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US Treasury Releases Report on Impact of Labor Unions

Samuel Corum/Bloomberg via Getty Images

The Treasury Department has released a comprehensive new report emphasizing the positive impact of labor unions on the middle class and the economy. In recent decades, middle-class households have suffered stagnant wages, increasing income volatility, and decreasing generational mobility- all while wage gaps have increased. The report demonstrates that unions can combat these dynamics by raising middle-class incomes, improving work conditions, and creating job satisfaction.

The report highlights several key points:

  1. Wages: Unions provide a "union wage premium," with union members typically earning around 10-15% more than non-union workers. These figures become more pronounced for long-tenured workers.

  2. Work Environments: Unions have better non-wage benefits and workplace conditions, such as healthcare, retirement benefits, flexible scheduling, and safety regulations. This enhances worker well-being leading to a better quality of life.

  3. Workplace Equality: Unions promote diversity and equality within, reducing wage gaps based on race and gender.

  4. Spillovers: Positive effects of unions extend beyond unionized workers. Non-union workplaces are incentivized to raise wages and improve working conditions. Unions also foster civic engagement and social capital in communities.

In summary, the report argues that unions can contribute to a more equitable and robust economy by improving the well-being of middle-class workers and addressing income inequality and economic instability.

The Report Comes at the Right Time

Early in his presidency, Joe Biden touted himself as the most pro-union president in history. Since then, the Biden-Harris Administration has taken great strides in recognizing the benefits of unions and the need to empower workers. In a pro union victory, the President passed the Infrastructure Investment and Jobs Act which fast tracks federal projects guaranteeing prevailing wage and benefits- positioning unions as the first in line to bid for these jobs. Because of the legislation, construction workers are looking at decades of work coming down the pipeline at a livable wage and with the benefits union rules guarantee.

In opposition to collective bargaining, stands proponents of “Right to Work.” This policy argues that unions are discriminatory and that these laws will protect workers from being forced to join a union. The truth is federal law already makes it illegal to force someone into a union. The true intent behind right-to-work laws is to shift the advantage in favor of large corporations, unfairly rigging the system against working families. These laws create obstacles for individuals seeking to establish unions and negotiate collectively for improved pay, benefits, and working environments. The benefits of unions have been proven categorically, yet supporters of right to work prefer a system where they reap all the benefits while their employees struggle to earn a living.

A back and forth between proponents of right to work laws and those who fight for union labor has raged for decades with organizations such as Associated builders and Contractors, real estate groups, and Republican lawmakers consistently at odds with unions. Most recently, early this year, the battle was fought on the steps of the Montana capital. Union supporters were able to successfully beat back right to work legislation proposed by Republican lawmaker Rep. James Bergstrom that attempted to establish Montana as the country’s 28th right-to-work state.

Union workers rally outside of the Montana Capitol on Feb. 17 in opposition to a bill establishing right-to-work in the state. Credit: Arren Kimbel-Sannit / MTFP

Reports analyzing the statistical advantage of unions and on the other end of the spectrum, demonstrating the struggles of the nonunion worker have been presented in recent years. However, the new report is comprehensive, and some would say a final say on the subject that irrefutably ends the argument.

Proof is in the Pudding

The Treasury department report is preceded by other reports that analyzed different data sets. Last year, the U.S. Congress Joint Economic Committee (JEC) and the House Committee on Education and Labor released a report highlighting union membership as a path to equal pay and proper benefits for workers of color. The study found that White workers earn 10.1% more as union members. Asians earn 14.7% more as union members. Black workers garner 17.3% in wage increases as union members. And Latinos earn 23% more as union members. Unions have been actively recruiting from historically undeserved communities and the report states these workers are taking advantage of the benefits of union membership more and more. Like the Treasury Department findings, the report also delved into the ways in which unions improve the quality of life for not just union members but for everyone in their communities.

Another report that came out last year delved into the other end of the spectrum. The University of California Berkeley Labor Center found that construction workers are becoming increasingly dependent on public safety net programs and that this directly correlates with the increasing number of workers entering the nonunion sector. These workers fall victim to the pitfalls of working unsafe, unregulated jobsites while union workers

The report determined that union membership can negate the need for public assistance with health care and access to sick days. According to the Economic Policy Institute (EPI) 94% of workers covered by a union contract have access to employer-sponsored health benefits, compared with just 68% of nonunion workers and 91% of workers covered by a union contract have access to paid sick days, compared with 73% of nonunion workers. EPI also reports that the average union pay scale is 11.2% higher than nonunion.

The two previous reports, along with this newest data, show the impact labor unions have on the work force. The rules set forth by labor unions even the playing field for all members and guarantee standardized pay and benefits. Stability is the cornerstone of a good middle class living and that is what unions provide.

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