Over the past six and a half years, the President has put forward his vision for middle-class economics where everyone plays by the same set of rules and if you work hard, you can get ahead. A key piece of his agenda to build a stronger economy for working Americans is to ensure that they have a voice in the workplace through unions and other organizing groups. Today’s Summit on Worker Voice highlights the economic case for strengthening worker representation, and a new CEA issue brief reviews the evolution of unions over time, their impact on a broad range of workplace outcomes, and new forms of organizing that have begun to take shape.
Union membership as a share of total employment expanded rapidly in the years following the Great Depression and World War II, plateaued between 1955 and 1975, and has declined consistently since then. In 1955, approximately one-quarter of all U.S. workers belonged to a union; by 2014, the share had dropped to just below 10 percent, around the same level as the mid-1930s. In some states, just 3 percent of workers belong to unions.
The decline of unionization over the past few decades has left many workers without a clear avenue for advocacy in the workplace, and, because unions have historically played a key role in raising the wages of low- and middle-skilled workers, declining unionization has increased inequality. Studies suggest that decreases in unionization can account for 15 to 20 percent of the increase in inequality between 1973 and 1993. In addition, research shows that unions can contribute to higher compensation and better workplace conditions, without decreasing productivity for businesses.
Economic research shows that union workers have higher wages than their nonunion counterparts, with unions raising wages by up to 25 percent for their workers compared to similar nonunion workers.
Union representation also increases the likelihood that a worker has access to benefits through an employer. For example, after controlling for differences between union and nonunion workers, research finds that union workers are about 30 percent more likely to have health insurance at their job than similar nonunion workers. Overall, union members are more likely than nonunion members to have access to retirement benefits, medical care, life insurance, paid sick leave, and paid holidays.
Organized labor has also contributed to broad improvements in workplace safety through both the legislative process and health advocacy. Unions were critical in the passage of the Occupational Safety and Health Act in 1970. Organized labor also contributes to the safety of workplace environments through advocating for workers in contracts and ensuring employer compliance with health and safety regulations. Unions affect safety improvements, for example, by providing information and training about occupational hazards, and unionization increases the likelihood that a workplace will be inspected for safety. Through advocacy and persistence, unions have increased awareness of occupational disease and altered the treatment of these occupational hazards as a result, improving working conditions in both unionized and non-unionized workplaces.
Research has shown that the benefits of unionization tend to spill over to other industries and firms. For instance, virtually all coal mines (and steel plants) were unionized in the 1950s. A study finds higher rates of unionization among healthcare workers today in the areas surrounding those past mines and plants, indicating historical spillovers from unionized industries to nonunionized industries in particular geographic locations. In addition, there are spillovers across firms within industries. Another study finds that nonunionized firms within an industry raise wages in response to increased unionization at the city-level, indicating that compensation increases in unionized firms may spill over to geographically proximate nonunionized firms. Unionization is even associated with intergenerational spillover effects, suggesting that parental union membership can be an important factor in upward mobility for children, especially for children of less-skilled parents.
As technology and other trends have changed the structure of our labor market in recent decades, alternative forms of worker bargaining have arisen to help workers, particularly those not eligible to collectively bargain through a union, express their collective voice. Paralleling the efforts of organized labor, workers themselves have come together to advocate for better wages and working conditions, utilizing resources such as online platforms to amplify their message.
Large advocacy campaigns have had success in improving the workplace policies of large companies, sometimes by enlisting consumers as allies, who may not have a direct stake in the desired outcome, but whose voices can be very effective in encouraging an employer to change. These kinds of groups raise awareness in the larger community and encourage employers to make changes in response to worker and consumer advocacy. For example, Coworker.org connects workers across the world, as well as community stakeholders and consumers, to one another through online campaigns and petitions. Such groups can serve as an important resource for workers who are not officially associated with a particular company and are thus constantly renegotiating their place in the workforce.
In all, unions and other forms of worker voice continue to play a key role in promoting higher wages, benefits, and workplace safety, ensuring that the benefits of economic growth are broadly shared.
Sandra Black is a member of the Council of Economic Advisers.