Sectoral bargaining is a type of collective bargaining between workers and firms that creates minimum standards for all workers in an industry or occupation. Most collective bargaining in the United States occurs at the worksite level, but laws could be changed to facilitate more sectoral bargaining operating in conjunction with workplace-level bargaining.
Here are four things to know about sectoral bargaining, which is sometimes known as industrywide or multiemployer bargaining.
Sectoral bargaining leads to more workers having better jobs
Sectoral bargaining increases the number of workers earning better wages and benefits provided in a union contract because it sets standards across multiple worksites, ensures workers do not lose representation as firms open and close, and limits the effectiveness of firm restructuring to avoid paying union wages. According to the Organisation for Economic Co-operation and Development, collective bargaining coverage is high and stable “only” in countries where sectoral bargaining is predominant. Sectoral bargaining is particularly effective at covering workers who are hardest to reach under worksite-level bargaining, which is important in the modern economy as firms increasingly contract out.
Recent analysis by the Center for American Progress suggests that moving to sectoral bargaining could nearly triple the percent of American workers covered by a union contract.
Sectoral bargaining has many other benefits
Union membership generally increases under sectoral bargaining because it creates new organizing opportunities and reduces incentives for employers to fight worker efforts to unionize. Sectoral bargaining also creates a level economic playing field that helps firms and the economy by incentivizing companies to boost productivity.
By ensuring similar pay for similar work, sectoral bargaining reduces wage inequality; one study found it is the “most important” factor in explaining pay dispersion. It also helps close racial and gender pay gaps because it standardizes pay and limits opportunities for discrimination.
Sectoral bargaining works in the United States and around the world
Sectoral bargaining in the auto industry and elsewhere helped create the American middle class in the mid-20th century and subsequent middle class struggles were fueled in part by the decline of sectoral bargaining. Though U.S. law makes sectoral bargaining excessively hard to achieve, it was more common when union density was higher and still exists in a few pockets of the U.S. economy, such as in the hotel, cleaning, and construction industries in some cities.
Union leaders and pro-worker policymakers increasingly support sectoral bargaining as a path to renew unions and the middle class. This push is growing not only in Europe, but also in Canada, Britain, and New Zealand, as well as Australia, where new sectoral policies are showing early promise increasing collective bargaining coverage, union membership, and wage growth.
Policymakers have multiple tools to promote sectoral bargaining
There are multiple paths forward to increase sectoral bargaining, including strengthening unions, using union contracts to set prevailing sectoral standards, and creating new bargaining streams. Ultimately, federal reforms are needed for true sectoral bargaining across the country, but cities and states have some legal authorities to promote sectoral bargaining and related sectoral strategies.
Many cities and states have prevailing wage laws that create sectoral standards for workers on government-funded projects as well as some other types of work. Six states and three cities set industrywide minimum standards by bringing together workers, employers, and the government in industry standards boards. Massachusetts and California are pioneering sectoral bargaining policies for rideshare drivers who are not covered by the federal National Labor Relations Act (NLRA), which could lead to 900,000 workers being covered by collective bargaining agreements, effectively reversing the past 20 years of bargaining coverage decline across the country.
States can also set up broad sectoral bargaining systems as part of union trigger laws that become effective if the NLRA is struck down by courts or ceases to be enforced.