13 Advantages and Disadvantages of Labor Unions

Since the 18th century, labor unions have been involved with employers to help protect worker rights. This was especially important during the development of the industrial revolutions in Europe and the United States. Although governmental reforms have helped to reduce the power and presence of labor unions, public sector unions have a consistent pattern of growth and private sector unions help to train people to become skilled workers in a specific career.

The advantages and disadvantages of labor unions show us that there are positive and negative outcomes which are generated when any group can wield power. Here are some of the key points to consider.

What Are the Advantages of Labor Unions?

1. Labor unions promote higher wages.
In a majority of US jobs and careers, union representation helps workers bring in significantly higher wages. From data provided by the US Bureau of Labor Statistics in 2010, unionized workers brought in an extra $800 per month over non-unionized workers. The average union member earned $917 per week before taxes, while the average non-union worker earned $717 per week before taxes.

2. Labor unions help workers get better benefits.
When workers are employed and unionized, they have a much better chance to receive essential benefits from their employer. Over 90% of unionized workers were entitled to medical benefits, while about 70% of non-union workers were entitled to the same benefit. Unionized workers usually pay less of a share of the benefits they receive, earn more vacation days, and have better access to sick days compared to non-union workers as well.

3. Labor unions help families receive better benefits.
Domestic partnerships are on the rise in the United States, often with children, but non-union workers can struggle to have this family structure protected with benefits like medical care. When family care is considered, union workers had 89% of their benefit costs covered by their employers, while non-union workers had just 66% of their benefit cost covered.

4. Labor unions provide better access to a funded retirement.
Over 90% of unionized workers have access to a retirement benefit that is provided by an employer. This may include access to a 401k or IRA contribution plan, a pension plan, or a combination of both. Their non-union counterparts have access to retirement benefits through an employer just 64% of the time.

5. Labor unions provider worker protections.
In most states in the US, non-union workers are typically employed in what is called an “at-will” environment. This means an employer can fire someone for virtually any reason. Only limited exceptions are in place, which often involve discrimination or whistleblowing. Any reason outside of the limited exceptions will qualify as a legal termination. At best, a fired employee would have access to unemployment benefits. Unionized workers can only be fired for what is called a “just cause.” There must be evidence of misconduct and any disciplinary action can usually go through arbitration or a grievance procedure.

6. Labor unions create an opportunity to negotiate frequently.
Most unions operate under a bargaining agreement that is renegotiated after a certain amount of time. Some operate on yearly contracts, but most workers tend to operate on agreements which are 2-5 years in length. This allows workers to negotiate for better wages and conditions, while providing an employer the opportunity to negotiate for concessions. When done correctly, a balance between worker and employer can be achieved where both parties can be happy.


What Are the Disadvantages of Labor Unions?

1. Labor unions can discount worker education and experience.
Many jobs that are offered in a unionized environment come through seniority instead of education and experience. This means someone who has been at a specific job or company the longest will automatically have the first option to receive a promotion or a job transfer. This also works in reverse. If there are layoffs that have been agreed upon, the least senior person is the first one to go, even if they are the most qualified.

2. Labor unions require ongoing dues and may require initiation fees.
Union dues are often deducted from a worker’s salary automatically and is a percentage of that worker’s salary. In most circumstances, the dues are 1.5-2.5% of what the union worker earns. There may also be initiation fees which must be paid to join the union in the first place. These fees can reduce a lot of the salary gains that workers experience by being in a unionized environment.

3. Labor unions may participate in activities that workers disagree upon.
Most states in the US allow unions to spend money on political lobbying and internal lobbying for specific causes. Not every worker may agree with the candidates that a union may endorse or a cause that the union may lobby for, but their dues are still being spent on those causes. A few states have allowed workers to opt out of that portion of their union dues if there is disagreement, but that is an exception more than a rule.

4. Labor unions discourage individuality.
There is strength in numbers, which is a tremendous advantage for worker safety and security. Working in groups also tends to generate “group think,” which limits individual creativity. Workers are often bound by the decisions a union will make, even though they disagree with them. All it may take is a majority vote for an action to be taken and then you’re stuck with that decision unless you decide to resign.

5. Labor unions offer job bumping arrangements.
If there is a layoff that is authorized, a position that may not be eliminated can still cause a low-seniority worker to be laid off because of a process that is known as “bumping.” Senior workers who have a job removed can transfer to a position not experiencing a layoff thanks to a provision in a CBA which is often negotiated. The senior worker takes the job and the other worker loses it. If that other worker has more seniority than another, then they can “bump” into another position as well. Eventually, the least senior person tends to be the one without employment.

6. Labor unions can have a poor public reputation.
In 2012, Governor Scott Walker of Wisconsin had a fundraising chairman send out emails that called union workers an “evil” part of society. Many union workers are blamed for a lack of revenue, especially when it is a public union, and this political animosity can be experienced in real life.

7. Labor unions are a hierarchal environment.
Many union workers feel like their supervisor treats them as if they were a boss instead of an equal partner in the business. Non-union workers experience this outcome 12 percentage points less often than their union counterparts. Non-union workers, by 9 percentage points, are also more likely to say that their supervisor creates an environment that is trusting and open.


Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.