Investing News

Are Labor Unions Effective?

Labor unions have a long history in the United States. While membership has been on the decline in recent decades, unions continue to play a major role in workers’ rights.

Are labor unions effective? Proponents maintain that unions result in better wages, benefits and working conditions for workers. Critics argue, among other things, that unions are anti-employer and that union contracts make it more difficult for companies to fire unproductive employees.

A Gallup poll, released Aug. 30, 2022, found that 71% of Americans now support unions–up from 65% before the pandemic, and the highest support level since 1965.oo

Key Takeaways

  • Labor unions benefit their members by negotiating better pay, benefits, and working conditions.
  • Critics of labor unions maintain that union contracts make it more difficult for a company to fire unproductive employees, and that they increase long-term costs which decreases competitiveness.
  • Labor unions have a long history in the United States, and while membership has declined in recent decades, they continue to play a major role in workers’ rights.

Whom Do Labor Unions Benefit?

Labor unions advance the interests of their members collectively—including better pay, benefits, and working conditions—by negotiating with employers. In 2021, non-union workers had median weekly earnings that were 83% of earnings for workers who were union members, according to research from the Bureau of Labor Statistics.

Unions have played a major role in worker’s rights for centuries. While their roots in the United States date back to the 18th Century, unions gained steam in the late 19th Century, when heavy industry and big business were in their infancy and a great deal of human labor was needed in order to facilitate the mushrooming Industrial Revolution. This quickly led to widespread abuse of workers, including children, who were forced to toil for many hours a day for low wages. Workers in a variety of industries eventually united to form labor unions. They negotiated better pay and working conditions for workers and were instrumental in helping to pass child labor laws.

Proponents of labor unions maintain that non-union members benefit from union policies too. Examples include setting industry standards, such as safe working conditions and a minimum wage.

Union membership peaked in the U.S. during the 1940s and 1950s. While the power of unions declined in the following decades, interest in them among American workers is on the rise recently. This is due in part to workers seeking better pay and conditions in the wake of the pandemic, a tight labor market, and younger generations embracing union membership. Workers have been winning union elections at Starbucks and Amazon, for example.

Criticism of Labor Unions

Critics of labor unions maintain that union contracts are anti-employer and make it more difficult for a company to fire an unproductive employee. They also believe that unions can increase long-term costs for employers, which can decrease competitiveness.

For example, many claim that unions are responsible for the decline of the U.S. auto industry. Foreign automakers entered the U.S. auto market in the 1970s and hired non-union workers to build vehicles. Due to the savings in labor costs, they could afford to sell their vehicles for less than U.S. manufacturers. This made it much harder for the unionized big three automakers to produce competitive cars at affordable prices, and they lost significant market share.

14 million

The number of people employed in the U.S. who belonged to unions in 2021—approximately a tenth of the working population.

Unions and Corruption

Unions also have a history of corruption. Perhaps the most high-profile example involves Jimmy Hoffa. He gave millions of dollars of union pension money to the Las Vegas mob in the 1960s when he was head of the International Brotherhood of Teamsters union.

Hoffa spent time in prison for jury tampering and pension fraud and was pardoned by President Nixon in 1971. He disappeared in 1975 and it is widely believed, though never proved, that he was murdered by mobsters. His body has never been found.

Hoffa’s son and namesake, James Hoffa, served as general president of the Teamsters from 1998 to 2022. In 2015, the U.S. Justice Department agreed to end more than 20 years of government oversight of the Teamsters union citing its efforts to end corruption and connection to organized crime.

Some unions have not been above using strong-arm tactics to protect their territories. For example, in September 2011 the International Longshore and Warehouse Union attacked a railroad dock terminal, overpowered security guards, and sabotaged trains carrying grain for a company that tried to use a different labor union.

What Are the Pros of Labor Unions?

Labor unions are designed to benefit their members. Such unions can negotiate better wages, benefits, and working conditions.

What Are the Cons of Labor Unions?

Critics of labor unions view them as anti-employer. For example, they maintain that union contracts make it difficult to fire unproductive employees.

Which Industries Have Labor Unions?

The public sector has the highest rates of union membership , such as police officers, firefighters, and teachers. In the private sector, industries with high union rates include transportation and warehousing, utilities, motion pictures, and sound recording.

The Bottom Line

Labor unions continue to play a major role in workers’ rights and the economy of the United States. Though union membership has declined from its peak in the 1940s and 1950s, interest is on the rise among Americans recently, particularly in the wake of the COVID-19 pandemic.

Articles You May Like

3 Top Mega-Cap Chip Stocks to Watch for Major Moves
3 Meme Stocks to Sell Even as the Euphoria Gains Traction
If You Can Only Buy One Machine Learning Stock in July, It Better Be One of These 3 Names
Get Ready to Sell AMD Stock By August 2024
3 Reliable Blue-Chip Stocks to Buy, Hold and Never Let Go