How Labor Unions Improve Pay and Work Conditions

Key Takeaways

• Unions are worker organizations formed to negotiate pay and working conditions with employers.
• 10% of the U.S. workforce were union members in 2023, down from 20% in 1983.
• Nearly 33% of union members in the U.S. work in the public sector.
• Unionized workers generally earn higher wages than non-union workers.
• “Right to work” laws in the U.S. allow non-union members to benefit from union bargaining without paying dues.

Unions are voluntary associations of workers seeking to improve the leverage of their members, negotiating through collective bargaining to set pay and other working conditions. Unions arose to correct an imbalance in corporate leverage and played an economic role for much of the 20th century. Recent unionization efforts have been undertaken in non-traditional industries, like service sectors. There’s been an impact on wage differences between union and non-union workers.

Labor laws strive to equalize the bargaining power between employers and employees and grant employees the right to unionize.

Understanding the Role and Structure of Labor Unions

Labor unions are voluntary, democratic associations of workers. Trade unions are organized for a specific trade or occupation, while industrial unions represent workers in a particular industry. National unions can have many local chapters. U.S. workers can elect a union as their collective bargaining agent under the National Labor Relations Act (NLRA).

Collective bargaining is a negotiation in which a union and an employer or group of employers set pay and other working conditions for the union’s members.Unions dissatisfied with collective bargaining results may call a strike under certain conditions, just as employers can lock out their workers.

Trends and Statistics in Union Membership

The proportion of workers in the national labor force covered by collective bargaining varies widely by country. In the U.S., the percentage of union workers dropped from about 20% in 1983 to 10% in 2023.

Nearly 33% of union members in the U.S. worked in the public sector, where more than a third of the workforce was unionized, compared with about 6% in the private sector. Teachers, police officers, and firefighters are among the public employees most likely to belong to a union.

As manufacturing employment that once served as the mainstay of union membership has declined, organizing efforts have extended into the service and professional industries where unions have previously lacked a foothold. Unionization drives succeeded in organizing workers at some Amazon.com (AMZN) warehouses, and as of 2024, over 385 Starbucks (SBUX) coffee shops have unionized.

10%

The share of the U.S. working population who were members of unions in 2023.

Challenges and Opposition Facing Unions

In the U.S., industry groups often oppose unions and their legislative goals. The U.S. Chamber of Commerce says its goal on union issues is to “fight back against the one-sided, anti-employer agenda of special interest organizations.” The business group opposed legislation providing additional protections for union organizers.

In 27 U.S. states, “right to work” laws allow non-union members to obtain the benefits of collective bargaining by unions without paying union dues. Employers hostile to unions often assert unions cannot secure better pay and working conditions than what is already provided for workers.

In China, independent labor unions are illegal, while official organizations are controlled by a government-backed union not known for advocating on behalf of workers.

Evaluating the Effectiveness of Unions

Union wages are generally higher than non-union wages globally. According to the U.S. Bureau of Labor Statistics, union members had a median weekly earnings of $1,263 in 2023, while non-union workers had a median weekly income of $1,090.

Like any democratic institution, organized labor is focused on the needs of union members. This focus can increase long-term costs for employers, both public and private. Collective bargaining aims for balance and compromise by addressing the long-term economic needs of the employer and employees.

In 2021, a higher-paid unionized workforce turned into a competitive advantage for United Parcel Service Inc. (UPS) against non-union rival FedEx Corp. (FDX), resulting in lower employee turnover amid a labor shortage.

How Is the National Labor Relations Act Enforced?

The NLRA defines and prohibits “unfair labor practices” by unions and management and requires both sides to bargain in good faith. The NLRA’s terms are enforced by the National Labor Relations Board (NLRB).

Can Unions Participate in Politics?

Unions may engage in politics. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) is a federation of 57 labor unions promoting laws and policies for union members.

The Bottom Line

As of 2023, 10% of the U.S. working population that was unionized. Unions have left their mark on the economy and are a significant force shaping business and politics. They represent many industries, from heavy manufacturing to the federal government, and aim to help workers secure higher wages and improved working conditions. Collective bargaining enhances workers’ negotiating power.

Unions have nonetheless faced opposition and challenges from industry groups and “right to work” laws.