Unions & Employee Wages

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In addition to the federal government, unions have historically played a large part in shaping wages in America. In industries in which workers are well organized, wages are determined not just by the market but by the strength of the union in the bargaining process. Economists acknowledge the impact of unions in setting wages in the theory of negotiated wages.

Not all unions in the United States have been organized along the same lines. Some unions have organized workers only within the same craft—one of American’s oldest craft unions, the United Brotherhood of Carpenters, has always restricted membership to carpenters, cabinet makers and other wood-working craftsmen. Other unions have organized all of the workers within a particular industry under the same umbrella. The American Railways Union, founded in 1893, combined fireman and brakemen, engineers and railroad car manufacturing workers within the same industrial union. Union priorities have also varied. The Knights of Labor, founded in 1869, aimed at securing more worker control over the workplace—among its priorities were workers’ councils that could join with management in setting company policies. The American Federation of Labor, on the other hand, concentrated primarily on winning better wages and shorter hours.

Unions have varied further in the strategies they adopted in pursuit of their objectives. Most have applied pressure on employers through strikes, picketing, and boycotts. Others, however, have placed equal emphasis on political organization and advocacy.

Employers have similarly responded to union efforts in a variety of ways. In the early years, some companies violently resisted all worker attempts to organize. They locked out striking workers, refusing to let them work, and they pursued injunctions from local courts prohibiting strikers from interfering with business operations. Some formed company unions as alternatives to the worker’s unions. By making fewer demands and signing “sweetheart contracts” with employers, company unions often drew workers away from more ambitious worker unions.

Outside of the workplace, in the political arena, unions also waged campaigns, winning their greatest political victories during the Great Depression. The Norris-LaGuardia Act of 1932 guaranteed unions the right to peacefully picket and strike. And the 1935 National Labor Relations Act, also known as the Wagner Act, guaranteed workers the right to form unions and bargain collectively.  The Wagner Act tilted the balance of power away from businesses and toward unions, and the result was a huge surge in union membership from the mid-1930s through the late 1940s.

Following World War II, however, amid Cold War concerns about communism and domestic radicalism, Congress passed legislation more hostile to unions. The 1947 Taft-Hartley Act prohibited unions from contributing money to political campaigns and outlawed the closed shop (where workers could not be hired without first joining the union). It did, however, allow the “union shop”—a shop that requires workers to join a union after they are hired. It also permitted a milder version of these agreements called the “modified union shop,” (a shop that allows current employees to join or not join unions, but requires all new employees to join a union) as well as the “agency shop” (a shop that requires employees to pay union dues even though they may not be actual members of the union). The Taft-Hartley Act also permitted states to ignore all of these provisions by passing “right to work laws” that prohibit employers from making union membership in any way a condition of employment. Right to work laws forbid closed, union, modified union, and agency shops—instead, they permit only “open shops.”

The effect of Taft-Hartley was once again to shift the balance of power between unions and employers, this time to the benefit of business.  Shortly after Taft-Hartley passed, union membership in private-sector workplaces began to decline slowly but steadily, a process which continued more or less nonstop for the next 50 years.  By the 2000s, fewer than one in ten private-sector workers in America belonged to a union.  (Unions remained significantly more powerful among public employees, however.)

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Why It Matters Today

Do unions still matter today?  Or has half a century of decline made unions irrelevant to the modern economy?

Your answer to that will probably depend upon what industry you work in.  Plenty of workers these days, especially those in the private-sector service industries, will rarely if ever encounter anything having to do with unions, one way or the other.  In other industries, though -- the building trades, the old blue-collar heavy industries, the public sector -- unions remain a powerful force in the workplace.

In those areas where unions remain strong, are they a force for good or evil?  You will encounter impassioned views on both sides of that debate... and you'll have to make up your own mind.

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Sometimes, a Song Says it Better: Work for the Working Man, by Bon Jovi

Rumor has it President Obama has these lyrics in the Oval Office…that may explain the UAW bailout.