Regional Differences in the Union Wage Premium

Just as the average union wage premium varies significantly by industry and gender, it also varies by geographical region. The U.S. Census Bureau categorizes the U.S. into four different regions: Northeast, Midwest, South and West. Graphic 5 shows which states make up each region.

Graphic 5: Census Bureau Regions

Graphic 5: Census Bureau Regions - click to enlarge

Source: U.S. Census Bureau

Graphic 6 shows the union wage premium by geographical region. In 2014, the union wage premium was the highest in the West at 17.1 percent, followed by the Northeast, whose premium was 16.5 percent. The Midwest and South followed at 11.4 percent and 12.2 percent, respectively. As in the case generally, the union wage premium in three of the four region has decreased substantially since 1985: falling 31 percent in the West, 50 percent in the South and 51 percent in the Midwest. The union wage premium in the Northeast is actually up slightly, from 14.9 percent in 1985 to 16.5 percent in 2014. There is not large variation year-to-year in any region in recent years, and the 15-year averages land at 13.5 percent in the Northeast, 15.8 percent in the West, 10.6 percent in the South and 11.2 percent in the Midwest.

Interestingly, the Northeast region’s increase in the union wage premium is matched by the largest decrease in the unionization rate between 1985 and 2014 compared to the other regions. In 1985, 12.1 percent of workers in the Northeast were unionized, but only 4.9 percent were in 2014. Unionization rates declined in the Midwest and West as well, falling from 10.7 percent to 7.7 percent and 9.6 percent to 5.1 percent, respectively. In the South, on the other hand, the unionization rate increased from 5.8 percent in 1985 to 6.9 percent in 2014.

Graphic 6: Union Wage Premium by Region, 1985-2014

Union Wage Premium by Region, 1985-2014 - click to enlarge

U.S. Census Bureau Current Population Survey. All figures are statistically significant at the 0.05 level.