Unions Increase Wages of Service Workers

by James Parks, Apr 7, 2009

After decades of disappointing wage growth for U.S. workers, a report from the Center for Economic and Policy Research (CEPR) shows that joining a union significantly boosts the wages of service-sector workers.

The report, “Unions and Upward Mobility for Service-Sector Employees,” shows that union membership raises the wages of the average service-sector worker by 10.1 percent, or about $2 per hour. According to the report, 13.3 percent of service-sector workers were either members of unions or covered by union contracts at their workplace in the 2004-2007 period. Click here to read the report.

On average, joining a union increases by 19 percentage points the likelihood that a service-sector worker will have employer-provided health insurance. Also, unionized service-sector workers were 25 percentage points more likely to have pensions than their nonunion peers.

Says John Schmitt, a senior economist at CEPR and author of the report:

The vast majority of jobs in this country are now in the service sector. The data show that workers in service jobs benefit as much from unionization as workers in manufacturing do.

The impact of unions in low-wage occupations was even greater. For workers in the 15 lowest-paying occupations, union membership raised wages by 15.5 percent. The likelihood of having health insurance increased by about 26 percentage points, and the likelihood of having an employer-sponsored pension increased by about 23 percentage points.

Schmitt adds:

Unions give the biggest boost to workers in low-paying occupations because these are the workers that have the least bargaining power in the labor market. Unionization can turn what would otherwise be low-paying jobs with no benefits into middle-class jobs.

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