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In terms of pay, benefits, and hiring, U.S. unions offer a good news/bad news story. The good news for unions and their members is that their members earn about 20% more than nonunion workers, even after adjusting for factors such as years of work experience and education level. The bad news for unions is that the share of U.S. workers who belong to a labor union has been steadily declining for 50 years, as shown in [link] . About one-quarter of all U.S. workers belonged to a union in the mid-1950s, but only 11.1% of U.S. workers are union members today. If you leave out workers employed by the government (which includes teachers in public schools), only 6.6% of the workers employed by private firms now work for a union.

Percentage of wage and salary workers who are union members

The graph shows that the percentage of wage and salary workers who are union members was lowest in 1935 where it was about 5%. It was highest in in the mid-1950s at around 25%. As of 2010, the percentage was less than 15%.
The share of wage and salary workers who belong to unions rose sharply in the 1930s and 1940s, but has tailed off since then to 11.1% of all workers in 2014.

The following section analyzes the higher pay union workers receive compared the pay rates for nonunion workers. The following section analyzes declining union membership levels. An overview of these two issues will allow us to discuss many aspects of how unions work.

Higher wages for union workers

Why might union workers receive higher pay? What are the limits on how much higher pay they can receive? To analyze these questions, let’s consider a situation where all firms in an industry must negotiate with a single union, and no firm    is allowed to hire nonunion labor. If no labor union existed in this market, then equilibrium (E) in the labor market would occur at the intersection of the demand for labor (D) and the supply of labor (S) in [link] . The union can, however, threaten that, unless firms agree to the wages they demand, the workers will strike. As a result, the labor union manages to achieve, through negotiations with the firms, a union wage of Wu for its members, above what the equilibrium wage would otherwise have been.

Union wage negotiations

The graph shows an upward sloping supply curve and a downward sloping demand curve. The two curves intersect at point E. Vertical dashed lines Qd and Qs intersect above point E with horizontal dashed line Wu. The space between the intersections of these lines creates the excess supply of labor.
Without a union, the equilibrium at E would have involved the wage We and the quantity of labor Qe. However, the union is able to use its bargaining power to raise the wage to Wu. The result is an excess supply of labor for union jobs. That is, a quantity of labor supplied, Qs is greater than firms’ quantity demanded for labor, Qd.

This labor market situation resembles what a monopoly firm does in selling a product, but in this case a union is a monopoly selling labor to firms. At the higher union wage Wu, the firms in this industry will hire less labor than they would have hired in equilibrium. Moreover, an excess supply of workers want union jobs, but firms will not be hiring for such jobs.

From the union point of view, workers who receive higher wages are better off. However, notice that the quantity of workers (Qd) hired at the union wage Wu is smaller than the quantity Qe that would have been hired at the original equilibrium wage. A sensible union must recognize that when it pushes up the wage, it also reduces the incentive of firms to hire. This situation does not necessarily mean that union workers are fired. Instead, it may be that when union workers move on to other jobs or retire, they are not always replaced. Or perhaps when a firm expands production, it expands employment somewhat less with a higher union wage than it would have done with the lower equilibrium wage. Or perhaps a firm decides to purchase inputs from nonunion producers, rather than producing them with its own highly paid unionized workers. Or perhaps the firm moves or opens a new facility in a state or country where unions are less powerful.

Questions & Answers

who should study economics
Mary Reply
what's the difference between elasticity and demand
Rich Reply
if country had a potential full employment income of Rs 1000 and following consumption and investment function C=0.75 y=50,I=150.find the level of government expenditure necessary to maintain full employment
Vijay Reply
what is China's economy
Ved
the meaning of elasticity
Yawe Reply
when equilibrium is égal to 1
Moussa
The tendency to change consumption habits with change in price
Iben
The type of elasticity if demand
Okonkwo Reply
aren't leaving too about bathrooms
SHADAB
I don't understand
Amina
like.
Ubong
Price elasticity of demand cross elasticity of demand income elasticity of demand
Lawrence
what is money
Lawal Reply
what is supply
Lawal
the total number of goods present at a particular area at a particular time
Offset
the meaning of elasticity
Affum Reply
how to knw the break even point in business
Edmore Reply
hello
Marshal
hello
ghulam
hi
Kakay
hi
Ornill
hi
Bakari
Good evening
owi
when TOTAL COST & TOTAL REVENUE equal each other that's break even point
Bappy
How is everyone doing
Kakay
yaah
Chris
🤙🤙
Kakay
Good evening
Amarachi
how are you feeling
Sorie
hello
Marshal
hello
McClean
Hai👋👋
Noah
Hey
Andile
hello
Offset
what's up?
Offset
what are the importance of economics
sani Reply
hello
Marshal
welcome
Zaid
am new here
Kakay
hello I'm new here
Mona
your welcome
Bakari
thanks
Mona
where are you from?
Bakari
Hello I'm new here
Amarachi
ohh hi
Tanaka
what is development?
juwel Reply
it shows how many products customers are willing to purchase as the price of those product increase or decrease
Asha Reply
economics as a science
skima Reply
What is utility
Jimoh Reply
utility is a total satisfaction derives from a consumer.
Umar
what is ranking reveal choices?
Umar
wants satisfying power of a commodity is known as utility........
SHADAB
What is elasity
bohvy
Differentiate between scarcity and choice and explain how they effect perfectly elasiticity of demand and give relevant example with type of goods affected
PATRICK
Utility is ability if of available goods to satisfy human wants
PATRICK
any idea about equilibrium?
Umar
equilibrium where price and quantity demanded equals
Bappy
e
john
Equilibrium is when quantity demanded of goods and services is equal to supply to the market.
john
saaa.....
Bright
how about the profit....anybody can explain
Jeff
how about equilibrium of consumer?
Umar
bappy,john thank you the answers.
Umar
Utility Simply means the satisfaction a consumer derives from consuming a good or service
Hez
Pls can someone explain Elasticity of demand in a short terms
Osuayan
it's a degree of responsiveness to demand due to changes in prices
Ukpen
what is scarcity? pls help
Mikateko Reply
scarity is when there is a huge demand for certain goods and services but there's limited resources to actually produce those things
Mario
thank you
Kakay
what is development?
juwel
what is distribution
umar Reply
1.what is distribution? 2.what are factors affecting distribution? 3.releat what you are writing in the contest of economics and Nigeria situation
umar

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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