destabilizing stable economics

State of the Unions in the US Economy

State of the Unions in the US Economy

Debates about the disappearance of the middle class and the lack of opportunities for the majority of Americans have been at the forefront of the 2016 presidential election. However, discourse surrounding unions and ways to increase the bargaining power of workers are often overlooked in these discussions.

Illustration: Heske van Doornen

These are integral components of the issue that could enhance the current economic climate for the middle class, and especially benefit low-wage, minority, and immigrant workers. Without unions, employees can be fired at-will in most states and have no collective leverage to negotiate with employers over their most basic terms and conditions. There are almost 15 million union workers across the country who have these rights, and therefore benefit considerably from better wages and working conditions. Here are four ways unions make a difference.

1. Unions benefit workers—especially women and minorities—through the union wage premium,according to data from the Current Population Survey.

  • Collective bargaining gives union members wage advantages over nonunion workers, despite holding the same jobs and sharing similar characteristics (e.g. education level, age, race, gender). This is called a union wage premium. On average, union members commanded a 26 percent wage premium in 2015.
  • Women tend to have considerably higher union wage premiums than men. In 2015, they made about 33 percent more than their nonunion counterparts, on average, while the union wage premium for men was approximately 17 percent. Unions are also offering another advantage through helping to close the gender pay gap.
  • Minorities have also shown to have better economic outcomes when they belong to unions. As of 2015, average Hispanic full-time workers’ weekly earnings were 47 percent higher when they were part of a union. The typical African-American worker received a 30 percent union wage premium.

2. Unions not only push for higher wages, but their members also tend to obtain more comprehensive benefits. According to the U.S. Bureau of Labor Statistics, union workers are more likely to have access to health insurance, as well as have retirement plans and paid sick leave.

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  •  This is especially important for immigrant workers and employees in low-wage jobs. The Center for Economic Policy Research (CEPR) finds that immigrant workers who are union members have close to a 50 percent higher chance of having employer-provided health insurance, and twice the probability of having a retirement plan. Union workers in low-paying jobs have a 25 percent higher probability of having these benefits.

3. Unions fight to maintain an equitable distribution of income among employers and workers.

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  • It is no coincidence that the percent of income going to the top percent of earners has increased while union membership has declined. The erosion of collective bargain reduces the share of income going to American families in the middle of the income distribution—not only union members. That is because unions pull millions of non-union Americans into the middle class by setting higher compensation standards that push everyone’s wages up. The decline of the middle class is, therefore, directly related to the decline in the density of unions.
  • The shrinking middle class has resulted in less spending money for many American families. Considering that household consumption is the main engine of our economy—accounting for around 70 percent of GDP—when the majority of workers can’t afford to spend the economy stagnates. Thus, contrary to popular opinion, unions do not impede economic growth when they fight for labor to receive its fair share of income, they are actually necessary to maintain a strong economy.

4. Unions are crucial for democracy.

  • As a recent Century Foundation report explains, unions serve as counterbalancing influences to arbitrary government powers. They function as “schools of democracy” for workers and help maintain a public education system that fosters democratic values. For example, the Milwaukee Teachers’ Education Associationsuccessfully advocated to revitalize the school curriculum to include issues surrounding civic engagement. Unions also represent one of the largest forms of an organized voice for low and moderate income Americans. In short, strong unions could ensure that society does not become governed by a small number of wealthy individuals.

So Why Are Union Membership Rates So Low?

Although there is overwhelming data showing the benefits of unions, they are battling to maintain their crucial foothold in the economy, especially in the private sector.

According to data from the Current Population Survey, unions remain strong in the public sector, with more than one-third of employees identifying as union members. Not surprisingly, the public sector employs more minorities and provides more equal wages than the private sector. The professions with the strongest unions include teachers, police officers, and firefighters.

However, workers in the private sector are over five times less likely to participate in unions, with membership rates down to 6.7 percent.

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The decline in union participation in the private sector has dragged down the total union membership rate. However, thanks to strong public sector unions, the rate of decline has stagnated in recent years, remaining at 11.1 percent since 2014.

Among states, New York has had the highest percent of union members with 24.7 percent in 2015. South Carolina has been on the other end of the stick, with only 2.1 percent of full-time workers belonging to a union. Examining the breakdown of union workers by state reflects the impact unions can have on lifting the wage floor for all citizens. States with higher union density tend to have a higherminimum wage for union and nonunion workers alike.

Even though polls show that close to 60 percent of workers see unions favorably, structural barriers have been holding back organizations from embracing unions.

The election process to establish a union, governed by federal law (National Labor Relations Act), puts major barriers in place for workers who want to become members. Even when workers want to be part of a union, they are typically harassed and can find themselves illegally fired. The National Labor Relations Board (NLRB) maintains that workers have the right to “form, join or assist a union.” However, the CEPR found there has been a steep rise in illegal firings of pro-union workers in the 2000s compared to the previous decade. Employers have a variety of unfair labor tactics they have used in union organizing drives—like hiring anti-union consultants (a $4 billion-a-year industry) or spying on their workers. However, minimal penalties and slow enforcement disincentivize companies from following the law. For example, two of the biggest employers in the U.S.—McDonald’s and Walmart—have been targets of such lawsuits but have rarely faced significant enough repercussions to dissuade them from continuing to employ these practices.

Another obstacle to establishing unions have been the Right-to-Work (RTW) laws, which are estimated to reduce union membership rates by 8.8-9.6 percent. With the addition of Wisconsin and West Virginia in the past two years, twenty-six states now have RTW laws. Under RTW state laws, companies can’t lawfully agree to agency shop, which allows workers to receive benefits secured by unions without contributing to cover collective bargain costs. The lack of agency shop cripples unions, and dissuades those interested in organizing drives.

Proponents of RTW argue these laws foster economic growth by raising competitiveness and attracting more business into their states. However, these laws promote economic growth by supplying their citizens labor at the cheapest price, instead of promoting and creating higher wage jobs. Workers in RTW states, which are most common in the South, are estimated to make $1,558 less per year, on average.

How Are Unions Responding?

Unions and their allies are developing new strategies to overcome these challenges and build alternative forms of workers bargaining.

A first priority has been strengthening labor laws and access to unions. Promising developments include the WAGE Act introduced last year that would extend civil rights laws to workers in unions. And, an emboldened National Labor Relations Act has put in place new rules to make elections faster and to make it easier to organize workplaces, like McDonald’s, that are jointly owned by a main company and numerous franchise.

In response to the limitations of firm-by-firm bargaining, unions are mounting cross-industry, cross-state campaigns to uplift the working conditions of all workers. The Fight for $15 movement is bringing together thousands of workers to demand a $15 minimum wage,which has already been implemented for workers in Seattle,New York, and California.

Unions are also partnering with alternative labor organizations, like workers centers, to provide support to workers—mainly people of color, immigrants, and low-wage workers but also those in the patchwork economy—that do not have access to union
representation.

By Oscar Valdes-Viera
Illustration by Heske van Doornen

This piece was originally published (here) by The Century Foundation in New York.



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