The “union wage premium” — the amount a union worker makes in wages and salary above a similar nonunion worker — is often used to highlight the potential value of joining a union. Unions claim that if workers unionize, their wages will increase, because allegedly the average union worker makes more than the average nonunion worker. If this were universally true, it seems like a compelling argument for enrolling in a union. However, the decline in union membership rates over the last several decades shows that an increasing number of workers have not been persuaded to join existing unions or organize new ones, suggesting that they are not convinced that becoming a union member will automatically boost their pay.

Some still maintain that union members earn significantly more, on average, than nonunion workers: the American Federation of Labor and Congress of Industrial Organizations union says that “union workers’ wages are 27 percent higher than their nonunion counterparts” and the U.S. Secretary of Labor claims that union workers make $950 per week compared to nonunion workers’ $750 per week.[1] But these statistics are based on a relatively simplistic view of the data. As this paper will demonstrate, there are significant challenges to using official government data to estimate the size of the union wage premium.

Even if the available government data on wages were entirely clean and a perfect reflection of reality, its significance for current workers is limited. For instance, the fact that the average unionized worker may make more than the average nonunion worker does not necessarily mean that every current nonunion worker would be better off unionized or even could rightfully expect higher wages from becoming a union member. Whether a worker will be better off as a result of unionization is a much more complex question and needs to take into consideration other factors, such as job satisfaction, job security and other elements that might impact the value of a particular job to an individual worker.

The complexity of this issue suggests that a much more detailed and ground-level research methodology is needed to estimate all of the potential benefits and potential drawbacks of unionization for individual workers. It would require a worker-level analysis of individual workplaces, and this type of research is time-consuming and not many have attempted it. But a recent research project deployed such a methodology and discovered results that may be surprising to many.

Brigham Frandsen, an economist at Brigham Young University, looked at the differences between workers employed at firms that narrowly voted to unionize and workers employed at firms that narrowly voted not to unionize. He then tracked the performance of these firms and the pay of individual employees over time, and found that “unionization significantly and substantially decreases establishment-level payroll, employment, average worker earnings ... and the probability of establishment survival.”[2] Clearly, this more detailed research paints a very different picture of the effects of unionization on workers and their earnings.

This paper discusses the difficulties of estimating the union wage premium, but also provides an analysis of the most current government data available and analzyes how this finding has changed over time. As mentioned, this analysis is of limited value for current workers considering unionization. The paper also discusses other research methods used to estimate the impact of unionization in a broader sense and of more consequence to current workers.