A new study found robust evidence that when unions are strong, they raise salaries of everyone doing similar work even if they aren’t members.  

This Labor Day, a new study confirms something union members always suspected was true: unions are good for workers. All workers.

Nonunion workers in regions and industries where unions stayed
strongest were paid higher starting salaries and saw better raises
than nonunion workers where unions were weakest. Neither did
as well as union workers doing the same job.

Unions are great for union members, of course. There are decades of research showing that, as a group, union members make 15 to 20 percent more than people doing the same jobs without a union.

But the new study, published in the journal SocialForces, confirms that nonunion workers in regions and industries where unions stayed strong not only have higher wages, but their income is more stable and the income of top executives doesn’t rise quite so far into the stratosphere.

“In the U.S. … labor unions tend to reduce inequality and increase both pay and well-being,” wrote the study’s author, University of Illinois at Urbana-Champaign Prof. Tom Van Heuvelen. “Simply put, actions taken by governments and businesses to reduce union power may have had broad negative consequences.”

“This isn’t anything we didn’t know in our guts,” said International President Lonnie R. Stephenson. “But our opponents haven’t been fighting us with common sense. They have been fighting us with the best cooked numbers money can buy and foolish theories that somehow always point to more tax cuts for the rich and fewer rights for working people. This is a pretty good bat to swat those pitches down.”

Van Heuvelen was responding to a persistent criticism of the idea that unions make things better for workers than they otherwise would be.

The critics claim the so-called union wage benefit doesn’t say anything about collective bargaining’s benefit. All unions do, they say, is sort through all workers and select only the most naturally productive of them. Then once they have long-term union contracts, it is worth it for companies to give them on-the-job training. That explains that 15 percent pay premium, according to the skeptics.

The union, the critics said, really didn’t offer much to members except this selecting-out process.

Van Heuvelen’s research not only rebuts the claim of the union critics, he found what he called “robust evidence” that strong unions raise all boats.

“It is not just wages that are higher if you have a union card. There are all these spillover effects that improve your own well-being but can also help other people who don’t have a union card,” he said. “Union decline not only changes the wage attainment of union members, but it may broadly suppress income inequality and volatility along all workers’ careers.”

And the impact of policies that weaken unions, he writes, are felt widely.

“Had the power of unions to protect the economic well-being of lower and middle-class workers not declined over the past several decades, my results suggest that workers might have experienced stronger and more stable wage growth across their career[s]” he wrote. “[R]esults highlight the potential collateral damage of policies designed to undermine union strength and membership.”

Van Heuvelen took a novel approach in the paper, titled “Moral Economies or Hidden Talents?"

Historically, economists and sociologists have only been able to analyze wages through snapshots of the entire workforce taken at a specific moment in time. Union members on such-and-such day in 1973 make this much; nonunion members in similar jobs at that same time make this much. Compare. Then you take another snapshot at another time, compare. Gather enough snapshots over enough time, they ended up with that 15-20 percent number.

But what you can’t see using that data set is what union membership means for individuals. If you could follow an individual you might find that they made 15 to 20 percent more whether they were in a union or not because of what Van Heuvelen, tongue planted firmly in cheek, calls ‘hidden talent.’

So, using data that followed thousands of individual workers’ wages recorded over decades, Van Heuvelen found that ‘hidden talent’ explains away some of the union wage benefit, but nowhere close to all of it.

Union members have, on average, 3 to 12 percent higher wage growth over a career, irrespective of how naturally gifted they may have been. And since wages form only part of total compensation –especially for union workers who have, on average, more generous health, vacation, sick leave and retirement benefits— total compensation growth rates may be even higher.

And by looking at individuals over a lifetime, Van Heuvelen could show that nonunion workers saw 3 to 7 percent higher growth in wages when working in regions and industries where unions weakened the least.  

Determining precisely how unions raise nonmembers’ wages is, Van Heuvelen said, one of the next steps for researchers like himself trying to find out why economic inequality has grown so wildly in the past few decades.

There is evidence for a fair few straightforward economic mechanisms including pulling down top managerial salaries, increasing labor’s share of total corporate income, raising wages of nonmembers in similar jobs as firms try to keep their workforce from organizing, strengthening labor’s bargaining position generally and boosting compensation expectations.

But Van Heuvelen says he found evidence supporting another theory about how unions make all workers better off. The theory is that unions give critical power and support for what academics call the moral economy: broadly shared norms of fairness institutionalized in market rules and customs.

They are the buffer against an unleashed free market that would treat people as no different from a pile of money or a machine.

One straightforward example is that unions historically have supported programs that make the economy more reliable for all people, not just members, including food stamps, minimum wage increases, universal healthcare and Medicare.

Unions also have a long history of getting left-leaning, low-frequency voters to the polls. This supports politicians who support unions and more egalitarian economic policies.

And simply by existing, unions make sure to keep equality at the center of our national political and moral conversation. When the national conversation is seduced by communist or proto-fascistic ideals like “blood and soil” and CEO-take-all tax policies, no one else speaks for the ideals of fairness and equality like labor unions do.

This study confirms what academics have been finding around the world: “denser unionization, broader union coverage, greater centralization, and more generous labor rights reduce inequality, lower poverty and pull down top-end managers’ pay.”

Clearly the message is getting out. In a Gallup poll this month, 62 percent of Americans approve of labor unions, which is consistent with the 61 percent who approved last year and up from 56 percent in 2016.

It’s the highest number in almost 15 years. 

That is something everyone can celebrate this Labor Day.