DATA: What effect do unions have on wages and businesses?
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On Monday, Gov. Bruce Rauner officially launched his war against government unions with an executive order to block “fair share” union fees and also is pursuing legal action to prevent public-sector unions from tapping those fees.
Rauner, a Republican, said state employees who choose not to participate in unions still must pay fees through the “fair share” provision.
Illinois labor has blasted Rauner for the move, calling it a “blatantly illegal use of power.”
Organized labor continues to lose ground, with membership falling to its lowest point since the Labor Department started tracking it in 1983.
With this pending union fight in Illinois, now is as good a time as any to look at the impact of unions on both businesses and the workers those union shops employ.
SEIU President Tom Balanoff told the Sun-Times Rauner’s actions were a smokescreen to drive down working wages in Illinois. It’s anything but a cut and dry issue, but numerous studies support Balanoff’s statement.
Basically, if you’re not in a union, you probably should want to be in one.
- A teachers union study published in the Economics of Education Review found that starting salaries were increased by 3.9 percent through collective bargaining. Over the first five years, those teachers earned an average of 5.4 percent more than non-unionized teachers.
- Bureau of Labor Statistics data shows that in 2014, the median weekly earnings of union workers was 27 percent higher than that of non-union workers:
- Multiple studies show that unions significantly equalize pay among workers by raising the floor and lowering the ceiling of pay scales.
- As a result, as union membership has decreased, income inequality has increased. A Harvard University study showed that from 1973 to 2007, income inequality increased by more than 40 percent.
- A study looking at The Impact of Unionization on the Wage of Hispanic Workers from the National Institute of Economic and Social Research and the University of Oxford shows that the wage premium unions provide is the largest for Hispanics, especially in low-wage jobs.
- The bad news for businesses? A Princeton study shows that unions cause inefficiencies within the business, and some of the value is transferred from investors to workers through higher compensation. Therefore, publicly traded unionized firms’ stock market value suffers a 10 percent depression.
h/t: The Washington Post