I'll explore the evidence on how unions affect workers and the broader economy.
Are labor unions good for workers and the economy? The research finds both benefits and costs, and effects vary depending on the industry, the type of union, and how bargaining is structured:
1. Effects For Workers - Largely Positive for Members
Higher wages and better benefits:
•Multiple studies find a union wage premium. The U.S. Treasury Department's 2023 report on unions found Unions raise the wages of their members by 10 to 15 percent. Unions also improve fringe benefits and workplace procedures such as retirement plans, workplace grievance policies, and predictable scheduling.
•For young workers (ages 18-24), research found union workers enjoyed a regression-adjusted wage premium of 14.7 percent.
•For other groups the premium is also documented as 10-15% or higher in low-wage service occupations where unionization raises wages by over 15% and increases health and retirement coverage. Unionization was associated with a 76.1 percent increase in employer-sponsored health insurance coverage and a 134.4 percent increase in retirement plan coverage for the youngest workers.
Other worker benefits documented include:
•Greater likelihood of paid sick leave, holidays, and vacation.
•More predictable scheduling - one study estimated the average worker values ability to avoid short-notice schedule changes at up to 20% of wages.
•Improved workplace safety norms and grievance procedures.
Reduced inequality and spillover effects:
•Unionization also has spillover effects that extend well beyond union workers - competition can raise wages at non-union firms, and safety norms can pull up whole industries.
•By encouraging egalitarian wage practices, unions serve to reduce race and gender wage gaps.
•Modern union membership is diverse - for example, Black men had a 13% representation rate in 2021 compared to 10% overall.
2. Effects On The Economy - Mixed Evidence
Arguments that unions help the economy:
•Advocates and some economic research argue unions contribute to growth by reducing income inequality and boosting aggregate demand. The Treasury found unions contribute to economic growth and resilience. They do so in part simply by reducing overall inequality.
•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.
•Other reviews find unions do not, overall, reduce productivity, though it varies according to specific circumstances and that they reduce income inequality.
•Labor unions are also argued to contribute to growth by increasing wages and consumer spending, promoting innovation and productivity, reducing income inequality and social unrest, and strengthening the middle class.
Arguments that unions can harm the economy:
•Critics point to higher labor costs. Studies note Higher Labor Costs: Union negotiations often lead to increased wages and benefits for members, which can raise labor costs for employers. This can lead to higher prices for consumers, reduced investment in other areas of the business, or even job losses.
•Exclusive or monopolistic bargaining structures can lead to slower employment growth and fewer jobs for unionized workers and can reduce company investments in R&D and long-lived tangible capital. A review of 147 studies found companies facing excessive demands often cut investments—particularly in R&D and long-term capital—reducing productivity and profitability, which weakens businesses and increases likelihood of downsizing or closure, ultimately leading to job losses and a smaller unionized workforce.
•The Mercatus study attributed roughly 55 percent of the decline in the Rust Belt's share of manufacturing employment between 1950 and 2000 to dynamics where companies responded to wage pressure by trimming investment and shrinking jobs.
•Strikes are a related cost: union strikes, while a legitimate tool for negotiation, can disrupt operations, halt production, and increase costs, which can lead to higher product prices.
Recent trend: shrinking wage premium
Historically the premium was large, but recent studies suggest the wage gap between unionized and non-unionized workers has narrowed, in large part because of global competition and technological changes and that the advantage ... has diminished to the point where union membership may no longer guarantee higher earnings. Some research also finds the effect of union power on income inequality is at best, mixed.
3. Public Opinion and Membership Context
Public support is high but membership is low:
•Gallup polling found 71% of Americans approve of labor unions, tied for the highest since the 1960s, though approval fell to 48% in 2009 before rebounding.
•Pew Research found 55% of Americans say labor unions positively affect the country, while 41% say they have a negative impact, with sharp partisan differences.
•Despite high approval, union membership in 2024 was just 9.9%, down from 20.1% in 1983 and about 35% in the mid-1950s.
Bottom Line
•For individual workers who are members: Evidence consistently shows higher wages (roughly 10-15% premium), better access to health insurance and retirement plans, and greater job security and workplace protections.
•For the broader economy: Effects are debated. Moderate, cooperative unions operating in flexible frameworks can raise standards, reduce inequality, and maintain productivity without major costs. More monopolistic or adversarial unions making aggressive, inflexible demands are more associated with trade-offs: higher consumer prices, slower job growth, reduced investment, and potential firm downsizing.
Whether unions are "good" therefore depends on what outcome is prioritized (member welfare vs. total employment and firm competitiveness) and on the structure of bargaining - balanced demands and pluralistic representation tend to preserve benefits while limiting costs.