Effects of Trade Unions on the Economy

Sample Essay on Effects of Trade Unions on the Economy

Trade unions have an immense beneficial effect on the wages and employment of any industry. Unionized members are especially placed at a great disadvantage though the issue on whether the business benefits is one that is debated upon often. According to reports from the Economic Policy Institute, union members receive a twenty percent increase in wages whenever their workplace becomes unionized.

In the United States, unionized workers receive 28% compensation which includes fringe benefits. Workers who are part of a union receive wages that are 15% higher than those not in a union. Non-union workers also feel the impact of trade unions as employers increase wages in order to prevent workplaces from becoming unionized.

Trade unions were popular, powerful and widespread in the 1980s. According to research, trade unions raised pay and also constrained the growth of employment and legislation restrictions that reduced the power unions had was introduced in the 1980s and tightened in the 90s.

Closure of workplaces

Between 1990 and 1998, workplaces that had unions were not likely to close as compared to those without unions. The manufacturing industry was different however as unionized companies were 15% more likely to close compare to those that were not unionized. Generally though, it was unlikely for service industries that were unionized to close down.

Employment growth

At least two thirds of work places in the private sector operated with twenty five or more employees during 1990 to 1998. Employment though grew at moderate rates in this industry and employment in the private unionized sector declined by 1.8% per annum while it increased in the nonunionized workplace at 1.4% per annum. In the service sector, employment growth rate was witnessed where trade unions negotiated with employers over the employment and wages.

Pay levels

During 1998, trade unions in the private sector continued to increase and the effect was seen in two areas which included multi-union representation and pay setting arrangement which covered 70% of employees in workplaces. The impact this had was on employees who had to increase pay for workers. At high pay levels, trade unions had less direct impact which was also not widespread. Also, trade unions are associated with increased provision of fringe benefits in the same instances as where the pay was higher.

Together with wages, unionized workers also enjoy increased benefits and this is despite the fact that the bargaining power of trade unions was weakened from 1970s. Today’s, workers who are part of trade unions enjoy benefits which include paid leave, retirement plans as well as health insurance.

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