In general, based on government survey data, the union wage premium has experienced a significant decline over the last several decades, decreasing by about 33 percent since 1985. This decline is prevalent throughout the economy, although its magnitude varies by industry, geographical location and for different types of workers. In some industries, union wage premiums have declined all the way to zero, meaning that nonunion workers, on average, make as much as unionized workers in these industries.

In contrast, in the education and health care sector, the union wage premium has averaged 16.5 percent between 2000 and 2015 and is statistically significant. It has not declined, on average, compared to its 1985 or 1990 value and in fact is up slightly. A likely explanation for this pattern is that the education and health care industries are protected by substantial barriers to entry. Public schools enjoy near monopoly status in the market for K-12 education, higher education is heavily subsidized, and hospitals are protected from competition via “certificate of need” laws and other anticompetitive regulations.

The other industries analyzed in this report have faced substantial competition in the global marketplace, as is the case in manufacturing, or from nonunion competition, as in the case in construction and transportation. In the construction and transportation industries, the average wage premium is still significant (37 and 27.3 percent in 2014, respectively) — larger than the other five industries analyzed in this report. However, unlike the education and health sector, premiums in these industries have declined since 1985, falling by 21 percent in construction and 28 percent in transportation. The competition in these industries likely prevents unionized companies from paying wages that are substantially greater than what the market can bear. Unions need monopoly power in order to pay above market wages as to not be put at a competitive disadvantage against lower cost competitors. It is possible that if the barriers to entry in education and health care are overcome, as they were in the other industries, the union premium there would substantially fall as well.

It’s important to remember that calculating the union wage premium is not an easy task, and as demonstrated, is substantially complicated. The various approaches researchers have taken to this question have produced a variety of results, all with their strengths and weaknesses. According to imperfect government survey data, unionized workers do earn more on average compared to nonunionized workers, but the difference is much smaller than the simplistic average wage figures that some unions publicize. These figures do not take into account any of the other potential factors that may contribute to some workers earning different wages than others, on average.

Finally, it’s also important to remember that correlation is not causation. Just because current unionized employees earn more on average than nonunionized workers does not mean that workers will automatically give themselves a wage boost by unionizing. Further, nonunion wages are rising faster than union wages, on average, and newly unionized firms tend to do worse, suggesting that it might not be in the best interest of workers, from a wage perspective, to organize new unions.

A more detailed and robust analysis of the impact of unionization on wages and more finds that newly unionized businesses and employees actually perform worse than businesses that almost voted to unionize but did not. Firms that unionized reduced their payroll, paid lower wages on average, hired fewer workers and were more likely to go out of business compared to their nonunionized peers. These findings may be more relevant for workers considering whether or not to unionize their workplace or join a union.