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What is a Union? Pros and Cons

Unions are back in the news again after General Motors employees walked off the job and went on strike last in September.

If you notice a yellow highlight on the page, hover over it for the definition!

For more than a month, nearly 50,000 United Auto Workers (UAW) members have been picketing outside the automaker’s US facilities, halting production that has caused thousands of additional layoffs and costing the company more than $2 billion in lost revenues. The good news is that GM and UAW have reached a labor contract that could end the work stoppage, but finalizing the four-year deal could take another two weeks.

But what is a union and what does it do?

What is a Union?

The labor or trade union has played an instrumental part in the employer-employee relationship since the Industrial Revolution. But just what exactly is it?

A union is a group of workers who have decided to organize and come together to make important about the conditions of their work. The important thing about a union is that you will collectively meet and negotiate with management when there are issues that affect the whole staff, like hourly wages, health care benefits, or day-to-day workplace safety.

According to the Bureau of Labor Statistics (BLS), there are approximately 14.5 million, or 10.7% of the workforce, union members in the US today. This is down from just under 18 million in 1983, or a little more than 20%.

Pros

The biggest benefit of joining a union is that leadership will negotiate for you to receive higher pay, better benefits, and enhanced working conditions. Because unions generally have an advantage over a business that wants to restart production to generate revenues, employees will typically get adequate compensation, fair medical coverage, and improved safety.

Another huge advantage for union members is job security. Unionized employees are guaranteed support and advocacy by the union leadership, which means that it is up to the organization to discipline a worker who might be out of line. Ultimately, your chances of being fired go down when you unionize.

Moreover, on the job security front, union members enjoy seniority. Put simply, should the business employ companywide layoffs, then the most senior employees are fired last and the most recent hires are given the heave-ho. Some call it “last hired, first fired.”

Cons

One of the key drawbacks of participating in a union is the cost of dues and initiation fees. It is estimated that dues can start anywhere from $200 to as much as $800 per year. Plus, union members will be required to pay a one-time initiation fee. So, this will partially offset higher pay – the median weekly income of full-time wage and salary union workers is about $1,000, compared to the $800 for non-union workers.

These dues are meant for two things: to pay for officials’ salaries and cover union business. But it has been often pointed out that employees will complain about how the money is spent, such as on political activism and donations to political campaigns, and how it is split between the national and local unions.

For employers, unions can add to overall labor costs, since these employees earn on average 22% more than non-union workers. This prevents the company from adding staff, investing in new equipment, or expanding the business.

Productivity could also take a hit should the union choose to take legal strike action and walk off the job. If there are not any employees who will operate the machinery, repair the equipment, or churn out products, then the business will lose money.

The Power of Unions

Whether you support or oppose unions, they have metastasized into formidable juggernauts that can sway elections, pour billions into lobbying, and make or break politicians. Despite union membership on the decline, union leaders still wield influential instruments – money and members ready to demonstrate. With billions at their disposal, unions can either spend money on improving the lives of the workers they represent or lend support to those in the corridors of power.

Andrew Moran

Economics Correspondent at LibertyNation.com and LNGenZ.com. Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at EarnForex.com. He is the author of “The War on Cash.” You can learn more at AndrewMoran.net.

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