Balancing the union debate — I'll gather recent evidence on worker and economic impacts.
Labor unions have both benefits and costs for workers and the economy, and the net effects depend on labor market conditions, industry, and the nature of union-employer relations.
How unions benefit workers
Research consistently finds a wage and benefits premium for union members:
•The U.S. Treasury Department's 2023 report 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.
•Other estimates put the premium at 10.2% more than non-union peers and up to 27% in some studies, with larger gains for Black workers at 17.3% and Latino workers at 23.1%.
•Unionized workers have greater access to paid sick leave, paid holidays and retirement benefits than non-union workers.
Unions also:
•Counterbalance Monopsony Power: In industries where employers have market power to pay wages below competitive equilibrium, a union can increase wages without causing unemployment. Many modern employers have a degree of monopsony power related to difficulties of moving between jobs.
•Provide representation and protection from exploitation, and help to uphold health and safety legislation.
•Can negotiate productivity deals and help implement new working practices.
•Polling shows most Americans believe unions increase workers' wages (67%), job security (63%), negotiation power (63%), and job satisfaction (51%).
How unions affect the broader economy
Positive spillovers:
•The Treasury report found Unionization also has spillover effects that extend well beyond union workers. Competition means workers at nonunionized firms see increased wages too and heightened safety norms can pull up whole industries.
•Unions help create a fairer economy by reducing race and gender wage gaps. From the late 1890s to 1980s, growth in UK union membership coincided with falling inequality.
•Finally, in addition to supporting the middle class, unions contribute to economic growth and resilience. They do so in part simply by reducing overall inequality. The Treasury also notes unions can boost businesses’ productivity by improving working environments and by giving experienced workers more input into workplace procedures.
•Other research finds union benefits can extend beyond individual organizations, boosting sectors and even the economy by reducing staff turnover, providing or promoting training and encouraging innovation.
•Trade unions can contribute positively to labour productivity by improving work morale and facilitating cooperation with management through their "collective voice" function.
•A World Bank review of a thousand studies concluded high unionization rates can lead to lower unemployment and inflation, higher productivity and faster growth in some contexts.
Potential costs and trade-offs
Economists also identify downsides, particularly when unions push wages above productivity or adopt adversarial tactics:
•Unemployment and investment: If labour markets are competitive, and trade unions are successful in pushing for higher wages, it can cause disequilibrium unemployment. Critics argue powerful unions can lead to slower job growth and fewer jobs for unionized workers, reduce company investments in research and development, and increase the likelihood of company closures.
•Survey evidence notes around half of Americans say unions increase the frequency of strikes (48%) or the cost of goods and services (47%).
•Lost productivity: If unions go on strike and work unproductively it can lead to lost sales and output, and can discourage firms from investing if they fear frequent strikes.
•Wage-inflation: If unions become too powerful they can bargain for higher wages above the rate of inflation. If this occurs it may contribute to wage-inflation.
•Mixed productivity evidence: One survey of the literature concludes 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, and participatory benefits can be countered if unions impose restrictive practices (such as overstaffing).
•Unions only consider the needs of its members, they often ignore the plight of those excluded from the labour markets, e.g. the unemployed.
Context matters
Evaluation depends on circumstances and the employment relationship:
> The benefits of trades unions depend on their circumstances. If they face a monopsony employer they can help counterbalance the employers market power
> It also depends very much on the nature of the relationship between trade unions and employers. If relations are good and constructive, the union can be a partner with the firm. However, if the relationship becomes confrontational, it can escalate into destructive partnerships which cause a decline in profitability and puts the long-term security of jobs at risk
Public opinion
Despite debates among economists, public support is high. Recent Gallup polling shows 71% of Americans approve of labor unions, tying the highest level since the 1960s, with support across party lines.
Bottom line: For individual workers, especially middle-class and lower-wage workers, union membership is generally associated with higher wages, better benefits, greater job security and more voice at work. For the economy as a whole, unions can reduce inequality, raise standards for non-union workers, and improve working conditions and stability, but if wages outpace productivity or labor relations become adversarial, they can also raise costs, reduce competitiveness, and create unemployment or inflation pressure.
Whether unions are "good" overall therefore depends on how they balance wage gains with productivity, and whether they cooperate with employers to improve efficiency rather than simply raising costs.