Building a Union Business

Unions Are Good for Business, Productivity and the Economy

According to Professor Harley Shaiken of the University of California-Berkeley, unions are associated with higher productivity, lower employee turnover, improved workplace communication, and a better-trained workforce.

Prof. Shaiken is not alone. There is a substantial amount of academic literature on the following benefits of unions and unionization to employers and the economy.

Economic Growth

Productivity

Competitiveness

Product or service delivery and quality

Training

Turnover

Solvency of the firm

Workplace health and safety

Economic development

Economic Growth

During the period 1945-1973, when a high percentage of workers had unions, wages kept pace with rising productivity, prosperity was widely shared, and economic growth was strong. Since 1973, union density and collective bargaining have declined, causing real wages to stagnate despite rising productivity. This decline in union density and bargaining contributed to the current financial crisis and severe recession, as unsustainable asset appreciation and easy credit too the place of wage increases most workers were not getting.

Productivity

According to a recent survey of 73 independent studies on unions and productivity: “The available evidence points to a positive and statistically significant association between unions and productivity in the U.S. manufacturing and education sectors, of around 10 and 7 percent, respectively.”

Some scholars have found an even larger positive relationship between unions and productivity. According to Brown and Medoff, “unionized establishments are about 22 percent more productive than those that are not.”

Product/ Service Delivery and Quality

According to Professors Michael Ash and Jean Ann Seago [5] heart attack recovery rates are higher in hospitals where nurses are unionized than in non-union hospitals. According to Professor Paul Clark, nurse unions improve patient care by raising staff-to-patient ratios, limiting excessive overtime, and improving nurse training.

Another study looked at the relationship between unionization and product quality in the auto industry.  According to a summary of this study prepared by American Rights at Work:

“The author examines the system of co-management created through the General Motors-United Auto Workers partnership at the Saturn Corporation…The author credits the union with building a dense communications network throughout Saturn's management system. Compared to non-represented advisors, union advisors showed greater levels of lateral communication and coordination, which had a significant positive impact on quality performance.”

Training

Several studies in have found a positive association between unionization and the amount and quality of workforce training. Unionized establishments are more likely to offer formal training. This is especially true for small firms. There are a number of reasons for this: less turnover among union workers, making the employer more likely to offer training; collective bargaining agreements that require employers to provide training; and finally, unions often conduct their own training.

Turnover

Professor Shaiken also finds that unions reduce turnover. He cites Freeman and Medoff’s finding that “about one fifth of the union productivity effect stemmed from lower worker turnover. Unions improve communication channels giving workers the ability to improve their conditions short of ‘exiting.’”

Solvency

Labor’s enemies assert that unions drive employers out of business, but academic research refutes this claim. According to Professors Richard Freeman and Morris Kleiner, unionism has a statistically insignificant effect (meaning no effect) on firm solvency. Freeman and Kleiner conclude “unions do not, on average, drive firms or business lines out of business or produce high displacement rates for unionized workers.”

Workplace Health and Safety

Employers should be concerned about workplace health and safety as a matter of enlightened self-interest. According to an American Rights at Work summary of a study by John E. Baugher and J. Timmons Roberts:

“Only one factor effectively moves workers who are in subordinate positions to actively cope with hazards: membership in an independent labor union. These findings suggest that union growth could indirectly reduce job stress by giving workers the voice to cope effectively with job hazards.”

The benefits of unions in terms of safer workplaces are hardly new. According to one most recent study, unions reduced fatalities in coal mining by an estimated 40 percent between 1897 and 1929.

Economic Development

Unions also play a positive role in economic development. One good example is the Wisconsin Regional Training Partnership, “an association of 125 employers and unions dedicated to family-supporting jobs in a competitive business environment. WRTP members have stabilized manufacturing employment in the Milwaukee metro area, and contributed about 6,000 additional industrial jobs to it over the past five years. Among member firms, productivity is way up--exceeding productivity growth in nonmember firms.”