The share of the workforce belonging to and being represented by labor unions has declined significantly in the past couple of generations. In the early 1980s, between 20 and 25 percent of workers were represented by unions (not all of whom actually joined the union representing them) and this dropped below 12 percent in 2019.
The Bureau of Labor Statistics has just released its latest detailed data on unionization. In 2020, 11.6 percent of all workers were represented by a union, and 10.3 percent belonged to the union representing them. So, 1.3 percent of workers are represented by unions to which they pay no dues.
Men are slightly more likely to be represented than women and Black workers are slightly more likely to be represented than other racial or ethnic groups. Middle aged workers are more likely to be represented than older or younger workers. Full time workers are twice as likely to be represented as part time workers.
Figure 1 shows the rate of union representation across the country.
Washington State has the fifth highest rate of union representation in the country. For the most part, the highest rates of union representation are on the West Coast (including Alaska and Hawaii, which has the highest rate) and the Mid-Atlantic states. The lowest rates are in the South, with South Carolina having the lowest rate in the country. In the non-coastal West, the picture is more mixed, with relatively high representation rates in Nevada and Montana, and low rates in Idaho and Utah.
Unions and their advocates make a number of claims for the benefits of unionization. Let’s look at a couple of them.
First, do unionized occupations and industries offer better pay? Figures 2 and 3 show the wage premium (or, if negative, wage penalty) for union members by both occupation and industry in 2020. The bars represent the difference between median weekly wages for union members and for all workers in that occupation or industry.
Construction and transportation show the largest premiums, both as occupations and industries. In both cases, some subsectors are heavily unionized (commercial and civil construction, railroads and airlines) while other subsectors are much less unionized (residential construction, local trucking). At the other end of the spectrum, unionized workers in traditionally white collar and professional occupations and industries do not earn as much as their non-unionized counterparts.
How about benefits for the economy as a whole. Figure 4 shows the relationship between union representation rates and growth in a state’s economy in the past 10 years.
There is no relationship at all between rates of union representation and GDP growth in the past decade. Washington has a high rate of both unionization and GDP growth, but the state of Utah has nearly as high a growth rate and one of the lowest unionization rates in the country. Connecticut has a unionization rate about the same as Washington’s but is among the slowest growing states in the country.
Unions are often seen as a tool to address income inequality by lifting up wages at the lower levels of the income spectrum. Figure 2 shows the relationship between union representation rates and income inequality. The Gini index is a commonly used measure of inequality, with an index of zero indicating perfect equality, and in index of one indicating that a single individual commands all income. The Gini index for the country as a whole is 0.49.
As with GDP growth, there is no relationship between unionization and inequality at the state level. New York state has the highest level of inequality while having the second highest level of unionization. At the opposite end, Utah has the lowest level of inequality while having among the lowest rates of unionization. Hawaii has the highest rate of unionization and one of the lowest rates of income inequality.
Unionization clearly has benefits for many individuals who work for unionized employers, in terms of higher wages. Within most sectors that have high levels of unionization, working for a unionized employer will pay better than working for a non-unionized employer, but that does not mean that a worker has the requisite skills to take on the unionized job (a non-union carpenter cannot instantly become a union ironworker).
But for the economy as a whole, it is difficult to see where unions are making a big difference in the aggregate. When unionization gets down to the relatively low levels of today, the wage premiums of union employees just don’t move the economy-wide needle very much.
Looking Ahead
The drop in unionization rates has slowed quite a bit in recent years, and rates in 2020 were slightly higher than in 2019. But basic economics suggests that when the price of something (union labor) goes up, demand will fall. Productivity increases (i.e. fewer workers doing the same amount of work) have been strong in heavily unionized sectors like manufacturing (more robots) and transportation (smaller train crews). At the same time, unions have struggled to organize in the faster growing sectors of the economy like tech and personal services.
So while labor advocates believe that expanding union membership and representation would be a plus for the economy and society, it is hard to imagine dynamics that will cause that to happen.
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