Do Unions Raise Your Wages Even If You’re Not In One?
by Kathryn Hauer, CFP®, EA
If the neighbors consistently pay babysitters more than you pay, before long you’ll have to spend more for date night. Local babysitters will become accustomed to working for higher rates, so the best babysitters will expect higher rates. The increase will eventually be passed on to other excellent babysitters and to some degree even to the babysitter who sneaks in her boyfriend after the kids have gone to bed. Unions might be regarded as that higher-paying neighbor who nabbed your regular Saturday-night babysitter.
Why might unions matter to you if you are not a union member? You are probably an employee, and you may also function as an employer or hiring manager. In either case, you’ve likely noticed that your salary and the salaries of those you employ haven’t changed much in recent years. Although people argue about the causes and solutions, most experts agree that the U.S. has experienced wage stagnation since the early 1970s. According to a USA Today report, “adjusted for inflation, median household income (now at $51,939) is 9% below where it was in 1999…and has grown only 7% since 1973, even as per capita GDP has roughly doubled.” Inflation-adjusted wages for young college graduates have also stagnated since the 1990s.
Given the reality of wage stagnation, could the reduced significance of unions over the past few decades have had an impact? Investopedia writer Brent Radcliffe’s informative article, "Unions: Do They Help or Hurt Workers?," explains how unions fit into the U.S. economy and concludes that unions “assist workers in obtaining better wages and working conditions.”
Americans today have mixed feelings toward unions. Gallup Poll data show that over the past decade, American approval of unions has ranged between 50% and 60%. Research shows unions have played a significant role in enforcing labor laws and ensuring workers are protected and have access to benefits to which they are legally entitled. Although I personally am convinced unions are necessary in the U.S. to ensure fair pay and safe work conditions, I realize union membership and popularity have decreased in the past 30 years
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What percent of Americans belong to unions? The union membership rate—the percent of wage and salary workers who were members of unions—was 11.1% in 2015 (14.8 million workers), unchanged from 2014. By comparison, in 1983, the first year for which comparable union data are available, the union membership rate was 20.1%, and there were 17.7 million union workers.
What are some of the ways unions help all workers—not just union workers? Labor expert Dr. Jake Rosenfeld, professor of sociology at Washington University in St. Louis and an expert on economic inequality, writes about the socioeconomic value of unions in the article "Unions, Norms, and the Rise in U.S. Wage Inequality." He makes the following points:
“Union membership in the private sector increases a worker’s compensation by 10-20 percent.”
“Unions also equalize pay within companies, partly because they raise the wages of blue-collar and less-skilled workers and partly because they standardize pay among workers with similar educational achievements and experience.”
“Nonunion employers in highly unionized industries, for example, often raise the wages they pay to avert organizing efforts.
“Legislators in these states are also more likely to vote for minimum-wage increases, and poverty rates in these states tend to be lower.”
So where does that leave Investopedia readers looking for the bottom line? It’s likely that unions help reduce wage inequality without dramatically crippling business growth. As the U.S. moves toward infrastructure development, an increase in union membership will likely benefit all workers.
