Showtime: Labor Unions and Economic Power

Showtime: Labor Unions and Economic Power
Photo by Ümit Yıldırım / Unsplash

In 1983, the Union membership rate in the United States was 20.1%. By 2021, it had halved to 10.3%. Union membership varies widely across sectors, so the economic effect is not evenly distributed.

With membership rates hovering around 33%, millions of local government employees in EveryTown USA — firefighters, police officers, and teachers — have fully embraced collective bargaining. This strategy has increased pay, job security, and benefits (especially healthcare).

The public sector is strongly Union, but the well runs dry in the much-vaunted free market. Private sector rates — 6% — are an astonishing four-fifths lower than their public sector counterparts.

Rates are down, but wages are up

Membership rates are but one way to analyze the economics of Unions.

An equally instructive point of analysis is comparing wage earnings across the Union and non-Union categories. And, here, tally-ho, the differences are substantial.

Non-union workers earn 83% of their Union counterparts or, said differently, Union power drives up wages by nearly 20%!

The ability to demand higher wages is a distinct type of economic power.

Despite shrinking numbers, Union members are still earning more. How? Collective bargaining. Since wages are bargained for all Union members, the average worker's paycheck is higher than his non-Union co-worker's. In other words, the median worker's cooperation is tangibly rewarded.

And therein lies the paradox. Unions have been shedding members for decades, but the remaining members stand to reap tangible rewards for participating.