Labor Policy

As union membership rates declined in recent decades, wages for most workers stagnated and income inequality grew to levels not seen since 1929. These developments are linked, and, in EPI’s view, will not be reversed without significant reform of U.S. labor laws to restore the rights of workers to form and join unions. Especially during this time of crisis, organized labor must resume its role as a balancing force in our economy.

A wide body of research has shown that unions are an overall benefit to the economy. They raise living standards for union and non-union workers, make companies more efficient and productive, and balance the interests of owners and investors with those of workers so that profits are shared. A widely-cited EPI study of union benefits can be found here.

Legislation being considered in Congress would remove some obstacles workers face when they try to organize their workplace. The Employee Free Choice Act would impose real penalties on employers who harass or fire union sympathizers, or otherwise try to scare workers away from a union. If a majority of employees at a workplace sign cards favoring a union, the act would require an employer to recognize it, rather than undertaking a long, costly and destructive battle. The act also would bring in a third-party arbitrator to produce a fair contract if the two sides can’t agree on one within a year. EPI has prepared a question-and-answer document to explain how the law would work and why it is needed.

Support from economists and pension fund trustees
Forty prominent economists, including three Nobel laureates, have signed onto a statement in favor of the Employee Free Choice Act written by EPI President Lawrence Mishel, Richard Freeman of Harvard and Frank Levy of MIT. Almost two hundred economists have added their support to this effort. Citing the recent unprecedented growth of inequality in household income and the urgent need to give workers more bargaining power to counter national and global trends, Freeman, Levy and Mishel wrote that the proposal is an essential step toward rebuilding a solid middle class.

“A rising tide lifts all boats only when labor and management bargain on relatively equal terms,” the statement says. “In recent decades, most bargaining power has resided with management. The current recession will further weaken the ability of workers to bargain individually. More than ever, workers will need to act together. The Employee Free Choice Act is not a panacea, but it would restore some balance to our labor markets. As economists, we believe this is a critically important step in rebuilding our economy and strengthening our democracy by enhancing the voice of working people in the workplace.” The statement appeared in a full-age ad in the Washington Post on Feb. 25, 2009.

We are now asking other economists to join this important effort. Please consider joining us as a co-signer of the Economists’ Statement for the Employee Free Choice Act by filling out this online form.

In a full-page ad in the August 5, 2009 edition of Roll Call, nearly 50 public pension fund trustees declare that the Employee Free Choice Act is essential to help strengthen the economy, increase consumer buying power, and ensure the long-term health of public pension funds. 

Related research
The Economic Policy Institute’s staff economists and associated scholars have conducted extensive research on unions and the economy through the years. Below is a list of significant studies:

State of Working America 2008/2009, select chapters
This signature publication by EPI, which has documented the economic well-being of American workers since 1988, contains a wealth of information on union benefits for members and non-members, especially for African-Americans, Hispanics and Asians.

Effect on Firm Closures, by John DiNardo, 2009
Claims by the organized business lobby that increased unionization will drive employers out of business are not borne out by historical data or existing credible research, according to a new report. DiNardo compares data on business failures among unionized and similar nonunion firms and concludes that unionized businesses are no more likely than nonunion ones to fail.

Squandering the Blue Collar Advantage, by Josh Bivens, 2009
Bivens shows why unions are not to blame for the loss of U.S. manufacturing jobs, and that in fact, the real culprits are manipulated currency rates that make U.S.-made goods overly expensive. A dysfunctional health care system that burdens responsible employers with outsized costs, and high executive and managerial salaries, also contribute to any lack of competitiveness.

Organizing Prosperity, by Matt Vidal with David Kusnet, 2009
Using twelve case studies from a variety of industries, including nursing, meatpacking and janitorial, the authors show how unions can benefit workers and communities while making companies more productive. They also illustrate the damage inflicted when union representation is removed.

Unions and African-American Workers, John Schmitt CEPR, 2008
This paper documents the advantages of union membership to African-Americans, who earn about $2 per hour more when in a union than not, and also are far more likely to enjoy employer-sponsored health insurance and a pension.

Unions, the Economy, and Employee Free Choice, by Harley Shaiken, 2007
Shaiken traces the history of workers’ rights (and employers’ obligation to respect those rights) from the Wagner Act through Taft-Hartley to the present day, noting that the unraveling of the employers’ duty to bargain a contract with workers who voted for union representation leads directly to the modern anti-union campaign, with its use of employer tactics of delay, interrogations, captive audience meetings, limited union access, and coercive speech. “With these rules,” Shaiken writes, “the playing field is not simply tilted against unions, they are barred from the stadium.”

Do Workers Still Want Unions? More Than Ever, by Richard B. Freeman, 2007
Freeman’s analysis updates findings from the mid-1990s, when the Worker Representation and Participation Survey (WRPS) of U.S. private sector workers documented a large gap between the kind and extent of representation workers had and what they desired. He finds that gap has grown even larger today. For instance, the proportion of workers who want unions has risen substantially over the last 10 years, and a majority of nonunion workers (53%) in 2005 would vote for union representation if they could. This is up from the 32% to 39% in the mid-1990s who would vote for representation, depending on the survey. If workers were provided the union representation they desired in 2005, then the overall unionization rate would have been about 58%.

A New Social Contract: Restoring Dignity and Balance to the Economy, by Thomas Kochan and Beth Shulman, 2007
Kochan and Shulman analyze the shift in values which has subordinated the interests and security of workers to stock prices and short-term gains which benefit the fortunate few. They argue that a new social contract must be forged, one that builds a strong, durable economy and strong, durable families.

The right to organize, freedom, and the middle class squeeze, by Lawrence Mishel, 2007
Testimony about the importance of unions for American workers given before the U.S. Senate Committee on Health, Education, Labor, and Pensions on March 27, 2007.

America Works, Richard Freeman, 2007
Freeman, a highly-regarded labor economist at Harvard and an EPI research associate, takes readers on a tour of America’s exceptional labor market, comparing the economic institutions and performance of the United States to the economies of Europe and other wealthy countries. The U.S. economy has an impressive track record when it comes to job creation and productivity growth, but isn’t so good at reducing poverty or raising the wages of the average worker.