I'll search for current evidence on how unions affect workers and the broader economy.
Labor unions have well-documented benefits for workers, and mixed but increasingly positive-evaluated effects on the broader economy - with trade-offs.
1. For Workers: Largely Positive
Most empirical research finds a consistent wage and benefits premium:
•Higher wages: Unions raise the wages of their members by 10 to 15 percent. Another analysis finds unionized workers earn 10.2% more than their non-union peers. Simple comparisons find about 20 percent more than nonunion workers before controls, with causal estimates around 10 to 15 percent, with larger effects for longer-tenured workers.
•Better fringe benefits and working conditions: Unions also improve fringe benefits and workplace procedures such as retirement plans, workplace grievance policies, and predictable scheduling. These workplace improvements contribute substantially to middle-class financial stability. Evidence shows unions improve both fringe benefits and non-wage features of the workplace.
•Reduced inequality and spillovers: By encouraging egalitarian wage practices, unions serve to reduce race and gender wage gaps. Unionization increases wages by 17.3% for Black workers and 23.1% for Latino workers.
Benefits are not limited to members. Competition means workers at nonunionized firms see increased wages too. Each 1 percentage point increase in private-sector union membership rates translates to about a 0.3 percent increase in nonunion wages. Heightened workplace safety norms can pull up whole industries.
Other worker benefits often cited include a formal dispute resolution process, lower employee turnover and better trained workforce, and greater civic engagement - union members vote 12 percentage points more often.
2. For the Economy: Positive Channels and Negative Risks
The U.S. Treasury Department's 2023 first-of-its-kind report concluded unions play an important role in addressing longstanding challenges faced by the middle class — including stagnant wages, high housing costs, and reduced intergenerational mobility. In doing so, unions contribute to a more robust and resilient economy.
Proponents argue:
•Reducing inequality supports growth: Increased financial stability to those in the middle or bottom of the income distribution could alleviate borrowing constraints, allowing workers to start businesses, build human capital, and exploit investment opportunities. 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 gains through voice: 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 report argues unions can have a positive effect on productivity through employee engagement and union voice effects, for example patient outcomes improved in hospitals where registered nurses unionized.
•Empirical studies are mixed but some find positive effects: The presence of labor unions has statistically and economically significant positive effects on firm productivity. In construction, one study found productivity for union labor is 14 percent higher versus open shop labor and that projects that use a mix of union and open shop labor have 8 percent better productivity.
•A synthesis concluded unions do not, overall, reduce productivity, though it varies according to specific circumstances. Unionisation does make businesses less profitable for the owners. But importantly, it also reduces income inequality.
Critics and other research point to costs:
•Reduced investment and employment growth: 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. Looking to the cost side, studies show that 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. Research also shows that these effects slightly increase the likelihood of a company closing.
•Higher labor costs and competitiveness: The disadvantages include increased labor costs, reduced flexibility, and potential strikes and disruption. For employers, unions can increase labor costs that lead to employer becoming less competitive and make it harder to promote and terminate workers and harder to fast-track promotions for high-performing workers and/or get rid of low-performing ones.
•Cartel / monopoly view: Critics argue unions operate as legal labor cartels. They try to control the supply of labor in an industry so they can drive up its price — wages. Union members benefit, but those costs get passed on as higher prices. Benefit their members at the cost of greater losses to the rest of society.
•Strikes and disruption: Strikes cost companies billions of dollars in lost... and critics argue large bargaining agreements have cost workers job opportunities, slower employment growth, and even company relocations or shutdowns. Trade unions can create tensions with employers, especially during negotiations. This can lead to strikes or work stoppages, which may disrupt business operations and result in lost wages.
•Other costs: Workers are required to pay union dues/fees that some might rather not pay, and unions can make it harder to promote and terminate workers and drive up costs.
3. Bottom Line
> The evidence presented in Treasury's report challenges the view that worker empowerment holds back economic prosperity.
•For individual workers, especially middle- and low-wage workers, women and workers of color, union membership is consistently associated with higher pay, better benefits, greater job security, safety, and voice.
•For the economy as a whole, unions tend to reduce wage inequality, raise aggregate demand and stabilize middle-class households, and can raise productivity when labor-management relations are cooperative.
•However, when unions operate primarily as monopoly bargaining agents making aggressive demands, research finds they can reduce profitability, investment, and employment growth, raise consumer prices, and increase risk of firm closure or relocation.
Recent economics literature emphasizes that how unions operate matters: cooperative, voice-based unionism tends to produce net positive productivity and equity effects, while adversarial, monopoly-focused unionism is more likely to produce the negative employment and investment effects noted by critics.