Unions and Low Wage Workers in the US

Unionization Substantially Increases the Wages of Low-Wage Workers

“While all workers benefit from union membership, low-wage workers see largest gains”

For Immediate Release: May 15, 2008
Contact: Alan Barber, (202) 293-5380 x115

WASHINGTON, DC: After decades of disappointing wage growth for many American workers, a new report from the Center for Economic and Policy Research (CEPR) shows that unionization significantly boosts the wages of low-wage workers.

The report, “The Union Advantage for Low-Wage Workers,” finds that unionization raises the wages of the typical low-wage worker by 20.6 percent. Unions also have a substantial impact on the wages of workers at the middle and top of the wage distribution, but the report found that the effect for low-wage workers was the largest.

For the typical U.S. worker –the earner right in the middle of the national pay scale– unionization raises wages about 13.7 percent, about two-thirds of the impact of unionization on the typical low-wage worker. For the typical high-wage worker, joining a union increased pay about 6.1 percent, or less than one-third of the increase for low-wage workers.

“Unionization raises wages for all workers, but unions have by far the biggest impact on the wages of the lowest-paid workers,” said John Schmitt, a Senior Economist at CEPR and the author of the study.

The disproportionate impact of unions on low-wage workers also holds across the 50 states and the District of Columbia. In each state, the union premium was substantially larger for low-wage workers than it was for middle- or high-wage workers.

“Unions give the biggest boost to low-wage workers because these are the workers that have the least bargaining power in the labor market,” Schmitt said. “Unionization has a large and measurable impact on the bargaining power, and therefore the wages, of low-wage workers.”

Over the period covered in the report, 13.8 percent of American workers were either members of a union or covered by a union contract at their workplace. Over the same period, the unionization rate varied widely across the United States, from 3.9 percent in North Carolina to 26.4 percent in New York.

The report analyzed five years of data on 16-to-64 year old workers from the Census Bureau’s Current Population Survey (CPS) for the years 2003 through 2007, the most recent years available