Unionization Would Boost Economy


Joining a labor union provides the most direct path to improving a worker's standard of living. If done on a large enough scale, unionization could help revive the entire US economy, a chorus of voices have argued recently.

In a recent telephone conference to discuss the economic benefits of unionization with reporters last week, former Labor Secretary Robert Reich said, 'One big reason we're in the crisis that we're in is that consumers have run out of money.'

Median wages dropped over the course of the past decade, making the period after the 2001 recession the first time ever that working-class wages have fallen during a an economic recovery, Reich noted.

The collapse of the housing market and the credit crunch combined with declining wages meant that working families had little or no personal financial safety net to fall back on, worsening the economic crisis to its historic proportions. 'The entire economy is in trouble because there simply is not enough demand out there,' Secretary Reich said.

'If [workers] did have higher wages and higher benefits, they would have the purchasing power they need to buy more of the goods and services that this economy produces,' Reich emphasized. 'And that would strengthen the economy overall.'

Fix the economy: join a union

A big part of the reason wages declined so precipitously over this recent period, Reich added, has to do with the decline of unionization. 'Workers want to be in unions. If they did have unions, they would have a wage and benefit premium, substantially, over the median wage worker today,' he said.

Reich also noted that the decline in unionization isn't related entirely to globalization and the movement of manufacturing or other union-dense industries overseas. Much of the decline has resulted from a growth in hostility by employers in the US to unions and to workers who try to join them.

A recent study by labor advocacy group American Rights at Work found that 30 percent of employers simply fire pro-union workers, about half threaten to close a workplace if workers join a union or try to bribe or show favoritism to workers who oppose union membership. More than 80 percent of employers hire anti-union consultants who help them intimidate workers, and more than nine in 10 employers force employees to attend anti-union meetings with supervisors.

While most of these actions are illegal, weak enforcement, small penalties and a federal bureaucracy that allows employers to endlessly appeal complaints and avoid punishment seem to provide employers with little or no incentive to obey the law. According to a January 2009 report from Human Rights Watch, 'Sanctions for illegal conduct are too feeble to adequately discourage employer law breaking, breaching the international law requirement that penalties be 'sufficiently dissuasive' to deter violations.'

To reverse this trend, boost the living standards of working families and protect the rights of workers, Reich argued, passage of the Employee Free Choice Act is necessary. The main purpose of that law would be to even the playing field between employers and workers, he stated.

According to congressional Web sites, the Employee Free Choice Act aims to establish or revise three basic labor laws: 1) to give workers a choice about how to certify a union in their workplace, using either a secret ballot or a majority sign-up process; 2) increases and enforces penalties on employers who threaten or harass workers who try to join a union; 3) eliminates red tape by speeding up the process of arbitration and mediation that employers often now delay endlessly at taxpayer expense.

Union benefits

Reich's comments introduced a new report by the Center for American Progress Action Fund on the economic benefits of unionization. The report shows that at the peak of union density in the late 1970s, workers saw growth in wages and the value of benefits proportional to the increase in their productivity. Over the last two-plus decades as union membership has declined, however, productivity has steadily grown, while workers have reaped fewer financial benefits.

“If unionization rates were the same now as they were in 1983 and the current union wage premium remained constant, new union workers would earn an estimated $49.0 billion more in wages and salaries per year,” the report's authors, David Madland, Director of the American Worker Project, and Karla Walter, Policy Analyst, noted. “If union coverage rates increased by just five percentage points over current levels, newly unionized workers would earn an estimated $25.5 billion more in wages and salaries per year.”

Union members earn an average of about 30 percent higher in wages, are 59 percent more likely to have health benefits and 54 percent more likely to have retirement benefits. Union membership also sharply reduces inequalities in wages and benefits by gender and race.

Beth Shulman, co-director of Fairness Initiative on Low-Wage Work, said that in working with low-income workers, she discovered that as workers joined unions they quickly saw higher incomes, better health care benefits and a sense of dignity and empowerment in the workplace.

'At the end of the day, having a union for millions of workers across the country really is the difference between having a decent wage and impoverishment,' Shulman pointed out. Unions also make a huge difference for communities by raising standards of livings and providing a tax base for improved public services, she added.

Think tanks like the Center for American Progress Action Fund are working closely with labor organizations like the AFL-CIO, SEIU and American Rights at Work to release a series of reports with state-by-state analysis of the benefits to working families that would come as a result of higher rates of unionization.