Center for American Progress

Issue Brief: Unions Are Good for the Economy and Democracy

Issue Brief: Unions Are Good for the Economy and Democracy

The Employee Free Choice Act is likely to go before Congress early next year. Harley Shaiken and David Madland outline the facts you need to know.

American Federation of State and County Municipal Employees union members pack the New Jersey Assembly gallery to listen to debate on the state budget. (AP/Mel Evans)
American Federation of State and County Municipal Employees union members pack the New Jersey Assembly gallery to listen to debate on the state budget. (AP/Mel Evans)

It is good for the economy and good for American democracy when workers join together in unions, despite the claims of some conservatives who are waging a campaign to block important legislation that would make it easier to join a union.

Only 12 percent of American workers are currently represented by unions, and those who attempt to unionize face an uphill battle. The Employee Free Choice Act, which is likely to be one of the most important issues debated when the 111th Congress starts in January, holds the promise of restoring workplace democracy for workers attempting to organize, boosting unionization rates, and improving the economic standing and workplace conditions for millions of American workers.

The bill has previously passed the House and received majority support in the Senate, though the opposition of a few conservatives in the Senate has prevented the bill’s final passage. Yet next year the bill has a very strong chance of becoming law due to the election of several progressive senators in November and President-elect Barack Obama’s promises of support.

Consider these facts:

Unions are good for all workers. They improve wages, benefits, and working conditions, and helped create the middle class.

  • Unions raise wages for all workers. Unions paved the way to the middle class for millions of workers and pioneered benefits along the way, including paid health care and pensions. Even today, union workers earn significantly more on average than non-union counterparts and union employers are more likely to provide benefits. Workers in low-wage industries, women, African-American, and Latino workers have higher wages in unionized workplaces. Even non-union workers—particularly in highly unionized industries—receive financial benefits from employers who increase wages to match what unions would win in order to avoid unionization.
  • Without unions, fewer workers get ahead. Shrinking union membership hurts all Americans. Corporations rather than workers are increasingly rewarded for growth in the economy. Long before the current financial crisis began, working families were struggling to make ends meet. American productivity has expanded by nearly 16 percent since 2001, but most of that economic boom bypassed workers, and real wages have remained flat. Corporate profits have meanwhile doubled since 2001, according to Moody economist Mark Zandi. Not since the 1920s has the link between economic growth and the well-being of the middle class been so tenuous. Labor’s decline squeezes the middle class, raises inequality, and undermines democratic values.

Unions are good for the economy. They can help foster a competitive high-wage, high-productivity economic strategy.

  • Higher wages are competitive. Critics argue that union wages are too high and make it hard for American employers to compete globally. Yet competitiveness is also linked to productivity, quality, and innovation—all of which can be enhanced with higher wages. Henry Ford found in 1914 that paying employees $5 per day—double the auto industry’s prevailing wage—reduced turnover, allowing him to cut the price of the Model T and increase profits significantly. Ford commented that the $5 day was one of the finest cost-cutting moves we ever made.
  • Unionization and high worker productivity often go hand-in-hand. Fairness on the job and wages that reflect marketplace success contribute to more motivated workers. Given the pressures of globalization and competitiveness today, unions have been responsive to increasing productivity and embracing new innovations. In the retail world, labor costs in 2005 for partially unionized retailer Costco were 40 percent higher than Sam’s Club, but Costco produced almost double the operating profit per hourly employee in the United States—$21,805 per employee versus $11,615 per employee.

Unions are good for democracy. They give workers a voice on the job and in politics, and have been essential to the passage of some of the most important legislation of the past 100 years.

  • Unions improve communication between workers and managers. Unions give workers a voice on the job and improve communication between workers and management. Without unions, day-to-day competitive pressures leave quitting as the only option for workers to address serious problems—an expensive solution for all concerned.
  • Unions have helped pass important legislation that helps all Americans. In the political arena, unions have pressed for improved minimum wages, health care coverage, retirement plan protections, overtime pay, and social security. When workers are able to join together in a democracy, the voice of workers can help balance out the power of business interests.
  • Unions foster political participation. Unions are democratic membership organizations and foster the political participation of their members. They educate their members about the political process and train them how to work together for a common goal.

The Employee Free Choice Act is needed. Under current law, workers are often denied workplace freedoms and face a Herculean task joining a union.

  • Workers attempting to unionize are often intimidated. Workers attempting to unionize face a hostile legal environment and aggressive antiunion employers. Expensive antiunion campaigns often seek to influence workers’ votes by using threats—sometimes that the wrong vote could cost workers their jobs—one-on-one pressure, and mandatory meetings. One out of five union organizers or activists is likely to be fired during union election campaigns.
  • The current law is a failure. Labor law contains few penalties for employers who routinely harass, intimidate, and even fire people who try to join a union. Even after a vote in favor of unionization, employers often exercise their available rights of appeal and engage in bad-faith bargaining as a delay tactic that can go on for years.
  • Workers want to join unions. Only 12 percent of American workers today are members of unions—but that’s not because they don’t want to be. A December 2006 Peter Hart Research Associates Poll reports that 58 percent of non-managerial American workers would join a union if they could.

The Employee Free Choice Act would restore workers’ voices. The bill would make joining a union and getting a first contract fairer and easier.

  • The Employee Free Choice Act promotes workers’ rights. The bill would reform the labor-relations system to restore workers’ basic democratic right to make a free choice to join a union.
  • The Employee Free Choice Act is fair. It would ensure fairness in the union selection process through three main provisions: workers would have a fair and direct path to join unions through simple majority sign-up, employers who break the rules governing the unionization process would face stiffer penalties, and a first contract mediation and arbitration process would be introduced to thwart bad-faith bargaining.

The Employee Free Choice Act is democratic and restores previously won rights. The bill would allow workers to join a union through simple majority sign-up or an election—as previous labor law allowed.

  • The Employee Free Choice Act allows majority sign up or an election. The bill would allow an employee to choose to join a union through simple majority sign-up—a system that works well at the small number of workplaces that choose to permit it. The act does not deny workers their right to vote in a union election, as some conservatives maintain, but rather allows workers to choose between signing a membership card and having an election.
  • Workers won rights in 1935. Workers won important collective bargaining protections over 70 years ago with the passage of the Wagner Act. The Wagner Act placed the federal government squarely on the side of collective bargaining and the right to organize. An employer’s duty was to remain completely neutral in a representation election, in recognition that economic dependence defines the relationship between employers and workers. Employer persuasion could not be separated from employer coercion.
  • The Wagner Act promoted majority sign up. Elections were just one way for workers to unionize during the 1930s. The National Labor Relations Board only required an election when genuine questions arose around a majority sign-up process. Almost a third of all union certifications between 1938 and 1939 occurred without an election according to labor historian Dr. David Brody, and under these legal rules millions of workers exercised their basic democratic rights, pouring into unions. Unfortunately, important safeguards requiring employer neutrality during union selection processes began to be dismantled starting in the 1940s. The Taft Hartley Act took away the NLRB’s right to certify unions with simple majority sign up in 1947—employers from that point on could recognize their workers’ petition, or request an additional election—where rules favor the employer.

The Employee Free Choice Act is necessary to restore workers’ rights, boost the wages and benefits of Americans, and strengthen our economy. Passing the bill would help restore workplace democracy for workers attempting to organize, boost unionization rates, and improve the economic standing and workplace conditions for millions of American workers.

Learn more from the Center for American Progress Action Fund’s American Worker Project.

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David Madland

Senior Fellow; Senior Adviser, American Worker Project