate for their members through collective bargaining agreements and protect them from bad management practices.   

All aspects of working life should be the subject of discussion and agreement between employers and employees under the protection of a trade union. Trained representatives of the union lead these negotiations on behalf of employees. Unions work constructively with progressive employers to ensure that company changes affecting employees are in the interest of both workers and employer. 

3. More holiday

Unions won the right for workers to have paid holidays. The average trade union member in the UK gets over 25% more annual leave a year than a non-unionised worker.  

4. Higher wages

You earn more in a unionised workplace. Trade union members in the UK earn on average 10% more than non-unionised members. This is the power of collective bargaining.

While many companies post record profits, workers in the UK are feeling the devastating effects of years of real-term pay decreases and cuts to vital public services. Amid a cost-of-living crisis that is dragging more and more people towards poverty, hundreds of thousands of unionised public sector workers have been left with no alternative but to go on strike.  

The UK government should be getting around the table and having meaningful discussions with workers and trade unions to find solutions to the deepening in-work poverty people are facing. Instead, it is undermining the vital role of unions in representing and fighting for the rights of workers.     

Strike action is always a last resort — no worker wants to go on strike and lose pay. But throughout history, union-organised strike action has been a crucial tactic for workers in securing fair pay and working conditions.  

In 2017, MacDonald’s workers made history when they joined the Bakers, Food and Allied Workers’ Union (BFAWU) and went on strike — the McStrike  — for the first time ever.  McDonald’s makes billions every year, but it doesn’t pay its fair share of taxes – or its workers living wages. The McStrike industrial action won McDonald’s workers across the UK the biggest pay rise in over ten years.  

5. Equal opportunities, and protection against discrimination 

Unions fight for equal opportunities in the workplace. Trade unions have fought for laws that give rights to workers: the minimum wage, maximum working time, paid holidays, equal pay for work of equal value as well as anti-discrimination laws.   

It is the trade union movement that is fighting back against the discriminatory and unjust practices of our broken economic system. In Sri Lanka, War on Want’s trade union partner FTZ-GSEU has been at the forefront of battling for workers for over 30 years. So-called ‘free-trade zones’ have eroded the rights of workers around the globe; and in Sri Lanka, as elsewhere, it is mainly women who are most affected by reduced regulations and weak worker protections. 

Separately, women from across the world have joined together to speak out about the sexual harassment they have faced whilst working at McDonald’s. Workers in the USA have even taken strike action. In the UK, the BFAWU-led campaign has led to McDonald’s entering a legal agreement with the Equality and Human Rights Commission to protect workers from sexual harassment. 

6. Better parental leave

Unions are responsible for securing and improving maternity, paternal and carer leave for millions of workers.    

In the UK, unionised workplaces are much more likely to have maternity, paternal and carer leave policies in place which are more generous than the statutory minimum.  

7. Security and stability

Trade union members are more likely to stay in their jobs for longer, on average five years more than non-unionised workers.

8. Health and safety  

Unionised workplaces are safer workplaces.  In the UK, there are 50% fewer accidents in unionised workplaces. Local safety representatives, appointed by trade union shops, deal with issues ranging from stress and mental health issues to hazardous substances, representing their colleagues’ health and safety interests to management.  

9. Legal support

If you have a problem at work, unions can offer legal services and advice.  

In situations such as disciplinary and grievance hearings, your union representative can give you expert advice, support and representation from start to finish. Unions have legal teams who will make sure you are treated fairly and won’t charge you legal fees. Your union will be there for you whether the problem is with employment contracts, harassment, redundancy, pensions or discrimination.  

10. Having someone in your corner

As a union member you are part of something bigger – and have the support of the union when you need it.  

Trade unions are part of an international movement. Global worker solidarity is crucial to ending the worst abuses and injustice working people face, and to push back against poverty, climate breakdown and inequality. War on Want regularly asks our affiliates from the UK trade union movement to stand in solidarity with other workers across the world in their own struggles to protect their livelihoods and right to organise.

Workers against poverty 

War on Want believes that poverty is political. It is the result of decisions made by those who hold power — governments and corporations — and a broken economic system which generates increasing wealth and power for elites at the expense of the majority of people on this earth. Unions have been central to War on Want’s work throughout our history as they are crucial to the fight against global poverty. We know that around the world, organised workers achieve more collectively than they can as individuals.  

The Covid-19 pandemic shone a light on those workplaces and sectors where poor pay and conditions had become almost normalised, where the gap between rich and poor has grown exponentially, and where wealth is rewarded while poverty is punished. 

Here in the UK, it was the trade union movement, not the government, who fought for the furlough scheme which helped many workers to keep their heads above water. And in Sri Lanka and Bangladesh, it was garment worker unions who fought for compensation for workers dismissed in factory closures when global fashion brands cancelled orders – and didn’t pay for work already completed – while continuing to make huge profits.  

Our partnerships with workers’ associations and trade unions focus on building strong, representative and effective worker-led organisations that have the knowledge and skills to create and use opportunities to engage with government and employers to realise safe, decent work. War on Want will continue to work with our affiliates here in the UK and our partners representing and organising workers across the Global South. 

First published on 12 Feb 2018, updated in Feb 2023. 

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What Are Unions and Why Are They Important?

What is a labor union and when were they first formed?

Dispatch riders waiting outside the TUC headquarters in 1926, UK. Image via TUC

Union formation really began to pick up in the United Kingdom around the time of the Industrial Revolution (1760-1840), when new factories popped up swiftly and had little regard for the conditions its employees had to endure. Workers fought back and settled many disputes, giving rise to “combinations” of colleagues protecting their rights.

Most early unions were on behalf of those in textile industries, as well as mechanics and blacksmiths, and although they laid the groundwork for organizations to continue to improve the lives of workers across the world, it’s worth remembering that they certainly weren’t inclusive of everyone. Despite the National Labor Union’s attempts to insist that it didn’t discriminate against “race or nationality” in 1869, the organization continually failed to fight hard enough for the rights of African-Americans and women, so in the same year, the Colored National Labor Union was formed.

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What are unions like today.

A woman strikes at the Grunwick film processing plant in London, 1976. Image via The Guardian

Unionized teachers on strike in Chicago in 2019. Image via Quartz.

At this point, it’s worth noting that laws surrounding unions vary drastically between different countries, depending on its history and politics. 

What are the plus (and minus) points of unions?

Martin Luther King Jr. and Joachim Prinz at the March on Washington for Jobs and Freedom in 1963. Image via AFL-CIO

How does the “right to work” relate to labor unions in the United States?

Campaigners from the Coalition of Black Trade Unionists in 2017. Image via In These Times

The general gist is that it entitles workers to be employed in ‘unionized’ workplaces (what’s called a ‘closed shop’) without joining a union. They can also leave a union at any time without having to fear losing their job, as was once the case. As well, even if an employee isn’t a union member, the right-to-work state law allows them to still access the benefits that the organizations offer, only they’ll likely be required to pay a fee for certain services.

Women in Bangladesh campaign for better working conditions with a representative from the labor rights organization Solidarity Centre. Image via Solidarity Centre

In the region, labor unions have become so key to the improvement of working conditions, pay, and job security that their representation can often be the difference between life and death.

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The Future of the Labor Unions in the U.S. Research Paper

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Why is there a Need to Organize into Labor Unions?

What are the problems faced by employees in relation to labor unions.

• What will be the Impact of the Free Choice Act?

Before Industrial Age emerged as one of the most significant period in history, humans learned to cope with an antiquated system characterized by monarchies, empires, and tribal leaderships. It was almost impossible for an ordinary human being to change his destiny unless he is a part of the noble class or unless he is willing to wrest control of authority by violent means. In the modern age democracy became an alternative form of government wherein the majority rules. This type of government can be seen in organized labor unions. An organization that helps protect the rights and privileges of workers so that a particular way of life can be sustained without reverting back to the chaos and dictatorships of ancient times. It is therefore important to know what is the future of labor unions in the United States.

The importance of labor unions can be seen in the way it is supposed to function. It is an offshoot of a modern understanding of democracy. It is no longer acceptable to allow one person to control a group of men and women. This is especially true in a democratic nation such as the United States. Every four years there is an election to ensure that a despot will not arise and revert the social and political landscape into something reminiscent of ancient history where kingdom fight against kingdoms and rulers oppress their people in the belief that they are secured in their position and no matter what they will do there is nothing that the majority can do to change the situation.

All of that had been thrown into the trash bin of history and in a democratic way of life, the ability of the people to take part in governance is not only limited to exercising their right of suffrage, ordinary men and women also have the capacity to help shape their working environment by becoming a part of organized labor unions. In this regard there are three questions that must be answered in this study and these are listed as follows:

What will be the Impact of the Free Choice Act ?

The answer to these questions will help determine the future of labor unions in the United States. With regards to the first question the proponent of this study will point out the benefits that will be acquired by members of labor unions as opposed to the solitary worker unable to acquire leverage and therefore has no power to negotiate with employers. The second question deals with the problems faced by employees as they seek to improve the quality of their lives and enhance job satisfaction. The third question is in relation to a specific solution a proposed law that would increase the capability of ordinary workers to organize themselves into labor unions.

Labor unions became an important component of the American landscape when workers in factory floors began to organize in response to the fact that as a group they can increase their leverage when negotiating with their employers. It did not take long before factory workers in the 19 th century began to realize that on their own they are powerless against the unified strength of businessmen who can easily remove their privileges as it was relatively easy to replace them with new hires. There is also the issue of wages, the number of hours that is required to labor in the workplace as well as the type of work that is required for a single worker.

All of these issues need to be discussed with management and it is not practical that each worker should make a beeline towards the factory manager’s office and express their complaints as well as their aspirations. It is much better to organize, choose a leader among them and then the spokesperson will be able to articulate their wishes and their demands. Aside from the practicality of choosing a leader to deal with corporate leaders, labor unions also find strength in numbers. The action of a single worker may be considered insignificant but if half the work force will refuse to work the firm or the factory will readily feel the impact of a strike.

It is a part of human nature to form social groups and therefore it should be expected that workers should seek out this type of organization. Labor organizations can even develop into a national organization by becoming a part of a wider network. In this way their leverage can be enhanced and members will be able to multiply their strength finding similar problems and therefore increasing the urgency that these problem need to be solved. Furthermore they will be able to create an organization having so much influence that even the government will be forced to listen to what they have to say. After all this is a democratic country and come election time workers can be expected to vote for those who they believe can help them improve their quality of life.

The International Brotherhood of Electrical Workers (IBEW) is one of the most influential labor unions in the United States and this group attests to the significance of unions when it comes to the following issues:

• Negotiated Wages – It is important that employees can negotiate for wages that are commensurate to the skills. Yet the sad fact is that there are many who are getting less than what they deserve.
• Job Training Benefits – There is a need to continually upgrade the skills and knowledge of the worker and labor unions make sure that this will happen.
• Guaranteed Overtime Pay – Workers will not be exploited especially during peak season when a factory or firm requires extended working hours to finish a project or hit a production quota.
• Safety Protections – Labor unions will make sure that workers are protected and that management should spend the for the necessary equipment and safety gear that will create a safe working environment.
• Defined Work Schedules – A defined work schedule will allow employees to enjoy life outside the workplace. Over fatigue and burnout can be prevented if there is a system like this in place.
• Paid Vacations and Holidays – Aside from having defined work schedules there is also a need to have paid vacations and holidays. There is no need to elaborate why it can help the worker sustain a busy schedule.
• Grievance Procedures – By creating grievance procedures the company will eliminate unnecessary politicking in the workplace. The grievances will immediately reach the ears of those who need to hear it and thus the problem can be resolved in the shortest possible time.
• Health Plan – A health plan can help the employee save for his or her retirement because each time the worker gets sick he or she does not have to use their savings to pay for medical expenses.
• Pension Benefits – Everyone must work towards retirement. Workers will work inspired knowing that at the end of their career there is a substantial reward waiting for them.

The aforementioned benefits are available to members of IBEW. Their members can expect the benefits outlined above because the IBEW is one of the respected and influential labor organizations in the United States. This means that not all employee organizations can expect to achieve the same level of success (Price, 2005). A good example is the labor violations at Wal-Mart (Greenhouse, 2009). By discussing these benefits one can have an idea of the future of labor unions in America. The IBEW has paved the way for others to follow but first there is a need to create a legal environment that will allow labor unions to flourish in the United States of America.

When the workers organize themselves into labor unions they are simply trying to increase their capability to negotiate with those who have the power to change their working conditions and those who have the authority to give them added benefits commensurate to their skills and length of service to the company. On the other hand employers are well aware of the fact that every concession and every upgrade directly related to the working environment will reduce their income as expenses are being plowed back into the system. It is therefore not surprising to find employers and businessmen to resist the changes imposed on them by labor unions.

In an ideal world labor unions can express their desires and aspirations and the employers out of benevolence and long-term strategic thinking will readily comply to their request. But in the real world nothing can be further from the truth. Although employers expect workers to organize themselves into unions, they are also well aware of a few strategies to frustrate the rapid development of labor unions in their midst. One way is to harass employees and to threaten to fire them if they will go ahead with their plans to force corporate leaders to accept their demands. Thus, even if workers have the right to form labor unions many are discouraged to do so thinking that it is better to have a not so great job as compared to having none at all.

In light of the current global financial crisis as well as the negative impact of business outsourcing to American laborers employers have the advantage when it comes to forcing employees to think of the company first before they think of their shrinking paychecks. There are instances when it is noble and moral for an employee to sacrifice for the common good but there are also times when employers are simply being unreasonable and use issues surrounding the financial crisis and globalization to threaten workers into submission.

There is also a legal loophole that corporate leaders can exploit when it comes to doing business in America. This country is a believer in free enterprise , meaning that the government should have a limited role in the economy. The best way to understand this dynamic is to study communist countries like North Korea as well as other nations that are being ruled by despots and one can see the how government tried to control their economy. Since America does not operate this way, businessmen can assert their rights when it comes to having absolute autonomy in running their respective businesses. On the other hand the current financial crisis is the eye-opener when it comes to the negative effects of unregulated markets.

Therefore, the wisdom of free market economics must be allowed to reign supreme in the U.S. but there is also a need to inject some form of regulation in order to temper the greed of others. It is common knowledge that businessmen have only one goal and it is to make money. Without any form of a feedback or mechanism that will inform businessmen that they have crossed the line in terms of amassing great wealth they will continue to find ways to increase their profit margins to the detriment of their workers. There is a need for a law that will allow businessmen to continually thrive in a free market economy but at the same time mindful of the status of the workers.

In response to this need Sens. Edward Kennedy (D-Mass.) and Reps. George Miller (D-CA) and Peter King (R-N.Y.) introduced a legislation called The Employee Free Choice Act (AFL-CIO, 2009). The said legislative proposal will remove the barriers to union representation and collective bargaining (AFL-CIO, 2009). In the past companies hide under the protection of current labor laws that allow them to intimidate, harass, coerce, and fire their employees in their attempt to stop representation and collective bargaining. According to the authors of the said legislative proposal, even if workers succeed in forming unions they fail to get a first contract (AFL-CIO, 2009). In other words companies have the prerogative to ignore them.

The Free Choice Act empowers American workers not only because it removes barriers to form unions and guarantees a new contract, the said legislative proposal also ensures that companies will have to pay if they will break the law. In the past penalties are so light that businessmen merely consider them as cost of doing business (AFL-CIO, 2009). This time they will feel the sting of the penalties and would think many times over before indiscriminately firing an employee.

Without a doubt it is much better for an employee to join labor unions. There are many benefits. The benefits easily outweigh the cost of joining one. There is only one problem. Companies are well aware of the cost of acquiescing to the demands of unions and so they would do everything that they can to lessen the bargaining power of labor groups and in many cases the idea of labor unions continue to remain an idea as management will do everything in its power to weaken its resolve and to block its success. In current labor laws companies can easily get away with labor code violations and they can therefore selectively fire employees they suspect to be leading workers into forming labor unions.

The Free Choice Act a bipartisan legislative proposal is manna from heaven for many American laborers. For the first time they have the chance to have the law on their side. If lawmakers will agree that this proposal is the right thing to do then the future of labor unions in the United States of America will drastically change for the better. In the early phase of the discussion it was pointed out that labor unions can help employees receive negotiated wages, enjoy defined working schedules and paid vacation as well as be assured of continuous skills and knowledge upgrade. But it seems that this is only available for established unions and far out of reach for those who are new to union representation and collective bargaining. Everything will change if The Freedom of Choice Act will be made into law.

AFL-CIO (2009). “The Employee Free Choice Act.” Web.

Beauchamp, Tom. (2008). “The Principle of Beneficence in Applied Ethics.” Web.

Greenhouse, Steven. (2004). “In-House Audit Says Wal-Mart Violated Labor Laws.” New York Times. Web.

Goodstein, J. & A. Wicks. (2006). Corporate and Stakeholder Responsibility: A Two-Way Conversation. University of Virginia: Darden Graduate School of Business Administration. Web.

International Brotherhood of Electrical Workers. “International Brotherhood of Electrical Workers.” Web.

Price, Alan. (2005). “Wal-Mart Fined for Child Labor Violations.” Web.

• Change through Persuasion in an Organization
• The Various Behaviors When the Employee Is Concerned
• Beginning and End of Labor Unions
• Using Technology to Improve Supply Chain Management
• Union Rights and Collective Bargaining
• Comparing Ethical Attitudes across Cultures
• Conflict Management: Teambuilding and Dynamics
• Memorandum Case of the Global Information System
• Communication Problem at Wal-Mart
• Do Managers Need Good “People Skills” to Do Their Jobs Well?
• Chicago (A-D)
• Chicago (N-B)

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U.S. Department of the Treasury

Labor unions and the u.s. economy.

By Laura Feiveson, Deputy Assistant Secretary for Microeconomics

Today, the Treasury Department released a first-of-its-kind report on labor unions, highlighting the evidence that unions serve to strengthen the middle class and grow the economy at large. Over the last half century, middle-class households have experienced stagnating wages, rising income volatility, and reduced intergenerational mobility, even as the economy as a whole has prospered. Unions can improve the well-being of middle-class workers in ways that directly combat these negative trends. Pro-union policy can make a real difference to middle-class households by raising their incomes, improving their work environments, and boosting their job satisfaction. In doing so, unions can help to make the economy more equitable and robust.

Over the last century, union membership rates and income inequality have diverged, as shown in Figure 1. Union membership peaked in the 1950s at one-third of the workforce.  At that time, despite pervasive racial and gender discrimination, overall income inequality was close to its lowest level since its peak before the Great Depression, and was continuing to fall.  Over the subsequent decades, union membership steadily declined, while income inequality began to steadily rise after a trough in the 1970s. In 2022, union membership plateaued at 10 percent of workers while the top one percent of income earners earned almost 20 percent of total income.

Figure 1: Union Membership and Inequality

While the overall U.S. economy has grown over the past few decades, the rise in inequality can be a proxy for the experience of many middle-class households. The income of the median family rose only 0.6 percent per year, in contrast to average personal income per household which rose 1.1 percent per year, as seen in Figure 2.  And, notably, other markers of middle-class stability have deteriorated since the 1970s. Income has become more volatile, [1] the amount of time spent on vacation has fallen, [2] and middle-class Americans are less prepared for retirement. [3] Intergenerational mobility has declined—90 percent of children born in the 1940s earned more than their parents did at age 30, while only half of children born in the mid-1980s did the same. [4]  

Figure 2: Income and Wage Growth since the 1960s

So, how could unions help? Treasury’s report shows that unions have the potential to address some of these negative trends by raising middle-class wages, improving work environments, and promoting demographic equality. Of course, unions should not be the only solution to these structural trends. But the evidence below and in the report suggests that unions can be useful in building the economy from the middle out.

Wages 

One of the most oft-cited benefits of unions is the so-called “union wage premium”—the amount that union members make above and beyond non-members.  While simple comparisons of the wages of union workers and nonunion workers find that union workers typically make about 20 percent more than nonunion workers, [5] economists turn to other types of analysis to capture causal effects of unions on wages. The first approach controls for many worker and occupation characteristics with the goal of comparing the wages earned by two similar workers that differ only in their union status. The other empirical approach is “regression discontinuity analysis,” which compares the wages in workplaces which just barely passed a vote to unionize against wages in workplaces that barely failed to pass the unionization vote. All in all, the evidence from these two approaches points to a union wage premium of around 10 to 15 percent, with larger effects for longer-tenured workers. [6]

Work environments

Worker wellbeing is greatly affected by non-wage benefits. Some benefits, such as healthcare benefits and retirement benefits, are a part of the compensation package and have substantial monetary value. Other features of the work environment, like flexible scheduling or workplace safety regulations, may not have direct monetary value but could still be highly valued by workers. For example, one study estimated that the average worker is willing to give up 20 percent of wages to avoid having their schedule frequently changed by their employer on short notice. [7] Another study, co-authored by Secretary Yellen, found that 80 percent of people who like their jobs cite a non-wage reason as the primary cause of their satisfaction and, conversely, 80 percent of people who dislike  their jobs cite non-wage reasons to explain their dissatisfaction. [8]

There is strong evidence that unions improve both fringe benefits and non-wage features of the workplace. Figure 3 shows how much more likely it is for a union worker to be offered certain amenities than a nonunion worker. While these simple comparisons reflect correlations only, studies that use more robust empirical approaches find the same: unions have had a large hand in improving work environments on many dimensions and, in doing so, raise the wellbeing of workers and their families. [9]

Figure 3: Fringe Benefits and Amenities

Workplace Equality

The diverse demographics of modern union membership mean that the benefits of any policy that strengthens today’s unions would be felt across the population.Union membership is now roughly equal across men and women. In 2021, Black men had a particularly high union representation rate at 13 percent, as compared to the population average of 10 percent. [10]  

Unions promote within-firm equality by adopting explicit anti-discrimination measures, supporting anti-discrimination legislation and enforcement, and promoting wage-setting practices that are less susceptible to implicit bias. As an example of egalitarian wage-setting practices, single rate or automatic progression wage structures contribute to lower within-firm income inequality compared to firms that make individual determinations. [11] These types of practices, and others like publicly available pay schedules, benefit women and vulnerable workers who can be less likely to negotiate aggressively for pay raises. 

Empirical studies have confirmed that unions have, indeed, closed race and gender gaps within firms. For example, one study finds that the wage gap between Black and white women was significantly reduced due to union measures. [12] Another study provides evidence of how collective bargaining has reduced gender wage gaps amongst teachers. [13]

The positive effects of unions are not limited to union workers. Nonunionized firms in competition with unionized workplaces may choose to raise wages, change hiring practices, or improve their workplace environment to attract workers. [14] Unions can also affect workplace norms by, say, lobbying for workplace safety improvements, or advocating for changes in minimum wage laws. [15] The empirical evidence finds that these positive spillovers exist. Each 1 percentage point increase in private-sector union membership rates translates to about a 0.3 percent increase in nonunion wages. These estimates are larger for workers without a college degree, the majority of America’s workforce. [16]  

Unions may also produce benefits for communities that extend beyond individual workers and employers by enhancing social capital and civic engagement. Union members vote 12 percentage points more often than nonunion members, and nonunion members in union households vote 3 percentage points more often than individuals in nonunion households. [17] In addition, union members are more likely to donate to charity, attend community meetings, participate in a neighborhood project, and volunteer for an organization. [18]

Increased unionization has the potential to contribute to the reversal of the stark increase in inequality seen over the last half century. In turn, increased financial stability to those in the middle or bottom of the income distribution could alleviate borrowing constraints, allowing workers to start businesses, build human capital, and exploit investment opportunities. [19]  Reducing inequality can also promote economic resilience by reducing the financial fragility of the bottom 95 percent of the income distribution, making these Americans less sensitive to negative income shocks and thus lessening economic volatility. [20] In short, unions can promote economy-wide growth and resilience.

All in all, the evidence presented in Treasury’s report challenges the view that worker empowerment holds back economic prosperity. In addition to their effect on the economy through more equality, unions can have a positive effect on productivity through employee engagement and union voice effects, providing a road map for the type of union campaigns that could lead to additional growth. [21] One such example found that patient outcomes improved in hospitals where registered nurses unionized. [22]

The Biden-Harris Administration recognizes the benefits of unions to the middle class and the broader economy and has taken actions, outlined in Treasury’s report, to empower workers. There have been promising signs: union petitions in 2022 rose to their highest level since 2015, [23] and public opinion in support of unions is at its highest level in over 50 years. [24] The evidence summarized here and in Treasury’s report suggest these burgeoning signs of strengthening worker power are good news for the middle class and the economy as a whole. 

[1] Dynan, Karen, Douglas Elmendorf, and Daniel Sichel. 2012. “The Evolution of Household Income Volatility.” The B.E. Journal of Economic Analysis & Policy 12 (2).

[2] Van Dam, Andrew. 2023. “The mystery of the disappearing vacation day.” The Washington Post, February 10, 2023.

[3] Johnson, Richard W., and Karen E. Smith. 2022. “How Might Millennials Fare in Retirement?” Urban Institute , September 2022.

[4] Chetty, et al. (2017).

[5] U.S. Bureau of Labor Statistics. 2023. Table 2.: Median weekly earnings of full-time wage and salary workers by union affiliation and selected characteristics. Last modified January 19, 2023.

[6] For example: Gittleman, Maury, and Morris M. Kleiner. 2016. "Wage effects of unionization and occupational licensing coverage in the United States."  ILR Review  69 (1): 142–172; Kleiner, Morris M., and Alan B. Krueger. 2013. “Analyzing the Extent and Influence of Occupational Licensing on the Labor Market.” Journal of Labor Economics 31 (2): S173–S202; DiNardo, John, and David S. Lee. 2004. “Economic Impacts of New Unionization on Private Sector Employers: 1984–2001.” The Quarterly Journal of Economics 119 (4): 1383–1441; Frandsen, Brigham R. 2021. “The Surprising Impacts of Unionization: Evidence from Matched Employer-Employee Data.” Journal of Labor Economics 39 (4): 861–894.

[7] Mas, Alexandre, and Amanda Pallais. 2017. "Valuing alternative work arrangements."  American Economic Review  107 (12): 3722–59.

[8] Akerlof, George A., Andrew K. Rose, and Janet L. Yellen. 1988. "Job switching and job satisfaction in the US labor market."  Brookings Papers on Economic Activity  1988 (2): 495–594.

[9] Knepper, Matthew. 2020. “From the Fringe to the Fore: Labor Unions and Employee Compensation.” The Review of Economics and Statistics  102 (1): 98–112.

[10] Bureau of Labor Statistics (BLS) and author’s calculations using BLS data, accessed through IPUMS. Data reflect 2022 values. Sample is employed 16+ year olds. Excludes workers represented by, but not a member of, unions.

[11] See, e.g., Card (1996) and Freeman (1982). Freeman, Richard B. 1982. "Union wage practices and wage dispersion within establishments." ILR Review 36 (1): 3–21.

[12] Rosenfeld, Jake, and Meredith Kleykamp. 2012. “Organized Labor and Racial Wage Inequality in the United States.” American Journal of Sociology 117 (5): 1460–1502.

[13] Biasi, Barbara, and Heather Sarsons. 2022. "Flexible wages, bargaining, and the gender gap."  The Quarterly Journal of Economics  137 (1): 215–266.

[14] Fortin, Nicole M., Thomas Lemieux, and Neil Lloyd. 2021. "Labor market institutions and the distribution of wages: The role of spillover effects."  Journal of Labor Economics  39 (S2): S369–S412; Taschereau-Dumouchel, Mathieu. 2020. "The Union Threat."  The Review of Economic Studies  87 (6): 2859–2892.

[15] The impact of changes in government policy arising out of union advocacy is not the focus of this paper; however, Ahlquist (2017) suggests that advocacy plays an important role in unions’ impacts on the labor market. Spillovers and “threat effects” within the labor market, however, are discussed in this paper. Ahlquist, John S. 2017. “Labor Unions, Political Representation, and Economic Inequality.” Annual Review of Political Science 20 (1): 409–432. 

[16] Note: Rosenfeld, Denice, and Laird (2016) do not interpret their estimates causally. Their approach suffers from many of the CPS’s sample size limitations. Although the CPS ostensibly reports quite detailed occupational codes, Rosenfeld, Denice, and Laird estimate regressions with only four occupational codes and 18 industry codes. This data limitation greatly increases the risks that the regression-adjusted approach cannot control for selection effects into unionization. 

[17] This 12-percentage-point union voting premium largely reflects socioeconomic factors associated with individuals who join a union. However, when comparing members with non-members who exhibit similar characteristics, there remains a union voting premium of 4 percentage points. Freeman, Richard B. 2003. “What Do Unions Do…to Voting?” National Bureau of Economic Research , working paper no. 9992.

[18] Zullo, Roland. 2011. “Labor Unions and Charity.” Industrial and Labor Relations Review 64 (4): 699–711. 

[19]  Aghion, P., E. Caroli, and C. Garcia-Penalosa. 1999. “Inequality and Economic Growth: The Perspective of the New Growth Theories.” Journal of Economic Literature 37 (4): 1615–60.

[20]  Kumhof, Michael, Romain Rancière, and Pablo Winant. 2015. “Inequality, Leverage, and Crises.” American Economic Review 105 (3): 1217–45.

[21] Doucouliagos, Christos, Richard B. Freeman, and Patrice Laroche. 2017. The Economics of Trade Unions: A study of a Research Field and Its Findings . London: Routledge.

[22] Dube, Arindrajit, Ethan Kaplan, and Owen Thompson. 2016. “Nurse unions and patient outcomes.”  ILR Review  69 (4): 803–833.

[23] National Labor Relations Board. 2022. “Election Petitions Up 53%, Board Continues to Reduce Case Processing Time in FY22.” Press release. October 6, 2022.  https://www.nlrb.gov/news-outreach/news-story/election-petitions-up-53-board-continues-to-reduce-case-processing-time-in .

[24] McCarthy, Justin. 2022. “U.S. Approval of Labor Unions at Highest Point Since 1965.” Gallup , August 30, 202 2.

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In Focus: Michigan Sen. Gary Peters emphasizes the importance of unions

Michigan Sen. Gary Peters explained why he feels union support is critical during an election cycle and how supporting the middle class also uplifts the economy.

He discussed his role as chair of the Democratic Senatorial Campaign Committee, saying his goal is to bring all the incumbents back, try to flip more seats to Democrats and become the majority party in the House again.

Peters said he is confident Vice President Kamala Harris can win in November. He described what he called a clear contrast between her and her Republican opponent, Donald Trump.

Report | Unions and Labor Standards

How unions help all workers

Report • By Matthew Walters and Lawrence Mishel • August 26, 2003

Briefing Paper #143

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Unions have a substantial impact on the compensation and work lives of both unionized and non-unionized workers. This report presents current data on unions’ effect on wages, fringe benefits, total compensation, pay inequality, and workplace protections.

Some of the conclusions are:

• Unions raise wages of unionized workers by roughly 20% and raise compensation, including both wages and benefits, by about 28%.
• Unions reduce wage inequality because they raise wages more for low- and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree.
• Strong unions set a pay standard that nonunion employers follow. For example, a high school graduate whose workplace is not unionized but whose industry is 25% unionized is paid 5% more than similar workers in less unionized industries.
• The impact of unions on total nonunion wages is almost as large as the impact on total union wages.
• The most sweeping advantage for unionized workers is in fringe benefits. Unionized workers are more likely than their nonunionized counterparts to receive paid leave, are approximately 18% to 28% more likely to have employer-provided health insurance, and are 23% to 54% more likely to be in employer-provided pension plans.
• Unionized workers receive more generous health benefits than nonunionized workers. They also pay 18% lower health care deductibles and a smaller share of the costs for family coverage. In retirement, unionized workers are 24% more likely to be covered by health insurance paid for by their employer.
• Unionized workers receive better pension plans. Not only are they more likely to have a guaranteed benefit in retirement, their employers contribute 28% more toward pensions.
• Unionized workers receive 26% more vacation time and 14% more total paid leave (vacations and holidays).

Unions play a pivotal role both in securing legislated labor protections and rights such as safety and health, overtime, and family/medical leave and in enforcing those rights on the job. Because unionized workers are more informed, they are more likely to benefit from social insurance programs such as unemployment insurance and workers compensation. Unions are thus an intermediary institution that provides a necessary complement to legislated benefits and protections.

The union wage premium

It should come as no surprise that unions raise wages, since this has always been one of the main goals of unions and a major reason that workers seek collective bargaining. How much unions raise wages, for whom, and the consequences of unionization for workers, firms, and the economy have been studied by economists and other researchers for over a century (for example, the work of Alfred Marshall). This section presents evidence from the 1990s that unions raise the wages of unionized workers by roughly 20% and raise total compensation by about 28%.

The research literature generally finds that unionized workers’ earnings exceed those of comparable nonunion workers by about 15%, a phenomenon known as the “union wage premium.”

H. Gregg Lewis found the union wage premium to be 10% to 20% in his two well-known assessments, the first in the early 1960s (Lewis 1963) and the second more than 20 years later (Lewis 1986). Freeman and Medoff (1984) in their classic analysis, What Do Unions Do? , arrived at a similar conclusion.

Table 1 provides several estimates of the union hourly wage premium based on household and employer data from the mid- to late 1990s. All of these estimates are based on statistical analyses that control for worker and employer characteristics such as occupation, education, race, industry, and size of firm. Therefore, these estimates show how much collective bargaining raises the wages of unionized workers compared to comparable nonunionized workers.

The data most frequently used for this analysis is the Current Population Survey (CPS) of the Bureau of Labor Statistics, which is most familiar as the household survey used to report the unemployment rate each month. The CPS reports the wages and demographic characteristics (age, gender, education, race, marital status) of workers, including whether workers are union members or covered by a collective bargaining contract, and employment information (e.g., industry, occupation). Using these data, Hirsch and Macpherson (2003) found a union wage premium of 17.8% in 1997. Using data from a different, but also commonly used, household survey—the Census Bureau’s Survey of Income and Program Participation (SIPP)—Gundersen (2003) found a union premium of 24.5%. So, estimates from household surveys that allow for detailed controls of worker characteristics find a union wage premium ranging from 15% to 25% in the 1990s.

Another important source of workplace information, employer surveys, has advantages and disadvantages. On the plus side, wages, occupation, and employer characteristics—including the identification of union status—are considered more accurate in employer-based data. The disadvantage is that data from employers do not include detailed information about the characteristics of the workers (e.g. education, gender, race/ethnicity). However, the detailed occupational information and the skill ratings of jobs (education requirements, complexity, supervisory responsibilities) used in these studies are most likely adequate controls for “human capital,” or worker characteristics, making the surveys reliable for estimating the union wage premium.

Pierce (1999a) used the new Bureau of Labor Statistics survey of employers, the National Compensation Survey, to study wage determination and found a union wage premium of 17.4% in 1997. Pierce’s study was based on observations of 145,054 nonagricultural jobs from 17,246 different establishments, excluding the federal government.

In another study, Pierce (1999b) used a different employer survey—the Employment Cost Index (ECI), a precursor to the National Compensation Survey—and found a union wage premium of 20.3%. This estimate is for all nonagricultural employers except the federal government, the same sector employed in Pierce’s NCS study (though for an earlier year—1994).

These two estimates of the union wage premium from employer surveys provide a range of 17% to 20%, consistent with the range identified by the household surveys. Thus, a variety of sources show a union wage premium of between 15% and 20%.

Since unions have a greater impact on benefits than wages (see Freeman 1981), estimates of the union premium for wages alone are less than estimates of the union premium for all compensation (wages and benefits combined). That is, estimates of just the wage premium understate the full impact of unions on workers’ pay. A 1999 study by Pierce estimates the union premium for wages at 20.3% and compensation at 27.5% in the private sector (see Table 1). Thus, the union impact on total compensation is about 35% greater than the impact on wages alone. (A later section reviews the union impact on specific fringe benefits such as paid leave, health insurance, and pensions.)

Many “measurement issues” have been raised about estimates of the union wage premium. Some researchers have argued that union wage premiums are significantly underestimated by some measurements. Hirsch (2003), in particular, raises an important question regardi ng the rising use of “imputations” in the CPS. Information is “allocated,” or “imputed,” to a respondent in the CPS when they either refuse to report their earnings or a proxy respondent is unable to report earnings. Hirsch reports that earnings were imputed for fewer than 15% of the CPS in the 1980s but 31% in 2001. The method of imputing earnings to workers for whom earnings aren’t reported does not take account of their union status, thus reducing the estimates of the union wage premium. The increase in imputations has, Hirsch says, created an increasing underestimate of the union wage premium. Table 1 shows Hirsch’s estimates for the union premium in the private sector using traditional methods (18.4%) and using a correction for imputation bias (23.2%). Hirsch’s results imply that imputations depress estimates of the union wage premium for 1997 by 20%, and that the union wage premium is actually one-fourth higher than conventional estimates show.

Union wage premiums and inequality

Historically, unions have raised the wages to a greater degree for “low-skilled” than for “high-skilled” workers. Consequently, unions lessen wage inequality. Hirsch and Schumacher (1998) consider the conclusion that unions boost wages more for low- and middle-wage workers, a “universal finding” of the extensive literature on unions, wages, and worker skills. As they state:

The standard explanation for this result is that unions standardize wages by decreasing differentials across and within job positions (Freeman 1980) so that low-skilled workers receive a larger premium relative to their alternative nonunion wage.

The larger union wage premium for those with low wages, in lower-paid occupations and with less education is shown in Table 2 . For instance, the union wage premium for blue-collar workers in 1997, 23.3%, was far larger than the 2.2% union wage premium for white-collar workers. Likewise, the 1997 union wage premium for high school graduates, 20.8%, was much higher than the 5.1% premium for college graduates. Gundersen (2003) estimated the union wage premium for those with a high school degree or less at 35.5%, significantly greater than the 24.5% premium for all workers.

Card’s (1991) research provides a comprehensive picture of the impact of unions on employees by estimating the union wage premiums by “wage fifth,” where the sample is split into five equal groups of workers from the lowest wage up to the highest wage workers. As Table 2 shows, the union wage premium was far greater among low-wage workers (27.9%) than among middle-wage (18.0%) or the highest-wage workers (10.5%).

Unions reduce wage inequalities because they raise wages more at the bottom and in the middle of the wage scale than at the top. Lower-wage, middle-wage, blue-collar, and high school educated workers are also more likely than high-wage, white-collar, and college-educated workers to be represented by unions (see Table 2). These two factors—the greater union representation and the larger union wage impact for low- and mid-wage workers—are key to unionization’s role as a major factor in reducing wage inequalities (see Freeman 1980, 1982; and Freeman and Medoff 1984).

That unionization lessens wage inequality is also evident in the numerous studies that attribute a sizable share of the growth of wage inequality since 1979 to the erosion of union coverage (Freeman 1991; Card 1991; Dinardo et al. 1996; Blackburn et al. 1991; Card et al. 2003; Blanchflower and Bryson 2002). Several studies have shown that deunionization is responsible for at least 20% of the large increase in wage inequality (Mishel et al. 2003). This is especially the case among men, where steep declines in unionization among blue-collar and non-college-educated men has led to a rise in education and occupational wage gaps. Farber’s (2002) estimate shows that deunionization can explain as much as 50% of the growth in the wage gap between workers with a college education and those with a high school education.

Unions and fringe benefits

In and earlier era, non-wage compensation was referred to as “fringe benefits.” However, items such as adequate health insurance, a secure retirement pension, and sufficient and flexible paid leave to manage work and family life are no longer considered “fringe” components of pay packages. Thus, the union impact on benefits is even more critical to the lives of workers now than in the past. This section presents evidence that unionized workers are given employer-provided health and pension benefits far more frequently than comparable nonunion workers. Moreover, unionized workers are provided better paid leave and better health and pension plans.

The previous section reviewed data that showed that unions have had a greater impact in raising benefits than in raising wages. This section examines the union effect on particular benefits, primarily paid leave, health insurance, and pensions. Unions improve benefits for nonunionized workers because workers are more likely to be provided particular benefits and because the specific benefits received are better.

Table 3 provides information from the employer survey (the ECI) about the impact of unions on the likelihood that a worker will receive benefits. The table shows that unionized workers are 3.2% more likely to have paid leave, a relatively small impact, explained by the fact that nearly all workers (86%) already receive this benefit. Unions have a much greater impact on the incidence of pensions and health insurance benefits, with union workers 22.5% and 18.3% more likely to receive, respectively, employer-provided pension and health benefits.

Table 3 also shows the union impact on the financial value of benefits, including a breakdown of how much the greater value is due to greater incidence (i.e., unionized firms are more likely to offer the benefit) or to a more generous benefit that is provided.

Union workers’ paid leave benefits are 11.4% higher in dollar terms, largely because of the higher value of the benefits provided (8.0% of the total 11.4% impact). Unions have a far larger impact on pensions and health insurance, raising the value of these benefits by 56% and 77.4%, respectively. For pensions, the higher value reflects both that unionized workers are more likely to receive this benefit in the first place and that the pension plan they receive is generally a “richer” one. For health benefits, the value added by unions mostly comes from the fact that union workers receive a far more generous health plan than nonunionized workers. This factor accounts for 52.7% of the total 77.4% greater value that organized workers receive.

Table 4 provides further information on the union premium for health insurance, pensions, and paid leave benefits, drawn from a different data source (a series of supplements to the CPS) than for Table 3.1 The first two columns compare the compensation characteristics in union and nonunion settings. The difference between the union and nonunion compensation packages are presented in two ways: unadjusted (the difference between the first two columns) and adjusted (differences in characteristics other than union status such as industry, occupation, and established size). The last column presents the union premium, the percentage difference between union and nonunion compensation, calculated using the adjusted difference.

These data confirm that a union premium exists in every element of the compensation package. While 83.5% of unionized workers have employer-provided health insurance, only 62% of nonunionized workers have such a benefit. Unionized workers are 28.2% more likely than comparable nonunion workers to be covered by employer-provided health insurance. Employers with unionized workforces also provide better health insurance—they pay an 11.1% larger share of single worker coverage and a 15.6% greater share of family coverage. Moreover, deductibles are $54, or 18%, less for unionized workers. Finally, unionized workers are 24.4% more likely to receive health insurance coverage in their retirement.

Similarly, 71.9% of unionized workers have pensions provided by their employers, while only 43.8% of nonunion workers do. Thus, unionized workers are 53.9% more likely to have pension coverage. Union employers spend 36.1% more on defined benefit plans but 17.7% less on defined contribution plans. As defined benefit plans are preferable—they provide a guaranteed benefit in retirement—these data indicate that union workers are more likely to have better pension plans.

Union workers also get more paid time off. This includes having 26.6% more vacation (or 0.63 weeks—three days) than nonunion workers. Another estimate, which includes vacations and holidays, indicates that union workers enjoy 14.3% more paid time off.

Union wages, nonunion wages, and total wages

There are several ways that unionization’s impact on wages goes beyond the workers covered by collective bargaining to affect nonunion wages and labor practices. For example, in industries and occupations where a strong core of workplaces are unionized, nonunion employers will frequently meet union standards or, at least, improve their compensation and labor practices beyond what they would have provided if there were no union presence. This dynamic is sometimes called the “union threat effect,” the degree to which nonunion workers get paid more because their employers are trying to forestall unionization.

There is a more general mechanism (without any specific “threat”) in which unions have affected nonunion pay and practices: unions have set norms and established practices that become more generalized throughout the economy, thereby improving pay and working conditions for the entire workforce. This has been especially true for the 75% of workers who are not college educated. Many “fringe” benefits, such as pensions and health insurance, were first provided in the union sector and then became more generalized—though, as we have seen, not universal. Union grievance procedures, which provide “due process” in the workplace, have been mimicked in many nonunion workplaces. Union wage-setting, which has gained exposure through media coverage, has frequently established standards of what workers generally, including many nonunion workers, expect from their employers. Until, the mid-1980s, in fact, many sectors of the economy followed the “pattern” set in collective bargaining agreements. As unions weakened, especially in the manufacturing sector, their ability to set broader patterns has diminished. However, unions remain a source of innovation in work practices (e.g., training, worker participation) and in benefits (e.g., child care, work-time flexibility, sick leave).

The impact of unions on wage dynamics and the overall wage structure is not easily measurable. The only dimension that has been subject to quantification is the “threat effect,” though measuring this phenomenon is a difficult task for several reasons. First, the union presence will likely be felt most in the markets where unions are seeking to organize—the nonunion employers affected are those in competition with unionized employers. These markets vary in nature. Some of these markets are national, such as many manufacturing industries, while others are local—janitors and hotel and supermarket workers. Some markets are defined by the product—what employers sell, such as autos, tires and so on—while other markets are occupational, such as music, carpentry, and acting. Therefore, studies that compare industries cannot accurately capture the economic landscape on which unions operate and do not adequately measure the “threat effect.”

A second difficulty in examining the impact of the “threat effect” on nonunion wages is identifying a measure, or proxy, for the union presence. In practice, economists have used union density, the percentage of an industry that is unionized, as their proxy. The assumption here is that employers in highly organized settings face a higher threat of union organization than a nonunion employer in a mostly unorganized industry. In broad strokes, this is a reasonable assumption. However, taken too literally and simply, union density can be misleading. First, it is not reasonable to consider that small changes in union density—say, from 37% to 35%, or vice-versa—will produce observable changes in nonunion wages. Any measurement of the “threat effect” that relies on small changes in union density will almost surely—and erroneously—yield little or no effect. Second, the relationship between union density and nonunion wages is not linear. Union density is not likely to produce any threat effect until some threshold level of unionization is reached, as much as 30% to 40%. That is, unionization of 20% in a particular industry may have no impact but 40% unionization may be sufficient to make employers aware of union organizing and union pay and practices. Empirically, this means a 20 percentage point change in unionization density from zero to 20 may have no effect, but a change from 20 to 40 will have an effect. Likewise, a union presence of 60% to 70% may provide as strong a threat, or ability to set standards, as unionization of 80% or more. Therefore, the relationship between union density and nonunion wages depends on the level of density: significant effects after a threshold level of density (e.g., 30% to 40%), a greater effect when density is higher, but no continued increase of impact at the highest densities.

The sensitivity of the results to the specification—a linear or nonlinear specification of union density—is seen in studies of the union threat effect. A linear specification assumes that small changes at any level have the same impact, while a nonlinear specification allows the union effect to differ at different levels of unionization—perhaps less at low levels and more at medium or high levels. In an important early study of the “threat effect,” Freeman and Medoff (1981) examined the relationship between union density and nonunion wages and compensation in manufacturing. They found that union density had no association with higher nonunion pay (the relationship was positive but not statistically significant). Mishel (1982) replicated those results (p. 138) but also employed a nonlinear, qualitative specification (Table 4) that found large threat effects: nonunion establishments in industries with union density from 40% to 60% and from 60% to 80% paid 6.5% and 7.3% more, respectively, than nonunion establishments with low union density (0% to 40%).

Farber (2002, 2003) has conducted the most recent analysis of union threat effects, the relationship between union density and nonunion wages across industries, in the private sector. Farber’s analysis, which uses a linear specification of union density (i.e., assumes small changes at any level have an impact), combines sectors where threat effects, if any, are geographic (hotel, construction, and janitorial work) and national (manufacturing). In one analysis, Farber finds a positive threat effect for the 1970s, 1980s, and mid-1990s. For example, the average nonunion worker in an industry with 25% union density had wages 7.5% higher because of unionization’s presence. Farber’s results show a lower, but still significant, threat effect in later years, though the effect on the average nonunion wage has diminished because of the erosion of union density. Farber also shows, not surprisingly, that the threat effect is greater for workers with no more than high school degree but minimal for those with a college degree.

Farber pursues much more stringent tests of the threat effect in models that use “industry fixed effects” in order to ensure that the effect of other industry characteristics are not wrongly being attributed to union density. Farber’s results in this further analysis show a threat effect among all workers in the 1970s and 1980s but not in the 1990s. Nevertheless, threat effects still prevailed across decades for those without high school degrees and for those with high school degrees, and in the 1980s for those with some college education. For example, nonunionized high school graduates (the largest category of workers in the United States) earned 2.0% to 5.5% higher wages in industries with 25% unionization than they did in completely nonunionized industries.

The union effect on total nonunion wages is nearly comparable to the effect of unions on total union wages. Table 5 illustrates the union impact on union, nonunion, and average wages among workers with a high school education. Farber’s stringent model from 1983 estimates that, for high school workers in a 25% unionized industry, the “threat effect” raises the average nonunion wage by 5.0%, thereby lifting the average wage by 3.8%. Assuming that unions have raised the wages of union workers by 20%, this raises the average high school wage by 5% (25% of 20%). The total effect of unions on the average high school wage in this example is an 8.8% wage increase, 3.8 percentage points of which are due to the higher wages earned by nonunion workers and 5.0 percentage points of which are due to the union wage premium enjoyed by nonunionized workers.

Two conclusions can be reached based on these studies. First, unions have a positive impact on the wages of nonunion workers in industries and markets where unions have a strong presence. Second, because the nonunion sector is large, the union effect on the overall aggregate wage comes almost as much from the impact of unions on nonunion workers as on union workers.

Unions and workplace protections

An extensive array of labor laws and regulations protects workers in the labor market and the workplace. From the National Labor Relations Act and Social Security Act of 1935 to the Occupational Safety and Health Act of 1970 and the Family Medical Leave Act of 1993, labor unions have been instrumental in securing labor legislation and standards. However, beyond their role in initiating and advocating enactment of these laws and regulations, unions have also played an important role in enforcing workplace regulations. Unions have provided labor protections for their members in three important ways: 1) they have been a voice for workers in identifying where laws and regulations are needed, and have been influential in getting these laws enacted; 2) they have provided information to members about workers’ rights and available programs; and 3) they have encouraged their members to exercise workplace rights and participate in programs by reducing fear of employer retribution, helping members navigate the necessary procedures, and facilitating the handling of workers’ rights disputes (Weil 2003; Freeman and Medoff 1984; Freeman and Rogers 1999).

Unions have played a prominent role in the enactment of a broad range of labor laws and regulations covering areas as diverse as overtime pay, minimum wage, the treatment of immigrant workers, health and retirement coverage, civil rights, unemployment insurance and workers’ compensation, and leave for care of newborns and sick family members. Common to all of these rules is a desire to provide protections for workers either by regulating the behavior of employers or by giving workers access to certain benefits in times of need (Weil 2003; Davis 1986; Amberg 1998). Over the years, these rules have become mainstays of the American workplace experience, constituting expressions of cherished public values (Gottesman 1991; Freeman and Medoff 1984).

Less well recognized perhaps, is the important role that unions play in ensuring that labor protections are not just “paper promises” at the workplace. Government agencies charged with the enforcement of regulations cannot monitor every workplace nor automate the issuance of insurance claims resulting from unemployment or injury. In practice, the effectiveness of the implementation of labor protections depends on the worker’s decision to act. This is done either by reporting an abuse or filing a claim. Unions have been crucial in this aspect by giving workers the relevant information about their rights and the necessary procedures, but also by facilitating action by limiting employer reprisals, correcting disinformation, aggregating multiple claims, providing resources to make a claim, and negotiating solutions to disputes on behalf of workers (Freeman and Rogers 1999; Weil 2003; Hirsch, et al. 1997).

Evidence of the vital role of unions in implementing labor protections can be found in the research on various programs and benefits. Union membership significantly increases the likelihood that a worker will file a claim or report an abuse. Examples of this research can be found in such areas as unemployment insurance, worker’s compensation, the Occupational Safety and Health Act, the Family Medical Leave Act, pensions, and the Fair Labor Standards Act’s overtime provision.

Unemployment insurance

Unemployment insurance (UI) is a joint federal and state program that was created in the Social Security Act of 1935 to provide some income replacement to workers who lose their job through no fault of their own. Budd and McCall (1997) offer a cost-benefit decision-making analysis to explain the costs facing the unemployed worker in filing a UI claim. In a system with complex eligibility rules and benefit calculations and a lack of uniformity among states regarding these rules, the difficulty, or “cost,” of obtaining information is formidable. In fact, the main reason that many unemployed workers never file a claim is because they thought they were not eligible (Wandner and Stettner 2000). The threat of an employer retaliating by not rehiring a laid-off worker might be another cost weighing on the decision to file a claim. Unions can help offset the costs of workers who are laid off.

Primarily, unions provide information to workers about benefit expectations, rules, and procedures, and dispel stigmas that might be attached to receiving a social benefit. Unions also can negotiate in their contracts layoff recall procedures based on seniority and protection against firing for other than a just cause, as well as help workers build files in the case of a disputed claim (Budd and McHall 1997). Additionally, the union-wage differential reduces the likelihood that unemployed workers will be ineligible for benefits because their pay is too low (Wenger 1999).

Budd and McHall (1997) have estimated that union representation increases the likelihood of an unemployed worker in a blue-collar occupation receiving UI benefits by approximately 23%. At the peak of UI coverage in 1975, one in every two unemployed workers received UI benefits. By the mid-1980s, the ratio of claims to unemployed workers (the recipiency rate) had fallen to almost 30%. Blank and Card (1991) found that the decline in unionization explained one-third of the decline in UI recipiency over this period. These findings underscore the difference unions make in ensuring that the unemployment insurance system works. Considering that UI acts as a stabilizer for the economy during times of recession, the role of unions in this program is pivotal (Wandner and Stettner 2000).

Worker’s compensation

Laws governing workers’ compensation are primarily made at the state level (with the exception of federal longshoremen), but they generally form an insurance system in cases where a worker is injured or becomes ill at the workplace. The employer is liable in the system, regardless of fault, and in return they are protected from lawsuits and further liability. Once again, lack of information about eligibility and the necessary procedures for filing a claim forms the greatest obstacle to receipt of benefits. Fear of employer-imposed penalties and employer disinformation are important other factors weighed by workers deciding whether to act.

As with unemployment insurance, unions provide information to workers through their representatives, and they often negotiate procedures to handle indemnity claims. Through grievance procedures and negotiated contracts, unions protect workers from employer retaliation and, furthermore, act to dispel the notion among workers that employer retaliation is commonplace (Hirsch et al. 1997).

Hirsch et al. (1997) found that, after controlling for a number of demographic and occupational factors, union members are 60% more likely to file an indemnity claim than nonunion workers. Employers and the private insurance companies that sell worker’s compensation insurance policies have mutual interests in denying claims to limit costs (Biddle 2001). According to Biddle, higher denial rates lead to lower claim rates. The robust finding of Hirsch et al. demonstrates that unions provide a needed counterbalance to this interest.

Occupational Safety and Health Act (OSHA)

The Occupation Safety and Health Act of 1970 (OSHA) provided the foundation for the Occupation Safety and Health Administration, which enforces safety and health standards at places of work. The administration’s purpose is to limit work-related injury, illness, and death due to known unsafe working conditions. They currently have only 2,100 inspectors to monitor over seven million establishments. Enforcement of OSHA regulations presents an obvious challenge; OSHA implementation requires worker action to initiate complaints.

In two studies of OSHA and unions in the manufacturing and construction industries (1991a and 1991b), Weil found unions greatly improve OSHA enforcement. In the manufacturing industry, for example, the probability that OSHA inspections would be initiated by worker complaints was as much as 45% higher in unionized workplaces than in nonunion ones. Unionized establishments were also as much as 15% more likely to be the focus of programmed or targeted inspections in the manufacturing industry. In addition, Weil found that in unionized settings workers were much more likely to exercise their “walkaround” rights (accompanying an OSHA inspector to point out potential violations), inspections lasted longer, and penalties for noncompliance were greater. In the construction industry, Weil estimated that unions raise the probability of OSHA inspections by 10%.

In addition to the findings above, Weil notes that the union differential could be even larger if OSHA’s resources were not so limited. He claims, “Implementation of OSHA seems highly dependent upon the presence of a union at the workplace” (Weil 1991a). Following the trend of declining unionization, OSHA claims have dropped from their peak in 1985 of over 71,500 and are currently at close to 37,500 (Siskind 2002; OSHA 2003).

Family Medical Leave Act (FMLA)

Passed in 1993, the FMLA grants workers 12 weeks of unpaid leave in a 12-month period to care for newborn or newly adopted children, or in case of a personal or family member’s health condition. The leave taker is guaranteed the same or equivalent position upon return. One of the most striking characteristics of the act is that less than an estimated 60% of employees covered by the FMLA are not even aware that it exists. There is also widespread misunderstanding on the part of the employer about whom the act covers and when it applies. There is evidence that this leads employers to reject legally entitled leaves (Budd and Brey 2000).

According to Budd and Brey (2000), union members were about 10% more likely to have heard of the FMLA and understand whether or not they were eligible. Union members were found to have significantly less anxiety about losing their job or suffering other employer-imposed penalties for taking leave. And although the authors did not find union membership significantly increases the likelihood that a worker would take leave, they did find that union members were far more likely to receive full pay for leave taken.

The biggest obstacle to workers exercising their rights under the FMLA—besides the fact that the leave is unpaid rather than paid—is information, since only a very slim majority has even heard of the act. With the exception of a $100 fine for failing to post a notice, employers have little incentive to inform employees of their rights. Unions are one of the few institutions to create awareness about FMLA’s existence and regulations.

Fair Labor Standards Act (FLSA)

This act, passed in 1938, had two main features: first, it established a federal minimum wage. Second, it established the 40-hour work week for hourly wage earners, with an overtime provision of time and a half the hourly wage for work done beyond 40 hours. Trejo (1991) examined the union effect on compliance of the latter part of the FLSA, finding that employer compliance with the overtime pay regulation rose sharply with the presence of a union. He hypothesizes that this result reflects the policing function of unions because unions often report violations to enforcement agencies.

Summary: union impact on workplace protections

The research evidence clearly shows that the labor protections enjoyed by the entire U.S. workforce can be attributed in large part to unions. The workplace laws and regulations, which unions helped to pass, constitute the majority of the labor and industrial relations policies of the United States. However, these laws in and of themselves are insufficient to change employer behavior and/or to regulate labor practices and policies. Research has shown convincingly that unions have played a significant role in enforcing these laws and ensuring that workers are protected and have access to benefits to which they are legally entitled. Unions make a substantial and measurable difference in the implementation of labor laws.

Legislated labor protections are sometimes considered alternatives to collective bargaining in the workplace, but the fact of the matter is that a top-down strategy of legislating protections may not be influential unless there is also an effective voice and intermediary for workers at the workplace—unions. In all of the research surveyed, no institutional factor appears as capable as unions of acting in workers’ interests (Weil 2003). Labor legislation and unionization are best thought of as complements, not substitutes.

This paper has presented evidence on some of the advantages that unionized workers enjoy as the result of union organization and collective bargaining: higher wages; more and better benefits; more effective utilization of social insurance programs; and more effective enforcement of legislated labor protections such as safety, health, and overtime regulations. Unions also set pay standards and practices that raise the wages of nonunionized workers in occupations and industries where there is a strong union presence. Collective bargaining fuels innovations in wages, benefits, and work practices that affect both unionized and nonunionized workers.

However, this review does not paint a full picture of the role of unions in workers lives, as unions enable due process in the workplace and facilitate a strong worker voice in the broader community and in politics. Many observers have stated, correctly, that a strong labor movement is essential to a thriving democracy.

Nor does this review address how unionism and collective bargaining affect individual firms and the economy more generally. Analyses of the union effect on firms and the economy have generally found unions to be a positive force, improving the performance of firms and contributing to economic growth (Freeman and Medoff 1984; Mishel and Voos 1992; Belman 1992; Belman and Block 2002; Stiglitz 2000; Freeman and Kleiner 1999; Hristus and Laroche 2003; with a dissenting view in Hirsch 1997). There is nothing in the extensive economic analysis of unions to suggest that there are economic costs that offset the positive union impact on the wages, benefits, and labor protections of unionized and nonunionized workers. Unions not only improve workers’ benefits, they also contribute to due process and provide a democratic voice for workers at the workplace and in the larger society.

— August 2003

1. The ECI data and the March CPS supplements show different benefit coverage rates with a union differential in coverage lower in the ECI than the CPS. This may reflect that the CPS reports individuals’ coverage while the ECI reports the coverage of occupational groups in establishments. The ECI overstates nonunion benefit coverage to the extent that uncovered nonunion workers are present in unionized occupation groups.

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How the Political Power of Teacher Unions Affects Education

36 Pages Posted: 20 Jun 2024

Kensuke Maeba

Northwestern University, Judd A. and Marjorie Weinberg College of Arts and Sciences, Department of Economics, Students

Eduardo Campillo Betancourt

Affiliation not provided to ssrn.

Date Written: June 12, 2024

Teacher unions play an important role in determining the quality of public education, especially when they have political power. However, the effects of teacher unions on education are theoretically ambiguous and empirical evidence is limited, particularly in developing countries. This paper studies how politically powerful teacher unions affect public education, focusing on the largest corporatist teacher union in Mexico and a performance-pay program regarded as an union's patronage tool for rewarding teachers based on their electoral support. We show that the number of public secondary school teachers who got promoted in the program increased in the municipalities supporting the union-affiliated candidate during the 2006 presidential election, compared to less supportive municipalities, after that election. However, we also show that the increased promotion was not associated with improved learning outcomes. Combined with robustness checks, our results suggest that the implementation of the program was distorted when the union gained political influence through the alliance with the ruling party.

Keywords: Teacher union, Performance-pay program, Clientelims

JEL Classification: I28, O17, P17

Suggested Citation: Suggested Citation

Kensuke Maeba (Contact Author)

Northwestern university, judd a. and marjorie weinberg college of arts and sciences, department of economics, students ( email ).

Evanston, IL United States

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Celebrities and Notable Faces in the Crowd at the Democratic Convention

By Elena Shao ,  June Kim ,  Ashley Wu and Alicia Parlapiano

Thousands of Democrats — delegates, party members, politicians and celebrities — filled Chicago’s United Center this week to nominate Vice President Kamala Harris and Governor Tim Walz of Minnesota for president and vice president. Here are some of the notable people spotted in the arena.

Ms. Harris accepted her party’s nomination , speaking about her middle-class roots and calling for unity with a “new way forward.” Before she spoke, members of her family took turns at the lectern, including her sister Maya, niece Meena and step-daughter Ella. Several celebrities were spotted in the crowd.

Doug Emhoff, the second gentleman

Maya Harris, Tony West and Meena Harris

Vice President Harris’s grand-niece

Gov. Tim Walz and his children, Gus and Hope

Octavia Spencer, actor

Rosario Dawson, actor

Padma Lakshmi, television personality

Fat Joe, rapper

Sheryl Lee Ralph, actor and singer

The convention’s third night featured speeches by several up-and-coming party stars, former President Bill Clinton and a surprise appearance by Oprah Winfrey. After several guests highlighted Mr. Walz’s average-Joe persona and background as a football coach, he officially accepted the Democrats’ vice-presidential nomination .

Senator Amy Klobuchar of Minnesota helped to introduce Mr. Walz before he took the stage, emphasizing his Midwestern roots.

Mr. Walz’s wife and children: Gwen, Gus and Hope

Senators Tina Smith and Amy Klobuchar of Minnesota

Senator Elizabeth Warren of Massachusetts

Senator Mark Kelly of Arizona and former Rep. Gabby Giffords of Arizona

Julian Castro, former HUD secretary, and Rep. Joaquin Castro of Texas

Rep. Ilhan Omar of Minnesota

Tony Goldwyn, actor

Mark Hamill, actor

Several Democratic governors, including J.B. Pritzker from the convention’s host state of Illinois, were seated with their delegations during a ceremonial roll call. A playlist of songs and a performance by the rapper Lil Jon soundtracked the night.

Before speeches by the former first lady Michelle Obama and former President Barack Obama capped the evening, Doug Emhoff, the second gentleman, spoke about how Ms. Harris took on the role of “Momala” to his children, Cole and Ella.

Gov. J.B. Pritzker of Illinois

Lil Jon, rapper

Mr. Emhoff’s daughter, Ella, and parents, Barbara and Michael

Cole, Mr. Emhoff's son, and his wife

Gov. Gretchen Whitmer of Michigan

Gov. Wes Moore of Maryland

Gov. Tony Evers of Wisconsin

Gov. Andy Beshear of Kentucky

Rep. Maxine Waters of California

Spike Lee, film director

Wendell Pierce, actor

Sean Astin, actor

The convention’s first night featured remarks by Hillary Clinton and a torch-passing speech by President Biden. “America, I gave my best to you,” he said, reciting a phrase from the song “American Anthem” by Gene Scheer. Several members of Mr. Biden’s family were among the crowd, and audience members held up signs reading, “Thank you Joe.”

Nancy Pelosi, a key figure in pushing for Mr. Biden to exit the race , held up a “We [Heart] Joe” sign.

Jill Biden, the first lady

President Biden’s grandchildren

Rep. Nancy Pelosi of California

Gov. Josh Shapiro of Pennsylvania

Gov. Gavin Newsom of California

Senator Chuck Schumer of New York

Rep. Lucy McBath of Georgia

Deja Foxx, influencer

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