14 Labor Unions Pros and Cons

A labor union, by definition, is an organized association of workers or employees. They are often in a specific profession or trade and they form this organization to protect their rights and best interests. Historically, labor unions have fought to end child labor, create better wages for workers, improve workplace safety, and provide benefits, such as health care or financial aid to employees injured on the job.

Labor unions have been in place since the 18th century, with the formation of the Federal Society of Journeymen Cordwainers in 1794. The first documented strike in the United States occurred in New York. Journeymen tailors came together to protest a reduction in their wages.

Labor Unions have certain pros and cons to look at as the debate to their effectiveness and influence continues on.

The Pros of Labor Unions

1. A labor union advocates for its members.
The purpose of a labor union is multi-faceted. They will work to negotiate higher wages for workers. They attempt to create contracts that provide for improved benefits. They’ll monitor working conditions at the workplace to help provide an extra level of security for worker safety. It allows workers to have fair coverage to support their families as they put in a days’ work.

2. Advocacy is guaranteed with a labor union.
Labor unions create a system of review when determining disciplinary actions. Their advocacy for workers with the employer creates greater job security, even in places where at-will employment is allowed.

3. It gives workers the opportunity to have a collective voice.
When all workers come together to negotiate for better wages, benefits, and conditions, it creates leverage for them. Employers must come together with their workers to negotiate so that productivity levels can be maintained. When relationships and professionally networking are continuously developed, it becomes an ongoing process that benefits everyone.

4. There is a better chance at creating a meaningful retirement.
According to reporting from Fox Business, 93% of workers who are associated with a labor union have access to retirement benefits with their employment. Just 64% of non-union workers have the same access. Medical benefits are more common with labor union workers as well.

5. Workers can still be fired when represented by a labor union.
Instead of being terminated in an at-will setting, employers can fire employees when they have a just cause to do so. The necessary actions to take are outlined in the collective bargaining agreement, so there is no confusion about what can or cannot happen. If an employee’s behavior qualifies, then the employer can process the termination.

6. The structure of a labor union removes favoritism.
Because many jobs within a union are based on seniority, promotions and layoffs tend to follow an objective system. The process is outlined to workers in the collective bargaining agreement and eliminates favoritism. Although this can limit opportunities for highly productive workers without seniority, it does stop management from putting in people at their personal discretion.

7. It creates a clear chain-of-command.
Workers who are unionized are more likely to say that their supervisor treats them as a direct report than non-unionized workers. This may create an environment that is less trusting, but it also creates a clear chain-of-command so that everyone on a team understands their role and duties.

The Cons of Labor Unions

1. It requires skilled negotiators on both sides of the aisle to be effective.
If the negotiators for a labor union are not skilled, then the employer can take advantage of this to create a long-term collective bargaining agreement that traps workers into low wages and poor benefits. On the other side of this equation is an employer without a skilled negotiator. This creates wages and costs that are unreasonably high and potentially unsustainable.

2. Poor workers can be difficult to remove when a poor contract is approved.
Employers that do not negotiate the circumstances for employee termination into a contract can find it difficult to remove poor performers. In some situations, it can be difficult to even initiate a disciplinary action. Some labor unions have even negotiated the power to dictate who an employer can or cannot hire.

3. Dues and fees are necessary for the labor union to operate.
These dues and fees, often between 1.5-3% of the wages an employee earns, can often offset the pay benefits that are negotiated on their behalf. Some people may be able to deduct union dues on their taxes each year, but they do not qualify as a pre-tax payroll deduction.

4. Labor unions can create a combative environment.
In many places of employment, the presence of a labor union creates an “us vs them” mentality. This reduces the benefits of collaboration between the two parties. This mentality also applies to the worker and the union at times. Majority rules are usually in place, which means if a strike is called, no one works – even if the employee wishes to remain on the job.

5. Seniority tends to be the tie-breaker.
Most labor unions operate on the principle that the last one hired is going to be the first one fired if layoffs occur. Someone with seniority that may lose their position due to layoffs could “bump” a lower-seniority worker out of their position. These bumps continue until the last worker is able to transfer. Seniority also tends to be a factor in promotions, which can limit highly qualified individuals from reaching their full potential for quite some time.

6. It limits individuality.
Although a labor union does give workers a unified voice, it does so by sacrificing the individual voices in the crowd. It’s a trade-off. You’re bound by union decisions, including political support, even if you disagree with them. Some laws have been passed that can allow individuals to limit fees or dues that are directed to certain activities at the local level, but for the most part, workers are stuck following decisions.

7. Labor unions are not always bound by the same rules.
Anti-trust laws and taxation laws do not always apply to labor unions. Many labor unions can file to be tax-exempt organizations in the United States, with limited exceptions. Restraints in trade or commerce are considered illegal, but labor union workers can place implement restraints at their discretion, with the support of the union, to their personal benefit.

The labor union pros and cons show us that as history changes, practices and policies must evolve. The need for labor unions in the generations before was due to a lack of regulations in worker safety, child labor, and adequate wages. Although these are still areas of concern for some, changes to laws have improved conditions without the need for union input.

Where do you think labor unions fit into our current system of society?

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.