Unions are organizations that represent the collective interests of workers in employer negotiations. With union membership comes broader benefits for workers: unions have historically organized for higher wages, better benefits, safer workplaces, and a myriad of other workplace improvements and norms such as the creation of weekends. These workplace norms impact union and nonunion workers alike.
Yet, union membership has declined significantly over the past several decades. In 1983, 1 in 5 (20.1 percent) workers were in a union compared with 1 in 10 (10.1 percent) workers in 2022. One-third (33.1 percent) of public sector workers and only 6 percent of private sector workers were unionized in 2022.
Researchers use this change in union membership over time to identify the impact on unionized workers and what happened to the wages of nonunion workers (known as union spillover effects) when unions were highly present and less present. In this study, Patrick Denice and Jake Rosenfeld review nearly four decades of data from the Current Population Survey to investigate how the presence of unions raise average wages for nonunionized workers between 1977 and 2015. The analysis controls for the decline of manufacturing, rise of automation, increasing skill demands, differences in occupations, and differences in regional labor markets, thereby isolating the effect of private sector union strength on the wages of nonunion private sector workers. By examining the private sector, the study illuminates effects for the majority of the workforce and the sector most impacted by structural changes to the economy.
Key findings
- Private sector union prevalence shapes nonunion worker pay: higher union density raises the wages of nonunion private sector workers. This holds true when comparing workers within occupations and within occupations and regions combined.
- Union pay effects vary by region. Union density raises pay to a smaller degree for nonunionized workers in the South.
- Union spillover effects are substantially larger for men than for women. In occupations and regions where unions are strong, nonunion men see even greater pay increases from the presence of unions than nonunion women, due to structural changes in the women’s labor force during this time period.
- Men in the private sector are historically more concentrated in highly unionized occupations. In occupations and regions where unions have a significant presence, private sector unions also improve pay for women workers.
- Previous research finds greater pay effects for nonunion women, but this study concludes that women’s earnings primarily increased during this time due to higher labor force participation and employment desegregation (i.e., increased gender diversity within occupations). When these changes are controlled for, the pay effect of union presence for nonunion women is smaller.
- Union spillover effects provide the most benefit to disadvantaged workers as nonunion pay rises the most for workers with less formal education. Workers typically earn higher wages in occupations where a larger proportion of employees have completed at least some college. In occupations (within regions) with higher rates of unionization, men and women with lower education receive larger wage increases.
- Without the decline in private section unionization from 22 percent in 1977 to 7 percent in 2015,weekly wages would be $78 and $23 higher (in 2023 dollars)[1] for nonunion private sector men and women, respectively. Additionally, in the fields of transportation, construction, and production, nonunion weekly wages would be $23 to $231 higher (in 2023 dollars)[2] if unions maintained previous levels in these industries.
- Union decline contributes to modern wage stagnation and growing inequality. By controlling for the decline of manufacturing, rise of automation, increasing skill demands, differences in occupations, and differences in regional labor markets, the analysis identifies union presence as the primary driver of wage stagnation and growing inequality.
Policy and practice implications
WorkRise recommends the following implications for policy and practice.
- Bolstering union power will help to reverse modern wage stagnation and inequality. Policymakers, labor advocates, workforce developers, and anyone interested in improving wage stagnation and income inequality in the US labor market should promote policies that support workers’ rights to collectively bargain.
- Federal and state policymakers should protect workers’ rights to organize. By upholding labor standards and worker rights at the local, state, and federal level, policymakers can make it easier for workers to organize their workplaces and collectively bargain with their employers.
- Employers should adopt a stance of neutrality to increase firm productivity and support economic growth. Unions have a proven track record of improving wages for workers and in turn supporting wealth accumulation. Aligning worker interests with firm interests in the collective bargaining process allows the development to be mutually beneficial for both parties. Further, given that unions also reduce turnover, they thereby reduce associated business costs, benefiting employers in the process.
- Labor advocates, employers, and policymakers should work toward integrating genders across various occupations. Union presence raises pay for men even more than pay for women due to men’s greater presence in highly unionized occupations. Unions could have an even greater impact on closing the gender pay gap if genders were more evenly distributed between occupations and if occupations with more women were more unionized.
- Researchers interested in accurately measuring union wage effects should control for manufacturing decline, changes in automation, rising skill demands, public sector unions, occupations, and occupation regions to effectively isolate modern contexts that disguise union pay effects. Further research should identify the methods through which unions help to raise nonunion pay and examine how spillover effects differ for men and women in more detailed occupations.
Unions matter to unionized and nonunionized workers alike, as the changes in unionization rates from 1977 to 2015 demonstrate. While the extent of this pay effect varies across occupations and geographic regions, private sector union strength in general positively impacts wages for nonunion private sector workers. These findings hold further implications for future wage growth given that nonunion worker wages stand to improve if private sector unionization recovers to previous levels.
[1]Adjusted for inflation from $61 and $18 in 2015, respectively, using the CPI-U.
[2] Adjusted for inflation from $18 and $180 in 2015, respectively, using the CPI-U.