The Union Earnings Premium
Insulators International Staff — Fri, Jun 12, 2015 @ 10:06 AM
The monetary value of this widely unclaimed legal right can be readily calculated using official government data. The evidence is clear: union members earn significantly higher wages and have better access to additional benefits than nonunion workers.2 According to published reports from the Bureau of Labor Statistics (BLS), median earnings for a two-income, nonunion family are $400 a week less than that of a union family. Over a lifetime, that adds up to more than a half million dollars in foregone wealth.3
Even when one accounts for characteristics that can affect earnings other than unionization, such as education, experience, occupation, hours worked, marital status, having children, state of residence, and (unfortunately) sex, race, and citizenship—the gap between union and nonunion workers remains nearly as large. Among private-sector workers who are otherwise similar, union members have per hour earnings that are 27.6 percent greater, on average, than those of nonunion workers.4
As Figure 1 shows, this union earnings premium holds across a wide range of occupations. For example, unionized construction workers earn 42 percent more hourly than their nonunion counterparts. And the premium applies both to traditional union strongholds, such as manufacturing (28 percent) and teaching (25 percent), as well as to less-unionized occupations, including food service (19 percent) and sales (14 percent).
Translated into lifetime wealth differences, the cumulative effect of the union premium becomes staggering. A nonunion worker who is otherwise average could expect to accumulate an additional $551,000 in wealth by the time she retires—simply by exercising her right to join a union.5 As described in Figure 2, construction workers who do not unionize are effectively giving up $1.1 million over the course of their careers. Forfeited nest eggs are nearly as large among professions as diverse as maintenance ($968,000), management ($900,000), and social services ($767,000). Even poorly paid workers stand to reap major gains in relative terms: nonunion food service workers give up $262,000, while nonunion personal care workers forego $143,000.
Like buying a house or saving for retirement, joining a union is one of the most consequential financial decisions a worker can make.