I'll examine whether unions help workers and the broader economy — weighing wages, security, and growth effects.
Whether labor unions are "good" depends on whose perspective and what kind of unionism is being considered. Economic research and public polling show significant benefits for members, but also trade-offs and costs for employers and the broader economy.
Benefits for Workers
Most studies find a clear wage and benefits premium for union members:
•Unions raise the wages of their members by 10 to 15 percent and also improve fringe benefits and workplace procedures such as retirement plans, workplace grievance policies, and predictable scheduling.
•Other estimates put the premium at 10.2% more than non-union peers and more broadly at 10- to 20-percent wage boost over nonunion counterparts over the last eight decades.
•Weekly earnings for unionized workers are 16% higher on average for comparable jobs according to Bureau of Labor Statistics figures.
•Unions also promote health through higher wages, retirement benefits, limits on working hours, job training, safer environments, and discrimination-free workplaces.
The effects are especially large for historically disadvantaged groups:
•Unionization increases wages by 17.3% for Black workers and 23.1% for Latino workers.
•By encouraging egalitarian wage practices, unions serve to reduce race and gender wage gaps.
Additional worker benefits include:
•Reduced exposure to underemployment and lower quit rates
•Greater job security and more predictable scheduling, which one study estimated workers value at up to 20 percent of their wages
•Greater economic mobility for children of union workers
Spillover Benefits and Inequality Reduction
Research finds benefits extend beyond members:
•Unionization also has spillover effects that extend well beyond union workers, with competition meaning workers at nonunionized firms see increased wages too and heightened workplace safety norms can pull up whole industries.
•By setting a standard for working conditions, unions generate broader spillover benefits for all workers in industries with high rates of unionization—even if individual workers are not themselves in a union.
At the macro level:
•Unions can improve well-being in ways that directly combat stagnating wages, rising income volatility, and reduced intergenerational mobility.
•Studies find unions substantially reduce wage inequality, especially for men, and that countries with a higher amount of the labour force in unions have lower levels of inequality.
•One Schumpeterian growth model finds that in the long run, stronger unions continue to lower inequality without affecting the steady-state growth rate.
•Treasury analysis argues that in addition to supporting the middle class, unions contribute to economic growth and resilience in part simply by reducing overall inequality and 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.
Costs and Criticisms For Workers and The Economy
Economists also identify downsides, particularly when unions operate as exclusive bargaining monopolies:
For employers and competitiveness:
•Unions can increase labor costs that lead to employer becoming less competitive, such as by requiring pensions.
•For firms facing global competition, unions raise their employers' labor costs and make them less competitive, which hastened the outsourcing of production overseas.
•Those higher wages can reduce profitability, and investment will move away from companies with such high costs and low profitability.
•Some managers, politicians, and the Heritage Foundation conclude unions may be responsible for a slower work process and reduced productivity.
For employment and investment:
•Powerful labor unions can bring about slower employment growth and fewer jobs for unionized workers and can reduce company investments in R&D and long-lived tangible capital.
•Excessive demands have led companies to cut investments—particularly in R&D and long-lived tangible capital—thereby reducing productivity, profitability, and long-term viability, making firms more likely to downsize or shut down.
•This dynamic helps explain roughly 55 percent of the decline in the Rust Belt's share of manufacturing employment between 1950 and 2000.
•Literature surveys conclude that on balance, the effects of unions upon productivity and productivity growth are small; they do not offset the cost increase resulting from higher union wages.
For non-members and outsiders:
•At higher union wages, employers employ fewer people and workers who lose jobs move to the nonunion sector, where increased supply causes nonunion wages to fall.
•Critics argue unions operate as legal labor cartels that try to control the supply of labor to drive up its price, benefiting members at the cost of greater losses to the rest of society through higher prices and lower sales and fewer jobs in that industry.
•Job security clauses and seniority promotions help union "insiders" but harm "outsiders" (younger or new workers) by discouraging hiring.
The Moderate vs. Powerful Union Distinction
Recent comprehensive research (147 studies) emphasizes structure matters more than presence:
•While powerful unions with monopolistic characteristics can achieve significant gains at the bargaining table, these victories often come with trade-offs that can negatively impact unionized workers and the economy.
•Research shows that powerful labor unions acting through their monopoly face can limit job growth and employment opportunities.
•The monopoly face refers to exclusive legal authority granted to a single certified union to represent all workers in a bargaining unit—blocking other unions or alternative forms of representation.
•More balanced, moderate, and cooperative unions are able to preserve collective voice, higher wages, and better conditions while minimizing downside of extortive demands that can lead to fewer jobs, fewer investments, and reduced company growth.
In addition, the traditional wage premium may be shrinking:
•The labor union wage premium has declined in recent years and may even be negligible or zero due to global competition and technological changes.
•NBER research using regression discontinuity comparing establishments where unions barely won vs. barely lost elections found that in recent decades the legal mandate to bargain has had little economic impact because unions have been somewhat unsuccessful at securing significant wage gains.
•The effect on income inequality is at best mixed, with most economists attributing rising inequality primarily to skill-based technological change.
Public Perception
Public opinion reflects this mixed assessment:
•About half (53%) say unions have had a positive effect on the salaries and benefits of union workers, and 51% positive on working conditions for all workers.
•But as many say unions have a negative effect as a positive effect on workplace productivity and on availability of good jobs, and more say unions have a negative (36%) than positive (24%) impact on ability of U.S. companies to compete internationally.
•Despite that ambivalence, overall approval is high: Gallup found public support ticked up to 70%, nearing 71% in 2022, the highest since 1965, with disapproval at a 57-year low. Union membership itself has declined from 20.1% in 1983 to 11.9% in 2010.
Bottom Line
•For workers who are members: Evidence is strong that unionization, on average, raises wages, improves benefits, safety, and job security, and reduces racial and gender pay gaps.
•For the economy as a whole: Unions can reduce inequality and raise standards industry-wide, which may support middle-class stability and resilience, but they can also raise costs, reduce profitability, discourage investment, and slow employment growth—especially when bargaining is adversarial and monopolistic. More cooperative, flexible models (as seen in Germany and the UK) tend to retain benefits while limiting costs.
Whether unions are net positive therefore depends on the balance struck between collective voice and monopoly power, the competitiveness of the industry, and how gains are distributed between current members, future workers, consumers, and employers.