I'll weigh how unions affect workers and the broader economy — gathering current evidence on wages, benefits, and growth.
Labor unions have both significant benefits and significant costs for workers and the broader economy, and economists disagree on the net effect.
For Workers: Benefits
Research consistently finds a union wage premium - that union members earn more than similar non-union workers.
•The most recent Bureau of Labor Statistics figures show that weekly earnings for unionized workers are 16% higher on average for comparable jobs.
•The U.S. Treasury Department's 2023 report, the first of its kind on unions and the economy, found that unions raise the wages of their members by 10 to 15 percent. Earlier reviews found a similar range of 10 to 15 percent with larger effects for longer-tenured workers, and that unions also improve fringe benefits and workplace procedures such as retirement plans, workplace grievance policies, and predictable scheduling.
•Workers represented by unions get higher wages, and are also more likely to enjoy benefits like paid sick days, paid holidays, and paid vacation than their non-union counterparts. For example, data show that 85 percent of unionized workers have access to paid sick leave, while only 62 percent of non-union workers have access.
Other worker benefits documented include:
•Reduced inequality: The decline in union membership is economically important: unions lift wages, reduce inequality, and shape how work is organized, among other effects. Unions promote within-firm equality by adopting egalitarian wage practices like single-rate or automatic progression structures, which have been shown to reduce race and gender wage gaps.
•Spillover effects: The positive effects are not limited to members. Nonunionized firms in competition with unionized workplaces may raise wages to attract workers. Each 1 percentage point increase in private-sector union membership rates translates to about a 0.3 percent increase in nonunion wages, with larger effects for workers without a college degree.
•Perceived benefits: Polling finds at least half of Americans believe that labor unions increase workers' wages (67%), job security (63%), negotiation power (63%), and job satisfaction (51%).
The Treasury report argued that unions serve to strengthen the middle class and grow the economy at large, and can improve the well-being of middle-class workers by raising incomes, improving work environments, and boosting job satisfaction.
For the Economy: Potential Positive Effects
Proponents argue unions can make the economy more robust and resilient:
•Reducing inequality to support growth: Unions contribute to economic growth and resilience in part simply by reducing overall inequality. Income inequality often feeds back into inequality of opportunity, which impedes growth if disadvantaged people cannot access the resources necessary to acquire job skills or start businesses.
•Productivity: Unions can boost businesses’ productivity by improving working environments and by giving experienced workers more of an input into decisions that design better and more cost-effective workplace procedures. The Treasury fact sheet echoed that finding, stating unions can boost productivity through these channels.
•Civic and community benefits: Union members vote more often and are more likely to donate to charity and participate in community projects, which can strengthen social capital.
For Workers and the Economy: Costs and Criticisms
Critics argue unions function as labor cartels that restrict the number of workers in a company or industry to drive up wages, with costs for employers, consumers, and non-union workers.
•Higher costs and less competitiveness: For firms facing global competition, unions raise their employers’ labor costs and make them less competitive. Collective bargaining may result in increased labor costs for employers, such as higher wages, benefits, and additional administrative expenses associated with managing union contracts.
•Fewer jobs and less investment: Some argue that with higher wages, unions bring less investment, fewer jobs, higher prices, and smaller 401(k) plans for everyone else. Economists consistently find that unions decrease the number of jobs available in the economy, and the vast majority of manufacturing jobs lost over the past three decades have been among union members.
•Unemployment risk: Critics also argue that unions' bargaining power can result in wages that are above the market-clearing level, creating a surplus of labor and contributing to unemployment.
•Costs when unions become too powerful: Others point to large costs for workers—and the broader economy—when labor unions become too powerful and operate primarily through their monopoly face, making aggressive demands. Large bargaining agreements have cost workers job opportunities, slower employment growth, and even company relocations or shutdowns.
•Productivity and strikes: While unions can improve productivity in cooperative settings, trade unions affect organizational productivity negatively by engaging in strikes when negotiations fail. The Rust Belt is often cited as a case where bloated labor costs and relentless strikes strangled productivity and investment, prompting manufacturers to flee to more business-friendly regions. Around half of Americans say unions increase the frequency of strikes (48%) or the cost of goods and services (47%).
Some research that controls for worker and firm characteristics finds that simply forming a union does not automatically raise wages at newly organized plants compared to plants where organizing drives failed, suggesting that the correlation between union membership and higher pay partly reflects that unions tend to organize already larger and more profitable firms.
Bottom Line
•For many individual workers, especially in the middle of the income distribution and without a college degree, union membership is associated with higher pay, better benefits, greater job security and more predictable scheduling.
•For the economy, evidence suggests unions can reduce wage inequality and raise labor standards industry-wide, but can also raise costs, reduce flexibility, deter investment, and potentially reduce employment and competitiveness if wage demands exceed what competitive markets can bear.
The net effect often depends on the industry, the level of competition, the quality of the labor-management relationship, and how unions balance wage gains with productivity and cooperation. Union membership in the U.S. has declined significantly - from 20.1% of wage and salary workers in 1983 to 11.9% in 2010- which makes the current debate about whether policies that make organizing easier would help reverse middle-class wage stagnation or harm economic dynamism.