Unions have a substantial impact on the compensation and work lives of both unionized and non-unionized workers. This report presents current data on unions' effect on wages, fringe benefits, total compensation, pay inequality, and workplace protections. Some of the conclusions are: • Unions raise wages of unionized workers by roughly 20% and raise compensation, including both wages and benefits, by about 28%. • Unions reduce wage inequality because they raise wages more for low- and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree. • Strong unions set a pay standard that nonunion employers follow. For example, a high school graduate whose workplace is not unionized but whose industry is 25% unionized is paid 5% more than similar workers in less unionized industries. • The impact of unions on total nonunion wages is almost as large as the impact on total union wages. • The most sweeping advantage for unionized workers is in fringe benefits. Unionized workers are more likely than their nonunionized counterparts to receive paid leave, are approximately 18% to 28% more likely to have employer-provided health insurance, and are 23% to 54% more likely to be in employer-provided pension plans. • Unionized workers receive more generous health benefits than nonunionized workers. They also pay 18% lower health care deductibles and a smaller share of the costs for family coverage. In retirement, unionized workers are 24% more likely to be covered by health insurance paid for by their employer. • Unionized workers receive better pension plans. Not only are they more likely to have a guaranteed benefit in retirement, their employers contribute 28% more toward pensions. • Unionized workers receive 26% more vacation time and 14% more total paid leave (vacations and holidays). Unions play a pivotal role both in securing legislated labor protections and rights such as safety and health, overtime, and family/medical leave and in enforcing those rights on the job. Because unionized workers are more informed, they are more likely to benefit from social insurance programs such as unemployment insurance and workers compensation. Unions are thus an intermediary institution that provides a necessary complement to legislated benefits and protections. The union wage premium It should come as no surprise that unions raise wages, since this has always been one of the main goals of unions and a major reason that workers seek collective bargaining. How much unions raise wages, for whom, and the consequences of unionization for workers, firms, and the economy have been studied by economists and other researchers for over a century (for example, the work of Alfred Marshall). This section presents evidence from the 1990s that unions raise the wages of unionized workers by roughly 20% and raise total compensation by about 28%. The research literature generally finds that unionized workers' earnings exceed those of comparable nonunion workers by about 15%, a phenomenon known as the "union wage premium." H. Gregg Lewis found the union wage premium to be 10% to 20% in his two well-known assessments, the first in the early 1960s (Lewis 1963) and the second more than 20 years later (Lewis 1986). Freeman and Medoff (1984) in their classic analysis, What Do Unions Do?, arrived at a similar conclusion. Historically, unions have raised the wages to a greater degree for "low-skilled" than for "high-skilled" workers. Consequently, unions lessen wage inequality. Hirsch and Schumacher (1998) consider the conclusion that unions boost wages more for low- and middle-wage workers, a "universal finding" of the extensive literature on unions, wages, and worker skills. As they state: The standard explanation for this result is that unions standardize wages by decreasing differentials across and within job positions (Freeman 1980) so that low-skilled workers receive a larger premium relative to their alternative nonunion wage. The larger union wage premium for those with low wages, in lower-paid occupations and with less education is shown in Table 2. For instance, the union wage premium for blue-collar workers in 1997, 23.3%, was far larger than the 2.2% union wage premium for white-collar workers. Likewise, the 1997 union wage premium for high school graduates, 20.8%, was much higher than the 5.1% premium for college graduates. Gundersen (2003) estimated the union wage premium for those with a high school degree or less at 35.5%, significantly greater than the 24.5% premium for all workers. Unemployment insurance Unemployment insurance (UI) is a joint federal and state program that was created in the Social Security Act of 1935 to provide some income replacement to workers who lose their job through no fault of their own. Budd and McCall (1997) offer a cost-benefit decision-making analysis to explain the costs facing the unemployed worker in filing a UI claim. In a system with complex eligibility rules and benefit calculations and a lack of uniformity among states regarding these rules, the difficulty, or "cost," of obtaining information is formidable. In fact, the main reason that many unemployed workers never file a claim is because they thought they were not eligible (Wandner and Stettner 2000). The threat of an employer retaliating by not rehiring a laid-off worker might be another cost weighing on the decision to file a claim. Unions can help offset the costs of workers who are laid off. Primarily, unions provide information to workers about benefit expectations, rules, and procedures, and dispel stigmas that might be attached to receiving a social benefit. Unions also can negotiate in their contracts layoff recall procedures based on seniority and protection against firing for other than a just cause, as well as help workers build files in the case of a disputed claim (Budd and McHall 1997). Additionally, the union-wage differential reduces the likelihood that unemployed workers will be ineligible for benefits because their pay is too low (Wenger 1999). Budd and McHall (1997) have estimated that union representation increases the likelihood of an unemployed worker in a blue-collar occupation receiving UI benefits by approximately 23%. At the peak of UI coverage in 1975, one in every two unemployed workers received UI benefits. By the mid-1980s, the ratio of claims to unemployed workers (the recipiency rate) had fallen to almost 30%. Blank and Card (1991) found that the decline in unionization explained one-third of the decline in UI recipiency over this period. These findings underscore the difference unions make in ensuring that the unemployment insurance system works. Considering that UI acts as a stabilizer for the economy during times of recession, the role of unions in this program is pivotal (Wandner and Stettner 2000). Worker's compensation Laws governing workers' compensation are primarily made at the state level (with the exception of federal longshoremen), but they generally form an insurance system in cases where a worker is injured or becomes ill at the workplace. The employer is liable in the system, regardless of fault, and in return they are protected from lawsuits and further liability. Once again, lack of information about eligibility and the necessary procedures for filing a claim forms the greatest obstacle to receipt of benefits. Fear of employer-imposed penalties and employer disinformation are important other factors weighed by workers deciding whether to act. As with unemployment insurance, unions provide information to workers through their representatives, and they often negotiate procedures to handle indemnity claims. Through grievance procedures and negotiated contracts, unions protect workers from employer retaliation and, furthermore, act to dispel the notion among workers that employer retaliation is commonplace (Hirsch et al. 1997). Hirsch et al. (1997) found that, after controlling for a number of demographic and occupational factors, union members are 60% more likely to file an indemnity claim than nonunion workers. Employers and the private insurance companies that sell worker's compensation insurance policies have mutual interests in denying claims to limit costs (Biddle 2001). According to Biddle, higher denial rates lead to lower claim rates. The robust finding of Hirsch et al. demonstrates that unions provide a needed counterbalance to this interest. Occupational Safety and Health Act (OSHA) The Occupation Safety and Health Act of 1970 (OSHA) provided the foundation for the Occupation Safety and Health Administration, which enforces safety and health standards at places of work. The administration's purpose is to limit work-related injury, illness, and death due to known unsafe working conditions. They currently have only 2,100 inspectors to monitor over seven million establishments. Enforcement of OSHA regulations presents an obvious challenge; OSHA implementation requires worker action to initiate complaints. In two studies of OSHA and unions in the manufacturing and construction industries (1991a and 1991b), Weil found unions greatly improve OSHA enforcement. In the manufacturing industry, for example, the probability that OSHA inspections would be initiated by worker complaints was as much as 45% higher in unionized workplaces than in nonunion ones. Unionized establishments were also as much as 15% more likely to be the focus of programmed or targeted inspections in the manufacturing industry. In addition, Weil found that in unionized settings workers were much more likely to exercise their "walkaround" rights (accompanying an OSHA inspector to point out potential violations), inspections lasted longer, and penalties for noncompliance were greater. In the construction industry, Weil estimated that unions raise the probability of OSHA inspections by 10%. In addition to the findings above, Weil notes that the union differential could be even larger if OSHA's resources were not so limited. He claims, "Implementation of OSHA seems highly dependent upon the presence of a union at the workplace" (Weil 1991a). Following the trend of declining unionization, OSHA claims have dropped from their peak in 1985 of over 71,500 and are currently at close to 37,500 (Siskind 2002; OSHA 2003). Family Medical Leave Act (FMLA) Passed in 1993, the FMLA grants workers 12 weeks of unpaid leave in a 12-month period to care for newborn or newly adopted children, or in case of a personal or family member's health condition. The leave taker is guaranteed the same or equivalent position upon return. One of the most striking characteristics of the act is that less than an estimated 60% of employees covered by the FMLA are not even aware that it exists. There is also widespread misunderstanding on the part of the employer about whom the act covers and when it applies. There is evidence that this leads employers to reject legally entitled leaves (Budd and Brey 2000). According to Budd and Brey (2000), union members were about 10% more likely to have heard of the FMLA and understand whether or not they were eligible. Union members were found to have significantly less anxiety about losing their job or suffering other employer-imposed penalties for taking leave. And although the authors did not find union membership significantly increases the likelihood that a worker would take leave, they did find that union members were far more likely to receive full pay for leave taken. The biggest obstacle to workers exercising their rights under the FMLA—besides the fact that the leave is unpaid rather than paid—is information, since only a very slim majority has even heard of the act. With the exception of a $100 fine for failing to post a notice, employers have little incentive to inform employees of their rights. Unions are one of the few institutions to create awareness about FMLA's existence and regulations. Fair Labor Standards Act (FLSA) This act, passed in 1938, had two main features: first, it established a federal minimum wage. Second, it established the 40-hour work week for hourly wage earners, with an overtime provision of time and a half the hourly wage for work done beyond 40 hours. Trejo (1991) examined the union effect on compliance of the latter part of the FLSA, finding that employer compliance with the overtime pay regulation rose sharply with the presence of a union. He hypothesizes that this result reflects the policing function of unions because unions often report violations to enforcement agencies. Summary: union impact on workplace protections The research evidence clearly shows that the labor protections enjoyed by the entire U.S. workforce can be attributed in large part to unions. The workplace laws and regulations, which unions helped to pass, constitute the majority of the labor and industrial relations policies of the United States. However, these laws in and of themselves are insufficient to change employer behavior and/or to regulate labor practices and policies. Research has shown convincingly that unions have played a significant role in enforcing these laws and ensuring that workers are protected and have access to benefits to which they are legally entitled. Unions make a substantial and measurable difference in the implementation of labor laws. Legislated labor protections are sometimes considered alternatives to collective bargaining in the workplace, but the fact of the matter is that a top-down strategy of legislating protections may not be influential unless there is also an effective voice and intermediary for workers at the workplace—unions. In all of the research surveyed, no institutional factor appears as capable as unions of acting in workers' interests (Weil 2003). Labor legislation and unionization are best thought of as complements, not substitutes. Conclusion This paper has presented evidence on some of the advantages that unionized workers enjoy as the result of union organization and collective bargaining: higher wages; more and better benefits; more effective utilization of social insurance programs; and more effective enforcement of legislated labor protections such as safety, health, and overtime regulations. Unions also set pay standards and practices that raise the wages of nonunionized workers in occupations and industries where there is a strong union presence. Collective bargaining fuels innovations in wages, benefits, and work practices that affect both unionized and nonunionized workers. However, this review does not paint a full picture of the role of unions in workers lives, as unions enable due process in the workplace and facilitate a strong worker voice in the broader community and in politics. Many observers have stated, correctly, that a strong labor movement is essential to a thriving democracy. Nor does this review address how unionism and collective bargaining affect individual firms and the economy more generally. Analyses of the union effect on firms and the economy have generally found unions to be a positive force, improving the performance of firms and contributing to economic growth (Freeman and Medoff 1984; Mishel and Voos 1992; Belman 1992; Belman and Block 2002; Stiglitz 2000; Freeman and Kleiner 1999; Hristus and Laroche 2003; with a dissenting view in Hirsch 1997). There is nothing in the extensive economic analysis of unions to suggest that there are economic costs that offset the positive union impact on the wages, benefits, and labor protections of unionized and nonunionized workers. Unions not only improve workers' benefits, they also contribute to due process and provide a democratic voice for workers at the workplace and in the larger society.