Unemployment[ edit ] The economist Milton FriedmanNobel Prize winner and advocate of laissez-faire capitalism, believed that unionization frequently produces higher wages at the expense of fewer jobs, and that, if some industries are unionized while others are not, wages will decline in non-unionized industries. This is because it is no longer worthwhile for businesses to employ those laborers whose work is worth less than the minimum wage rate set by the unions. The ones who are likely to lose the most from a trade union are those who are unemployed or at the risk of unemployment or who are not able to get the job that they want in a particular field. Moreover, profits are invested leading to an increase in capital:
Some of the conclusions are: Unions reduce wage inequality because they raise wages more for low- and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree.
Strong unions set a pay standard that nonunion employers follow.
The impact of unions on total nonunion wages is almost as large as the impact on total union wages. The most sweeping advantage for unionized workers is in fringe benefits. Unionized workers receive more generous health benefits than nonunionized workers. Unionized workers receive better pension plans.
Because unionized workers are more informed, they are more likely to benefit from social insurance programs such as unemployment insurance and workers compensation. Unions are thus an intermediary institution that provides a necessary complement to legislated benefits and protections.
The union wage premium It should come as no surprise that unions raise wages, since this has always been one of the main goals of unions and a major reason that workers seek collective bargaining.
How much unions raise wages, for whom, and the consequences of unionization for workers, firms, and the economy have been studied by economists and other researchers for over a century for example, the work of Alfred Marshall.
Table 1 provides several estimates of the union hourly wage premium based on household and employer data from the mid- to late s. All of these estimates are based on statistical analyses that control for worker and employer characteristics such as occupation, education, race, industry, and size of firm.
Therefore, these estimates show how much collective bargaining raises the wages of unionized workers compared to comparable nonunionized workers. The data most frequently used for this analysis is the Current Population Survey CPS of the Bureau of Labor Statistics, which is most familiar as the household survey used to report the unemployment rate each month.
The CPS reports the wages and demographic characteristics age, gender, education, race, marital status of workers, including whether workers are union members or covered by a collective bargaining contract, and employment information e.
Using these data, Hirsch and Macpherson found a union wage premium of Another important source of workplace information, employer surveys, has advantages and disadvantages. On the plus side, wages, occupation, and employer characteristics—including the identification of union status—are considered more accurate in employer-based data.
The disadvantage is that data from employers do not include detailed information about the characteristics of the workers e. Pierce a used the new Bureau of Labor Statistics survey of employers, the National Compensation Survey, to study wage determination and found a union wage premium of Since unions have a greater impact on benefits than wages see Freemanestimates of the union premium for wages alone are less than estimates of the union premium for all compensation wages and benefits combined.
A study by Pierce estimates the union premium for wages at A later section reviews the union impact on specific fringe benefits such as paid leave, health insurance, and pensions. Some researchers have argued that union wage premiums are significantly underestimated by some measurements.
The increase in imputations has, Hirsch says, created an increasing underestimate of the union wage premium. Consequently, unions lessen wage inequality.
The standard explanation for this result is that unions standardize wages by decreasing differentials across and within job positions Freeman so that low-skilled workers receive a larger premium relative to their alternative nonunion wage.
The larger union wage premium for those with low wages, in lower-paid occupations and with less education is shown in Table 2. For instance, the union wage premium for blue-collar workers in Likewise, the union wage premium for high school graduates, Gundersen estimated the union wage premium for those with a high school degree or less at As Table 2 shows, the union wage premium was far greater among low-wage workers Unions reduce wage inequalities because they raise wages more at the bottom and in the middle of the wage scale than at the top.
Lower-wage, middle-wage, blue-collar, and high school educated workers are also more likely than high-wage, white-collar, and college-educated workers to be represented by unions see Table 2. That unionization lessens wage inequality is also evident in the numerous studies that attribute a sizable share of the growth of wage inequality since to the erosion of union coverage Freeman ; Card ; Dinardo et al.
This is especially the case among men, where steep declines in unionization among blue-collar and non-college-educated men has led to a rise in education and occupational wage gaps. Thus, the union impact on benefits is even more critical to the lives of workers now than in the past.
This section presents evidence that unionized workers are given employer-provided health and pension benefits far more frequently than comparable nonunion workers. Moreover, unionized workers are provided better paid leave and better health and pension plans.
The previous section reviewed data that showed that unions have had a greater impact in raising benefits than in raising wages.
This section examines the union effect on particular benefits, primarily paid leave, health insurance, and pensions.Watch video · Did you know? In , 12 percent of American workers belonged to unions. The early labor movement was, however, inspired by more than the immediate job interest of its craft members.
Unions began forming in the midth century in response to the social and economic impact of the industrial revolution. National labor . Opposition to trade unions This article's lead section does not adequately summarize key points of its contents.
Please consider expanding the lead to provide an accessible overview of . Sep 17, · Too often, unions continue to ask for things that really are impossible.
In Philadelphia right now, the contract with the Philadelphia Federation of Teachers has expired. In the history of America's trade and labor unions, the most famous union remains the American Federation of Labor (AFL), founded in by Samuel Gompers.
At its pinnacle, the AFL had approximately million members. American labor unions were hurt by many problems during the s, including migration of many industries into the anti-union southern states, the rapid expansion of the middle class, and internal corruption by some of the larger unions, such as the International Brotherhood of Teamsters.