How Has Union Participation Impacted Wage Growth and Standard of Living?

How has union participation impacted wage growth and standard of living? 

Facing stagnant wages in the context of a cost-of-living crisis, strike action has increased significantly, with NHS nurses set to go on strike for the first time in history. Whenever unions are on the rise, they face the same criticisms that they ‘hike costs for businesses’ or ‘distract from (insert issue)’. Without unions, however, we would be living in a world with higher inequality, fewer workers rights and a lower overall standard of living. Don't just take my word for it: over the last 100 years in the US, union membership has a strong negative correlation with income inequality. 

As governments around the world weakened unions towards the end of the 20th century, the gap between the richest and poorest reached levels not seen since the 1920s, in an era of speculation and excess. With the technology and financial services industries producing more billionaires every year, this trend shows no sign of slowing down. While the impact of anti-union legislation is minimal for those in the highest income brackets, middle and lower-income individuals have faced low, and even non-existent wage growth.  

Research by the Economic Policy Institute has highlighted the knock-on effect of union membership: while union workers have higher wage growth than non-union workers, they experience a share of the benefits, as industries with a high union density have higher wages across the labour force. It must not be forgotten that businesses are profit-maximisers, not charitable institutions. Without organised labour, the balance of power is shifted entirely to those less likely to feel the impacts of inequality and weakened workers’ rights.  

This isn’t to say that all unions have been equally effective and productive: the largest unions have often been weighed down by bureaucracy to the point that they begin to resemble corporations themselves. Instead, cooperation has proven itself to yield positive outcomes for both corporations and their employees. In Germany, for example, codetermination, which involves the right of workers to participate in management of the companies they work for, gives workers an opportunity to speak up for themselves while also providing a unique perspective that could lead to more strategic and well-informed decisions in boardrooms, which are otherwise far removed from day-to-day operations.  

If anyone was to question the impact that unions have on workers' rights and wage growth, they would see the vast sums of money that companies including Starbucks and Amazon are spending in order to crush attempts to unionise. They currently enjoy vast, unchecked power, and this is becoming increasingly true as the largest corporations have begun to dominate their respective industries to an extent that was far rarer in the 20th century. 

This factor adds to the urgency of the issue: as lobbyists and the private sector as a whole exercise increasing power over governments, it is important to seek a balance, preventing any one group from controlling wages, benefits, safety and much more. Policymakers must seize this opportunity and capitalise on growing support for organised labour by compensating for the rolling back of worker protections by leading political figures including Margaret Thatcher and Ronald Reagan. Otherwise, sustainable and equitable growth will remain out of reach for the global economy.