When an organized group of employees, workers, or contractors come together to represent their mutual best interests in a workplace environment, then a labor union begins to form. Many of these organizations represent specific trades, public service employees, or high-risk workers in situations where their job may encounter unsafe conditions.
The historic goal of a labor union was to improve worker safety while supporting higher wages and benefits. Because of these organizations, we now have rules in place that prevent child labor. There are health care insurance benefits, vacation days, paid sick time off, and additional options in addition to an hourly wage or salary because of their efforts, especially in the United States, for more than a century.
Some labor unions have operated continuously since the 1700s. The first known union was the Federal Society of Journeymen Cordwainers that formed in 1794. They made shoes using new leather, whereas a cobbler would repair footwear.
There are specific labor union pros and cons to look at today as society looks at their continued usefulness in society compared to the potential costs they provide.
List of the Pros of Labor Unions
1. Labor unions help to create a clear chain of command.
Workers who are employed in a unionized environment are the most likely to report that their manager or supervisor treats them like a direct report instead of a “friend.” This structure makes it possible for workers to understand what their role in the company is with greater clarity. There are fewer disputes from hierarchy issues because there is always clarity about who is in charge at any given time.
2. Labor unions remove favoritism from the workplace environment.
Although labor unions are often seen as disadvantageous because they typically operate from a perspective of seniority, this feature also creates a distinctive advantage. When promotions are based on the length of time you have served in a company, then there is a reduction in the amount of bias or favoritism that is present in the environment. Highly productive workers will be dissatisfied either way, but for the average person, there is usually more opportunities to step up to a senior role when you put in the time.
3. Labor unions do not stop workers from being fired.
There is a myth percolating about labor unions throughout the United States that the protect workers from being fired. That is not the case. What these organizations provide is an opportunity for employees to go through the due process that is available to them during a period of disciplinary action. If there is just-cause to terminate an employment contract, then the employer will do so – often with the support of the union. It eliminates the idea that a company can fire someone for any reason.
4. Labor unions create the foundation of a meaningful retirement.
One of the most significant benefits that is available through a labor union is the negotiated support of retirement benefits. Over 90% of unionized employees have access to this workplace benefit compared to about 60% of non-union workers. The collective bargaining agreement will outline the options that are available for each person, but it may include a pension program, a 401k or 403b, or a specific program that outlines employer responsibilities for funding and matching. Many labor unions negotiate for ongoing medical insurance and support for their retired members as well.
5. Labor unions give individual workers the power of the group voice.
When an individual employee encounters an issue in their workplace environment, no one might listen to them because their single voice gets drowned out in the crowd of other voices that are clamoring for attention. The structure of a labor union makes it possible for like-minded people to group together and speak with one louder voice about the issues they encounter while earning a paycheck. This process makes it possible to negotiate for better benefits, working conditions, or even wages.
6. Labor unions provide an outlet for advocacy.
Labor unions offer advocacy opportunities in a variety of settings. Some workers can get involved at the negotiating table. Others are supported with their work as they speak with local representatives in government at every level. If there is a unjustified disciplinary action which occurs in the workplace, then a union representative will help the employee affected maintain their position. These benefits often extend to non-union workers who are active in the same workplace as well.
7. Labor unions work to help create better lives for everyone.
The primary purpose of a labor union, and so arguably its most significant advantage, is that it takes a tiered approach to helping the employees it represents. Members will negotiate directly with an employer to create a collective bargaining agreement which offers a contract for behavior and results for both parties. Unions will advocate in government to have legislation passed that benefits their representatives. These organizations work to monitor working conditions to help make them become safer.
8. Labor unions help workers to bring home a better paycheck.
The Bureau of Labor Statistics put together a direct comparison of median weekly income for union workers and non-union employees in the United states. They discovered that the workers who belonged to a union earned an average of $917 per week before taxes, while the non-union employees earned a median of $717. Even when you include the 3% dues that some unions charge for membership, the union workers come out ahead by $600 per month and typically have better benefits to enjoy as well. Many of these advantages extend to the family of the worker too, which further increases the pay differences.
9. Labor unions often offer benefits to ummarried partners.
Unmarried domestic partners have more access to worker benefits with a labor union than those who work in non-unionized workplaces. 82% of union workers have their health insurance premiums paid by the employer for their entire family, compared to just 66% in a non-union environment.
List of the Cons of Labor Unions
1. Labor unions are not always bound by the same rules that businesses must follow.
There are taxation and anti-trust laws which apply to corporations in the United States that are not always enforced with a labor union. These organizations can even file to be a tax-exempt company in some situations. Workers can implement restraints in commerce or trade at their discretion, with the support of union backing, to benefit them in personal ways. The only restriction is that these restraints do not occur within the context of the “business” the labor union created.
2. Labor unions limit the individuality of the workers.
When you are employed somewhere that is supported by an active labor union, then your voice gets put into the same pot as everyone else. You do gain the power of unification through this process, but it comes at the cost of your individuality. There are votes which take place to direct union representatives to take specific actions, like the approval of a new collective bargaining agreement, but if you find yourself in the minority, there is nothing that you can do about that situation. Certain states in the U.S. do allow you to redirect fees or dues sent to specific purposes toward something that you support.
3. Labor unions often use seniority as the primary emphasis of hiring.
If an employee is the hardest working, most experienced, and most productive person on their team, the structure of most collective bargaining agreements require that the individual be laid off first if they have the least experience. Some unions base that experience from the time of hire, while others look at the specific time spent at the worker’s current position. If a decision comes down to laying off the most senior worker or the most productive employee, it is always going to be the latter with a labor union.
4. Labor unions reinforce the socioeconomic divides of society.
The structure of a labor union often creates a culture that pits the workers against the managers in the company, even though both parties are trying to do what is best for the company. It is a mentality which often reduces the amount of collaboration that occurs between managers and workers, eventually limiting the creativity and innovation that comes from each team. Since every significant decision is also based on a majority perspective, there is a lot of pressure placed on people to conform – or find themselves on the outside of decisions.
5. Labor unions require dues for their work in representing employees.
Although there are laws in place in some states in the U.S. that permit workers from opting out of being in the Union, there are still occupations which do not have this luxury. Some employees must pay a portion of their salary, sometimes up to 3% of what they earn, to gain the benefits of what representation provides in the workplace. Labor unions do encourage higher wages and better benefits, but it also comes at a cost that could offset many of the gains in some professions.
6. Labor unions can make it a challenge to terminate under-performing workers.
The collective bargaining agreements which are enforced by employers and labor unions often focus on behaviors more than production when evaluating a potential disciplinary action process. This structure ensures more people can keep their jobs, but it also means that the company might be paying more for less output. A contract that is poorly negotiated can create challenging circumstances for everyone involved.
The issue here comes back to seniority once again. When push comes to shove, the people who work there the longest receive the most benefits. That can eventually lead to the downfall of a company if younger workers are tech savvy and the older workers are not.
7. Labor unions must have skilled negotiators representing the labor force.
A collective bargaining agreement that is not expertly negotiated can become problematic for both parties. It can force employers into paying high wages and benefits without consideration for their profits or revenue streams. There is also the chance that workers could get locked into low wages and unsafe working conditions for an extended period. Although the voting process can limit this issue somewhat, a 50% plus one vote structure is all that is necessary to lock something detrimental into place for up to 5 years.
These pros and cons of labor unions must evolve as the modern workplace changes to meet the demands of the modern age. They served their purpose long ago in providing a counter to the overwhelming rights that company owners had at the turn of the 20th century. Are they needed still today? The answer to that question often lies in how someone sees this structure in their lives. People who benefit from higher pay generally support them, while those who see them as a waste of taxpayer resources are usually against them.
Natalie Regoli, Esq. is the author of this post and the editor-in-chief of our blog. She received her B.A. in Economics from the University of Washington and her Masters in Law from The University of Texas School of Law. In addition to being a seasoned writer, Natalie has almost two decades of experience as a lawyer and banker. If you would like to reach out to contact Natalie, then go here to send her a message.