Are labor unions good for workers and the economy?

Leans yesSays it is contestedSources conflict

The Treasury and Work Rise sources describe unions as boosting productivity and the economy, while the Heritage-derived source says unions harm the overall economy through cartel effects and fewer jobs.

I'll examine the evidence on how unions affect workers and the broader economy.

Labor unions have both benefits and costs, and economic research is divided on the net effect on the overall economy, while more consistent on the effect for union members themselves.

For Union Members and Workers

Most research finds unions benefit their members:

•Higher wages and benefits: 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 comparing union and non-union workers find similar premiums, with analysis showing union wages are about 12 percent higher when comparing similar workers, and that unions have a positive and significant impact on wages. Over a lifetime, the average male worker will earn $1.3 million more if they have consistently been a member of a union.

•Better benefits and working conditions: Workers represented by unions get higher wages, and are also more likely to enjoy benefits like paid sick days, paid holidays, and paid vacation. For example, data from the Bureau of Labor Statistics show that 85 percent of unionized workers have access to paid sick leave, while only 62 percent of non-union workers have access.

•Spillover effects to non-union workers: Competition means workers at nonunionized firms see increased wages too and heightened workplace safety norms can pull up whole industries. Research links strong unions to higher wages, lower income inequality, and safer workplaces.

•Reduced inequality and turnover: Unions reduce employee turnover and wage inequality. They have played a significant role in reducing income inequality, and they raise wages more for workers with less formal education and experience. Unions also reduce turnover by insulating workers from retaliation when communicating discontent to managers rather than otherwise quitting.

A Washington "Union Effect" report found evidence that unions raise workers' wages and benefits, and reduce the use of public assistance, benefiting both the states economy and worker well-being.

For Employers and the Broader Economy

The debate is more contested at the economy-wide level, with studies pointing to both positive and negative effects:

Arguments that unions help the economy:

•Productivity: In the United States, unions generally have a positive impact on productivity, and this effect is particularly strong among manufacturing firms. 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.

•Lower turnover costs and training: By lowering turnover, unions support the necessary stability for investments in firm-specific human capital and training.

•Macroeconomic stability: Unions help create a fairer economy by reducing race and gender wage gaps, and unions can help to stabilize the economy by reducing income inequality and promoting a more equitable distribution of wealth.

•Correcting labor market failures: Mounting evidence has shown there is a pervasive lack of competition across the labor market that leads to suboptimal wage and employment levels, and unions are described as critical components of ensuring competitive market outcomes.

Proponents summarize that rather than worker interests being seen as inherently at odds with business interests, aligning them through the collective bargaining process can improve firm outcomes and benefit the broader economy.

Arguments that unions harm the economy:

•Labor cartel model: Unions function as labor cartels that attempt to monopolize the labor supplied to a company or industry in order to force employers to pay higher wages. Economic research finds that unions benefit their members but hurt consumers generally, and especially workers who are denied job opportunities.

•Higher costs and prices: Advantages of trade unions include better wages and benefits, safer working conditions, and job security, while disadvantages include increased labor costs, reduced flexibility, and potential strikes and disruption. Critics argue unions can stifle economic growth by increasing labor costs and reducing business competitiveness, leading to higher prices for consumers.

•Fewer jobs and investment: Unions effectively tax investments by negotiating higher wages for their members, thus lowering profits, and unionized companies respond by reducing investment. This, along with the fact that unions function as labor cartels that seek to reduce job opportunities, causes unionized companies to lose jobs. A 2025 review of 147 studies by researchers at the Mercatus Center concluded that powerful labor 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.

A broad survey summarized by the Heritage Foundation states that while unions can sometimes achieve benefits for their members, they harm the overall economy. Other analyses note that widespread unionization delays recovery from economic downturns.

Bottom Line

•For workers who are members: Evidence is strong that union membership is associated with higher pay, better benefits, greater job security, and safer workplaces, with spillover benefits even for non-union workers in the same labor market or industry.

•For the economy as a whole: The effect depends on scale, industry, and how unions and employers bargain. Supportive research, including a 2023 U.S. Treasury report, finds unions contribute to economic growth and resilience in part simply by reducing overall inequality, while critical research emphasizes cartel-like costs: higher prices, reduced investment, decreased competitiveness, and fewer jobs.

Many economists conclude the net effect is context-dependent: cooperative unions that give workers voice in improving workplace efficiency can raise both wages and productivity, while adversarial or monopoly-style unions in highly competitive global markets may raise costs without sustainable gains.

Citations (3)

1treasury.govGovernment
FACT SHEET: Treasury Department Releases First-Of-Its-Kind Report on Benefits of Unions to the U.S. Economy
Backs: “For Union Members and Workers. Most research finds unions benefit their members: Higher wages and benefits: 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.”
statistic, official document, points to yes. Claim: Unions raise members' wages by 10 to 15 percent and improve benefits and workplace procedures; Treasury finds unions contribute to economic growth.
2workrisenetwork.orgNonprofits and think tanks
How Unions Can Increase Firm Productivity and Strengthen Economic Growth
Backs: “Other estimates comparing union and non-union workers find similar premiums, with analysis showing union wages are about 12 percent higher when comparing similar workers, and that unions have a positive and significant impact on wages.”
statistic, article, points to yes. Claim: Union wages are about 12 percent higher when comparing similar workers, and unions have a positive impact on productivity.
3indoamericancenter.comNonprofits and think tanks
HERITAGE FOUNDATION - What Unions Do: How Labor Unions Affect Jobs and the Economy
Backs: “Proponents summarize that rather than worker interests being seen as inherently at odds with business interests, aligning them through the collective bargaining process can improve firm outcomes and benefit the broader economy. Arguments that unions harm the economy: Labor cartel model: Unions function as labor…”
attribution, article, points to no. Claim: Unions function as labor cartels monopolizing labor supply to force higher wages, hurting consumers and the overall economy.