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"The importance of unions"

"Labor unions and equality"

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Unions and the Economy: What We Know; What We Should Know

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Unions and the Economy: What We Know; What We Should Know

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Key Information:

-Unions raise wages (by about 15 per cent on average) and reduce wage dispersion for their members while also reducing profits

-Unions do not seem to reduce employment levels in affected firms, or cause non-union wages to fall

-Efficiency losses due to sectoral misallocation of labour and to strikes are small, but some evidence suggests lowered investment in unionized firms

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Unions and the Economy: What We Know; What We Should Know on JSTOR

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Peter Kuhn, Unions and the Economy: What We Know; What We Should Know, The Canadian Journal of Economics / Revue canadienne d’Economique, Vol. 31, No. 5 (Nov., 1998), pp. 1033-1056

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Unions help reduce disparities and strengthen our democracy

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Unions help reduce disparities and strengthen our democracy

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Key Information:

-Deunionization explains a third of the growth of the wage gap between high- and middle-wage earners over the 1979–2017 period

-On average, a worker covered by a union contract earns 10.2% more in hourly wages than someone with similar education, occupation, and experience in a nonunionized workplace in the same sector

-Wages are lower in states with low union density compared with states with high union density—$1,121.70 a week versus $942.70 a week in 2020

-Hourly wages for women represented by unions are 4.7% higher on average than for nonunionized women with comparable characteristics

-Collective bargaining lifts wages of Black and Hispanic workers closer to those of their white counterparts

-94% percent of union workers participate in a retirement plan, compared with 67% of nonunion workers

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Unions help reduce disparities and strengthen our democracy

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Unions improve wages and benefits for all workers, not just union members. They help reduce income inequality by making sure all Americans, and not just the wealthy elite, share in the benefits of their labor. Unions also reduce racial disparities in wages and raise women’s wages, helping to counteract disparate labor market outcomes by race…

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Key Information:

-Simple comparisons of the wages of union workers and nonunion workers find that union workers typically make about 20 percent more than nonunion workers. Evidence found from more in-depth approaches continue to point to a union wage premium of around 10 to 15 percent, with larger effects for longer-tenured workers

-Empirical studies have confirmed that unions have closed race and gender gaps within firms. One study finds that the wage gap between Black and white women was significantly reduced due to union measures, while another study provides evidence of how collective bargaining has reduced gender wage gaps amongst teachers

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Today, the Treasury Department released a first-of-its-kind report on labor unions, highlighting the evidence that unions serve to strengthen the middle class and grow the economy at large. Over the last half century, middle-class households have experienced stagnating wages, rising income volatility, and reduced intergenerational mobility, even as the economy as a whole has prospered. Unions can improve the well-being of middle-class workers in ways that directly combat these negative trends. Pro-union policy can make a real difference to middle-class households by raising their incomes, improving their work environments, and boosting their job satisfaction. In doing so, unions can help to make the economy more equitable and robust.

Over the last century, union membership rates and income inequality have diverged, as shown in Figure 1. Union membership peaked in the 1950s at one-third of the workforce. At that time, despite pervasive racial and gender discrimination, overall income inequality was close to its lowest level since its peak before the Great Depression, and was continuing to fall. Over the subsequent decades, union membership steadily declined, while income inequality began to steadily rise after a trough in the 1970s. In 2022, union membership plateaued at 10 percent of workers while the top one percent of income earners earned almost 20 percent of total income.

Figure 1: Union Membership and Inequality

While the overall U.S. economy has grown over the past few decades, the rise in inequality can be a proxy for the experience of many middle-class households. The income of the median family rose only 0.6 percent per year, in contrast to average personal income per household which rose 1.1 percent per year, as seen in Figure 2. And, notably, other markers of middle-class stability have deteriorated since the 1970s. Income has become more volatile, the amount of time spent on vacation has fallen, and middle-class Americans are less prepared for retirement. Intergenerational mobility has declined-90 percent of children born in the 1940s earned more than their parents did at age 30, while only half of children born in the mid-1980s did the same.

Figure 2: Income and Wage Growth since the 1960s

So, how could unions help? Treasury's report shows that unions have the potential to address some of these negative trends by raising middle-class wages, improving work environments, and promoting demographic equality. Of course, unions should not be the only solution to these structural trends. But the evidence below and in the report suggests that unions can be useful in building the economy from the middle out.

Wages

Work environments

Worker wellbeing is greatly affected by non-wage benefits. Some benefits, such as healthcare benefits and retirement benefits, are a part of the compensation package and have substantial monetary value. Other features of the work environment, like flexible scheduling or workplace safety regulations, may not have direct monetary value but could still be highly valued by workers. For example, one study estimated that the average worker is willing to give up 20 percent of wages to avoid having their schedule frequently changed by their employer on short notice.[7] Another study, co-authored by Secretary Yellen, found that 80 percent of people who like their jobs cite a non-wage reason as the primary cause of their satisfaction and, conversely, 80 percent of people who dislike their jobs cite non-wage reasons to explain their dissatisfaction.

There is strong evidence that unions improve both fringe benefits and non-wage features of the workplace. Figure 3 shows how much more likely it is for a union worker to be offered certain amenities than a nonunion worker. While these simple comparisons reflect correlations only, studies that use more robust empirical approaches find the same: unions have had a large hand in improving work environments on many dimensions and, in doing so, raise the wellbeing of workers and their families.

Figure 3: Fringe Benefits and Amenities

Workplace Equality

The diverse demographics of modern union membership mean that the benefits of any policy that strengthens today's unions would be felt across the population.Union membership is now roughly equal across men and women. In 2021, Black men had a particularly high union representation rate at 13 percent, as compared to the population average of 10 percent.

Unions promote within-firm equality by adopting explicit anti-discrimination measures, supporting anti-discrimination legislation and enforcement, and promoting wage-setting practices that are less susceptible to implicit bias. As an example of egalitarian wage-setting practices, single rate or automatic progression wage structures contribute to lower within-firm income inequality compared to firms that make individual determinations. These types of practices, and others like publicly available pay schedules, benefit women and vulnerable workers who can be less likely to negotiate aggressively for pay raises.

Spillovers

The positive effects of unions are not limited to union workers. Nonunionized firms in competition with unionized workplaces may choose to raise wages, change hiring practices, or improve their workplace environment to attract workers.Unions can also affect workplace norms by, say, lobbying for workplace safety improvements, or advocating for changes in minimum wage laws. The empirical evidence finds that these positive spillovers exist. Each 1 percentage point increase in private-sector union membership rates translates to about a 0.3 percent increase in nonunion wages. These estimates are larger for workers without a college degree, the majority of America's workforce.

Conclusion
[1] Dynan, Karen, Douglas Elmendorf, and Daniel Sichel. 2012. "The Evolution of Household Income Volatility." U.S. Bureau of Labor Statistics. 2023. Table 2.: Median weekly earnings of full-time wage and salary workers by union affiliation and selected characteristics. Last modified January 19, 2023. For example: Gittleman, Maury, and Morris M. Kleiner. 2016. "Wage effects of unionization and occupational licensing coverage in the United States." Bureau of Labor Statistics (BLS) and author's calculations using BLS data, accessed through IPUMS. Data reflect 2022 values. Sample is employed 16+ year olds. Excludes workers represented by, but not a member of, unions. 69 (1): 142-172; Kleiner, Morris M., and Alan B. Krueger. 2013. "Analyzing the Extent and Influence of Occupational Licensing on the Labor Market." Fortin, Nicole M., Thomas Lemieux, and Neil Lloyd. 2021. "Labor market institutions and the distribution of wages: The role of spillover effects." Note: Rosenfeld, Denice, and Laird (2016) do not interpret their estimates causally. Their approach suffers from many of the CPS's sample size limitations. Although the CPS ostensibly reports quite detailed occupational codes, Rosenfeld, Denice, and Laird estimate regressions with only four occupational codes and 18 industry codes. This data limitation greatly increases the risks that the regression-adjusted approach cannot control for selection effects into unionization. National Labor Relations Board. 2022. "Election Petitions Up 53%, Board Continues to Reduce Case Processing Time in FY22." Press release. October 6, 2022. https://www.nlrb.gov/news-outreach/news-story/election-petitions-up-53-board-continues-to-reduce-case-processing-time-in. Journal of Labor Economics 39 (S2): S369-S412; Taschereau-Dumouchel, Mathieu. 2020. "The Union Threat." The Review of Economic Studies 87 (6): 2859-2892. Journal of Labor Economics 31 (2): S173-S202; DiNardo, John, and David S. Lee. 2004. "Economic Impacts of New Unionization on Private Sector Employers: 1984-2001." The Quarterly Journal of Economics 119 (4): 1383-1441; Frandsen, Brigham R. 2021. "The Surprising Impacts of Unionization: Evidence from Matched Employer-Employee Data." Journal of Labor Economics 39 (4): 861-894. The B.E. Journal of Economic Analysis & Policy 12 (2).
[12] Rosenfeld, Jake, and Meredith Kleykamp. 2012. "Organized Labor and Racial Wage Inequality in the United States." American Journal of Sociology 117 (5): 1460-1502.

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By Laura Feiveson, Deputy Assistant Secretary for MicroeconomicsToday, the Treasury Department released a first-of-its-kind report on labor unions, highlighting the evidence that unions serve to strengthen the middle class and grow the economy at large. Over the last half century, middle-class households have experienced stagnating wages, rising income volatility, and reduced intergenerational mobility, even as the economy as a whole has prospered.

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Unions are necessary for worker pay equity 

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Unions are necessary for worker pay equity 

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Explanation: The resources all covered the pay advantages of labor unions. The modern ones focused on how the decrease in union support/participation has coincided with an increasing class and wage divide. The economy has been a spot of worry for many years now, and the advantages posed by unions for the working class to meet the middle class gap are of importance. The historical precedent is also important, since labor unions have aided and continue to aid traditionally marginalized and discriminated against groups like women and people of color in obtaining equitable pay. All this considered, the resources I've found have many statistical examples that support my angle.