Do Labor Unions Increase The Wages Of Workers?

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Table of contents

  1. Introduction
  2. The Negative Impact of Unions
  3. In Conclusion
  4. Works Cited


If any union is going to increase the labor, they must have an inelastic demand. According to the book, labor problems in American Industry by Carroll R Daughtry, “Inelastic means when people buy about the same amount whether the price drops or rises, likewise they don’t buy much even if the price drops” (Daugherty, 1941). People should keep a high demand for the product the union is producing to be able to raise the wages of workers. If the power of substitutes is not taken the power of the union all together can fold and make the union weak.

Even if it makes the union weak the union cares about the well beings of its workers. According to “Everyone who has at one point felt unheard or powerless as an employee. Joining a union simply means that you negotiate important elements of employment and conditions together… that could mean securing wage increases” (Bivens, et al., 2017). Which could intentionally lead to the raising of the union labor workers.

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Unions have 2 different types of labor unions and four different levels of union forces. These two different types of union labor forces area craft union and industrial union. There are two different types because the industrial union is working multiple jobs, but the craft is entirely to one industry. Using these unions and having them work together, many help them raise the wages of workers using the monopoly method that Carroll Daughtry suggests these monopolies can help improve communications between the labor unions and reduce transaction costs.

Labor may be a Blue- & White-collar worker, Professional People (lawyers, doctors, dentists, teachers), Small business owners (barbers, plumbers, retailers). They provide labor as the run their own business. They substantially affect the pay and work lives of both unionized and non-unionized specialists. Wage disparity since they raise compensation more for low-and center wage specialists than for higher-wage laborers, more for industrial than for desk specialists, and more for specialists who don't have an advanced education. The effect of union on aggregate nonunion wages is nearly as vast as the effect on aggregate association compensation. Unionized specialists get better annuity designs. In addition to the fact that they will probably have an ensured advantage in retirement, yet their bosses additionally contribute 28% more toward benefits. They assume an essential job both in anchoring enacted work securities and rights, for example, wellbeing and wellbeing, additional time, and family/restorative leave and in implementing those rights at work. Since unionized laborers are more educated, they will probably profit by social protection projects, for example, joblessness protection and specialists’ remuneration. Associations are in this way a delegate foundation that gives a vital supplement to enacted advantages and insurances. Unionized workers are more likely than their nonunionized counterparts to receive paid leave, are approximately 18% to 28% more likely to have employer-provided health insurance and are 23% to 54% more likely to be in employer-provided pension plans. (Walters & Mishel, 2003). They likewise pay 18% lower medicinal services deductibles and a little offer of the expenses for family inclusion. In retirement, unionized laborers are 24% more prone to be secured by medical coverage paid for by their boss.

There are a few different ways that unionization's effect on wages goes past the specialists secured by aggregate bartering to influence nonunion wages and work rehearses. For instance, in businesses and occupations where a solid center of work environments is unionized, nonunion managers will as often as possible meet association measures or, in any event, enhance their remuneration and work rehearse past what they would have given if there were no association nearness. This dynamic is called the 'Union Threat Effect,' how much nonunion laborers get paid more because their managers are attempting to prevent unionization. Union density is not likely to produce any threat effect until some threshold level of unionization is reached, as much as 30% to 40%. That is, unionization of 20% in a industry may have no impact but 40% unionization may be sufficient to make employers aware of union organizing and union pay and practices. (Walters & Mishel, 2003). Union members on avg. make 15 % more than no-union workers. Productivity of U.S. Labor has increased over the long run- causing the demand for labor to increase faster than increases in the labor supply. More will be supplied at higher wages because the wage must cover the opportunity costs of alternative uses of time spent either in other labor markets or in household activities or leisure. Unions will try to increase the demand for their products through advertising and through political. Unions will increase productivity through training and joint labor-management committees designed to increase labor productivity.

Numerous unions have won higher wages and better working conditions for their individuals. In doing as such, be that as it may, they have decreased the number of employment accessible in unionized organizations. That second impact happens considering the fundamental law of interest: if associations effectively raise the cost of work, bosses will buy less of it. In this way, they are a noteworthy anticompetitive power in labor markets. Their additions come to the detriment of shoppers, nonunion specialists, the jobless, citizens, and proprietors of companies. They capacity to settle high costs for their individuals' work lays on legitimate benefits and susceptibilities that they get from government, both by rule and by nonenforcement of different laws. The reason for these lawful benefits is to confine others from working for lower compensation. Once the government ratifies a union’s position as representing a group of workers, it represents them exclusively, whether employees want collective representation. In 2002, unions represented about 1.7 million waged and salaried employees who were not union members. (Reynolds, 2018). Full-time nonunion laborers had a normal week by week profit of $587, 21 percent lower than the $740 earned by union individuals. The wage advantage appreciated by union individuals results from two elements. In the first place, restraining infrastructure associations raise compensation above focused levels. Second, nonunion wages fall since laborers evaluated out of employment by high union compensation move into the nonunion area and offer down wages there. Along these lines, a portion of the additions to the union individuals come to the detriment of the individuals who must move to bring down paying or less alluring occupations or go jobless.

While creating merchandise and ventures, organizations require work and capital as contributions to their generation procedure. The interest in work is a financial aspects standard got from the interest for a union yield. That is, if the interest for a company's yield expands, the firm will request more work, in this way employing more staff. What's more, if the interest in the union yield of merchandise and ventures diminishes, thus, it will require less work and its interest in work will fall, and less staff will be held. Work advertise factors drive the free market activity for work. Those looking for business will supply their work in return for wages. Organizations requesting work from specialists will pay for their time and aptitudes. A strong demand for products creates a demand for the labor to produce them. When the wage rate is high, employers limit the number of employees they hire. Workers who improve their skills can improve the demand for their services, since they are more productive to their employers. (Metcalf, 2018). They regularly consult to raise their compensation scale or to restrain the span of their participation. A union made from individuals in a specific exchange can limit the supply of work by necessitating that businesses enlist just union laborers. With a constrained supply of specialists, the outcome is higher wages. A comprehensive union sorts out every single accessible laborer and after that participates in aggregate anticipating higher wages. Higher wages decrease the interest in specialists being employed.

Consequently, if a union raises it wages then it would cause the economy interest to increase but also the product of the company that they are selling. For example, “If a union raises wages in its industry above the competitive level, as usually is the case, one would expect some productivity consequences. The higher wage lever should enable employers to recruit and retain higher-quality workers. It also should give employers a stronger incentive to substitute capital for labor, and an increase in the capital-labor ration usually raises output per man-hour.” (Reynolds, 1982)

Wages of union workers are much higher than wages of nonunion workers. Brent Radcliffe at Investopedia states this “According to a 2013 study, by the Bureau of Labor Statistics, ‘Salaries for private industry union workers averaged $18.36 per hour while those for nonunion private industry workers averaged $14.81 per hour.’ As well, the study found that union workers have more access to employee benefits than nonunion workers.” (Radcliffe, n.d.). That is a substantial difference. Union members make on average over $3.50 more an hour than nonunion members. Having higher wages will keep spending higher along with the motivation of the workers.

The Negative Impact of Unions

Unions have negative impacts in the fact that the people who speak for the union, known as representatives, can be hard negotiators, and may ask things that are completely reasonable. Union leaders usually lack business knowledge and do not understand the financials, the trends, etc. as much as they should. Michele Masterfano, a Clinical Associate Professor at Drexel University states “Too often, unions continue to ask for things that really are impossible” (Masterfano, 2013).

Unions are also controlling in the fact they leave very little other options for businesses if they decide to go on strike. As stated by John R. Lott Jr., an economist, published author, and columnist for Fox News, says that “Unions are harmful because they act as monopolies. If the union members won’t work, the law makes it extremely difficult for anyone else to step in and do their jobs. As a result, union workers have little competition -- so they can demand higher wages and do less work.” (Lott, 2011). This negatively impacts businesses as it can lead to lower productivity and smaller profit margins.

Another issue with unions is that they hold back potential employees for jobs, even if they would have the qualifications. An unnamed writer for Bizfluent states “By restricting the number of eligible workers in an industry, unions essentially decrease the labor supply, shifting the labor supply curve upward. As a result, the existence of unions increases the average wage above the level that would naturally occur in the market” (Writer, 2017).

One fallback of unions is that they lack some crucial knowledge that could be detrimental to their negotiations, such as basic business knowledge and what is attainable. Michele Masterfano states in an article that “Union leaders negotiate hard, and they should…. But union leaders also need to understand business more — the financials, the trends, how to evaluate the viability of a business or state/city/municipality they work for” (Masterfano, 2013). With more knowledge and understanding the employers might have a harder time denying what they are asking if the union negotiators are being tough, as well as knowledgeable.

In Conclusion

Within a union we have multiple positions and multiple jobs that can make up a union. They lead to many different positions for many workers. Many workers who are in the field of rather social work, industrial, and or just the labor force has the higher risk of joining a union.

The only problem with labor forces is that they increase the amount of interest and create bigger interest problems. This can cause our economy to get in a downfall. They also aren't a good thing especially when it comes to the workers not getting what they want half of the time. But the unions try everything in their power to keep the workers happy. Another thing is they can’t raise the wages of workers because the demand to help the company would have to be inelastic.

The demand would have to be inelastic which means the union would have to sell something that help with the company and would also help with themselves after the product was made and built. This will help with the wages of workers and the demand for the company.

Works Cited

  1. Bivens, J., Engdahl, L., Gould, E., Kroeger, T., McNicholas, C., Mishel, L., . . . Zipperer, B. (2017, August 24). How Today's Unions Help Working People. Retrieved from Economic Policy Institute:
  2. Daugherty, C. R. (1941). Labor Problems in American Indusry. Cambridge: The Riverside Press.
  3. Lott, J. (2011, March 17). Why Unions Are Harmful to Workers. Retrieved from Fox News:
  4. Masterfano, M. (2013, November 17). Unions: The Good, the Bad, the Ugly. Retrieved 2018, from HUFFPOST:
  5. Metcalf, T. (2018, November 14). Retrieved from How Do the Laws of Supply & Demand Affect the Labor Market?:
  6. Radcliffe, B. (n.d.). Unions: Do They Help or Hurt Workers? Retrieved November 12, 2018, from
  7. Reynolds, L. G. (1982). Labor Economics and Labor Relations. Englewood Cliffs: Prentice Hall.
  8. Reynolds, M. O. (2018, November 14). Retrieved from Labor Unions:
  9. Walters, M., & Mishel, L. (2003, August 26). Retrieved from How unions help all workers:
  10. Writer, C. (2017, September 26). Bad Effects of Labor Unions. Retrieved from Bizfluent:
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Do Labor Unions Increase The Wages Of Workers? (2022, February 17). Edubirdie. Retrieved July 14, 2024, from
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