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The Pros and Cons of Unions

The Pros and Cons of Unions

Unions are controversial in the U.S. – more controversial, in fact, than they are in some other countries. Here in the States, some people tout unions as essential to a strong working class, while others criticize unions for putting too many restrictions on workers and employees. To help you get a handle on this debate, we put together a guide to some of the pros and cons of unions. Consider working with a financial advisor as you invest, save and plan for retirement.

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Pro 1: Unions increase pay and benefits for workers.

Data from the Bureau of Labor Statistics (BLS) shows that non-union workers have median weekly earnings that are only 83% of the earnings for union workers. And while union membership is declining nationally – declining by 241,000 workers from 2020 to 2021 – unions in some states are more robust than in others. It’s not just unionized workers who benefit. Employers hiring for non-union jobs have to increase their wages, too, in order to compete for employees.

Pro 2: Unions set up formal processes for disputes and complaints.

When unions work well, they make it easier for workers to handle disputes and complaints, with other workers and with management. There are formal processes in place, which makes it easier for any worker – regardless of their individual status – to raise grievances. Many unions will also subsidize legal fees for unionized employees who want to sue their employers (such as for discrimination or wrongful termination).

Pro 3: Unions make political organizing easier.

By channeling workers’ energies into national organizations – and collecting money at the same time – unions make it easier to advance political causes that working people support. In effect, unions amplify the political voices of their members. Of course, not every union member agrees with the candidates and causes his or her union supports but, in general, unions help keep candidates focused on issues like the loss of manufacturing jobs, which might otherwise not have a politically powerful constituency behind them.

Pro 4: Unions set norms that extend to the rest of the economy.

The Pros and Cons of Unions

You may have seen bumper stickers that say something like, “The Labor Movement: The Folks Who Brought You the Weekend.” Before the labor movement, things we all take for granted in the workplace now – weekends, safety provisions – were not the norm. So, even though the U.S. workforce has never been completely unionized, unionization spread certain norms throughout the economy to the benefit of even non-unionized workers. The minimum wage, OSHA guidelines and overtime rules are all part of the legacy of the labor movement.

Related Article: The Pros and Cons of Raising the Minimum Wage

Con 1: Unions can make it harder to promote great workers and get rid of not-so-great workers.

Unions tend to put a lot of influence on seniority. That can be a good thing for creating a steady career path, but it can also make it hard for superstars to advance up the hierarchy. It can also make it hard to demote or dismiss workers who are consistently under-performing. And because unions have their own internal leadership structures, favoritism and cronyism can impede progress toward a meritocracy.

Con 2: Unions can require dues and fees that some workers might not want to pay.

Some workplaces are closed shops, which means you must be a union member to apply to work there. Others are union shops, where you can apply as a non-member but you must join the union if you’re hired. Still others are agency shops, where you can work there as a non-union-member but you have to pay agency fees to contribute to the work the union does on your behalf (contract negotiations, etc.)

Critics say that all three of the above scenarios are unfair to people who might have practical or ideological objections to the union and don’t want to comply with requirements to pay dues or fees. That’s why some critics of unions prefer open shops, where employees can’t be required to pay dues or fees. Other critics of unions work to pass right-to-work laws that limit the power of unions to collect dues and engage in collective bargaining.

Con 3: Unions can lead to a closed culture that makes it hard to diversify the workforce and weed out bad actors.

Unions aren’t just systems for organizing workers. They also have distinct cultures, which can vary by union and by “local.” Teamsters and teachers might both be unionized, but their union meetings probably look and sound different. Some unions can be tough to break into. This is particularly true of some of the older, more homogeneous unions. The closed cultures of some unions can make it hard for outsiders (e.g. women and people of color who want to be union welders) to feel comfortable in union shops, advance in their fields and take on union leadership roles. The closed culture and strong sense of solidarity can also lead union members to protect each other from scrutiny or cover up member misconduct.

Con 4: Unions can drive up costs and lead to an adversarial relationship between labor and management.

The flip side of unions providing higher wages for workers is that labor costs are higher. Using only union labor, which the government sometimes requires, can make big projects (think: building a new NYC subway line) much more expensive than they would otherwise be. And because unions “unite” workers to tackle negotiations with management they can sometimes lead to hostilities between labor and management. If you think the relationship between workers and management is inherently adversarial you might not see a problem, but if you want to work in a place where lines between labor and management are blurred and relations are friendly you might not feel comfortable in a union.

Related Article: What Is a Pension Plan?

Bottom Line

The Pros and Cons of Unions

It’s hard to generalize about the pros and cons of unions because there are so many different unions and locals. And the face of union membership is changing. It’s less white and male than it used to be. Though union membership has declined significantly, there are some signs of a resurgence of interest in union membership. Time will tell how far that resurgence goes.

Tips on Financial Planning

  • Whether you are in a union or not, a financial advisor can help you get the most out of your pay and benefits. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Our free retirement calculator will help you determine how much you need to save for retirement.

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