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How Labor Unions Raise Wages for Nonunion Workers

Labor DayWhile we enjoy the day off this Monday, we must remember that Labor Day is much more than a long weekend. Working men and women make this country what it is, and their success or failure is the success or failure of the entire nation.

Unions have played a proud role in the history of our country, ensuring important benefits to workers and a strong middle class. As union membership declines and the middle class shrinks, it’s more important than ever to take a hard look at the benefits unions also bring to nonunion workers.

A new report from the Economic Policy Institute explains how higher rates of unionization help all workers.

Nonunion workers benefit from a strong union presence in their labor market in many ways. Strong unions set pay and benefits standards that nonunion employers follow. Those employers may raise pay for some workers to forestall an organizing drive, which leads to an upward adjustment in wages of workers above them, to maintain relative pay differentials (similar to the effects of minimum-wage increases). Even absent organizing activities in their spheres, nonunion employers may also follow the standards that unions help establish through politicking for labor-friendly policies, instituting informal and formal rules governing labor conditions, and generally serving as a cultural force arguing for a “fairer share” for working men and women.

The report’s authors looked at how declining rates of unionization have therefore hurt nonunion employees. In the 1950s, approximately one out of every three private sector workers belonged to a union—today only about one in twenty do.

Some of the report’s findings include

  • For men in the private-sector who do not belong to unions, wages would have been an estimated five percent higher in 2013 if unions were as strong as they had been in 1979. That’s an annual wage loss of $2,704.
  • For men in the private-sector who are not college graduates, weekly wages would have been an estimated eight percent higher in 2013 if unions had maintained their 1979 levels. That adds up to an annual wage loss of $3,016.

Read the entire report here.


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