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The Effect Unions Have on Wages & Benefits

Unions have a positive effect on many aspects of job quality, including employee wages and benefits. On the whole, union members tend to enjoy higher wages and have greater access to medical and other fringe benefits than their non-union counterparts. Unions also appear to play a role in reducing the wage gap between men and women.

 

On Average, Wages Are Higher For Unionized Employees (both sexes - 2000)

Source: CPRN - EKOS Changing Employment Relationships Survey (2000).
 

As the chart illustrates, unionized workers tend to earn more than their non-unionized counterparts within the same occupational group. Overall, union members earn an average of $3.00 more per hour than non-unionized workers. There are, however, differences in the size of this so-called union premium that cut across gender and occupational lines. Indeed, wage differences reflect numerous factors in addition to union status. These factors include the distribution of union membership by age, gender, job tenure, occupation, industry etc. In other words, the observed differences in wages and benefits between union and non-union workers cannot be attributed entirely to union status alone.

 

Union Wages By Gender and Occupation

On Average, Wages Are Higher For Unionized Employees (men)  

Source: CPRN - EKOS Changing Employment Relationships Survey (2000).
 

On Average, Wages Are Higher For Unionized Employees (women)

Source: CPRN - EKOS Changing Employment Relationships Survey (2000).
 

While the overall wage difference between unionized and non-unionized male workers is about $1.75 per hour, the difference for women is much greater - in the range of $4.25 an hour. Insofar as wages are concerned, female workers appear to benefit significantly from union representation. While the overall wages of women (unionized or not) remain below the male average, the wage disparity between unionized men and unionized women is significantly lower than the disparity that exists between non-unionized men and women. Whereas non-unionized men earn on average $5 more per hour than non-unionized women, this spread is reduced to about $2.50 an hour between unionized men and unionized women. Another way of looking at this is to show how much a female employee earns for every dollar a male employee makes. For non-unionized workers, women on average earn only 75 cents for every dollar a man makes; among unionized workers, women on average earn 89 cents for every dollar a male earns.

While this suggests that unions play a powerful role in narrowing the gender-based wage gap, it is important to note that these wage differentials also reflect large differences between men and women on a range of other dimensions that also affect earnings. For instance, female employment continues to be concentrated in what are thought of as 'traditional' female occupations. For example, in 2000, 31 percent of the female labour force was in sales and service occupations and 27 per cent was in business, finance and administrative occupations. Men, on the other hand, continue to predominate in blue-collar, management and professional occupations where earnings are higher. Also, women tend more often than men to work part-time, with many of those jobs being associated with lower average hourly earnings. Finally, as our indicators on Long Hours of Work and Unpaid Overtime noted, men continue to be more likely to work paid overtime hours which has the effect of boosting their take-home pay.

Unions seem to have their biggest impact in boosting wages for lower-paying jobs. In other words, as hourly pay increases, the positive effect organized labour has on wages seems to diminish. For instance, while the average unionized manager earns 67 cents more per hour than a non-unionized manager, the average unionized sales or service clerk earns $4.50 per hour more (about 40 percent more) than a non-unionized clerk. As noted above, the percentage of workers covered by a union is very small for occupations like professionals and managers.

Unions also appear to affect the wages and the number of hours part-time employees work. Unionized part-timers seem on average to earn significantly more ($16.81 versus $10.20 per hour - data not shown) and tend to work more hours per week. Whereas the average non-unionized part-timer in 2000 worked 16.6 hours per week, unionized part-timers worked an average of 19.5 hours. This difference in hours, combined with higher hourly pay resulted in unionized part-timers earning per week on average significantly more than non-union part-time workers ($325 versus $170 per week).

 

Union and Non-Wage Benefits

Unionized Employees More Likely to Receive Benefits

Source: CPRN - EKOS Changing Employment Relationships Survey (2000).
 

Unions also have an effect on employee access to non-wage benefits. As the chart indicates, union members are more likely to have access to medical and dental coverage, maternity and sick leave, and have a pension plan. Overall, more than three quarters of union workers have access to employer-sponsored fringe benefits.

 

By Firm Size

Unions Play Less of a Direct Role in Large Firms

Source: CPRN - EKOS Changing Employment Relationships Survey (2000).

 

Access to employer-sponsored benefits is related to firm size. Among firms with 100 employees or more, there is little difference between those that are unionized compared to those that are not in terms of access to medical and dental benefits, paid sick leave or maternity leave, though the difference is larger in the case of pension plans.

There are many reasons why the union effect on the availability of non-wage benefits is greater for smaller firms than for larger ones. First, larger firms in general often can better afford to provide benefits to their employees. This is partly due to an 'economy of scale' effect -- as the number of employees to be covered increases, the cost per head will usually decrease. Second, for a variety of reasons, non-unionized employers may choose to match the benefits unionized employers provide. Competitive compensation packages may be used to facilitate employee recruitment, especially when labour markets are tight. Unions often point out that such employer practices are used as a means to dissuade non-union workers from organizing -- employee perception of fair compensation can often act as an effective bulwark against unionization efforts. In this respect, unions may exert an influence over certain aspects of job quality that go beyond their members to indirectly raise the wages and benefits of many non-union employees.

 

Unions and Aspects of Job Satisfaction

Unionization Affects Perception of Job Quality 

Source: CPRN - EKOS Changing Employment Relationships Survey (2000).
 

Unionization appears to have positive effects on how employees feel about their jobs. Unionized workers are more likely to agree or strongly agree that both their pay and benefits are good. There is little difference, however, in the extent to which unionized and non-unionized feel their jobs are secure.

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