Unions: Good for Everyone, Including Employers
By 
As a labor economist, I know that the public is onto something — and that the rise in U.S. labor activism and union formation is not an automatic threat to business interests and economic stability. Evidence shows that unionized workplaces are more productive and have a more stable workforce. Evidence also suggests labor unions can help correct market failures, reverse decades of income inequality, and support economic growth -– all forces that make the economy work better in ways that ultimately help business’s bottom line.
With renewed activism among workers and support for unions in both the public and private sectors, businesses have an opportunity to align their interests with that of their employees by taking a neutral stance on worker efforts to unionize. Doing so would not only mutually benefit employers and workers; it would also yield far-reaching gains for the broader economy.
But if unions are successful in representing worker interests, how does that help businesses?
One primary way that unions improve workplaces is by making them more productive. This is in part supported by unions giving employees ways to express their opinions about wages and benefits, and also to notify managers about inefficiencies within company policies and the production process without the threat of retaliation.
In addition to supporting productivity by allowing workers to have a voice in workplace decisions, unions may also improve business outcomes by helping firms hold on to tenured workers, who tend to be more productive. For example, research shows that unionized workers are less likely to say they plan to quit their jobs. When a worker is less likely to quit, it also increases the incentives for employers to invest in human capital and training.
n today’s competitive labor market, employers need to be able to promote job quality to maintain their workforce. Since unions must collectively vote on contracts that structure employee benefits, they are more likely to promote the interests of the average worker rather than the marginal worker. This does not necessarily mean that employers spend more, but that they spend on different priorities. That, in turn, may better reflect the average preferences of workers.
And given mounting concern over lack of competition in the economy, there has been increasing evidence how this leads to suboptimal wage and employment levels across the labor market. This phenomenon, known as “monopsony,” results from a variety of factors resulting from changing economic trends as well as inherent features of the labor market, including increasing corporate concentration, constraints that workers face moving around for jobs, and idiosyncratic preferences workers have for different job attributes. While competition policy such as antitrust enforcement offers partial solutions, evidence also suggests that unions are critical to ensuring competitive market outcomes.
It is once again worth noting that the employer problem with unions is really not about money. It’s about power. It often makes financial sense to come to a deal with your workers. Moreover, unions end up being part of the disciplinary process. But the power, that’s what they can’t abide. Having to sit down across from workers and not just tell them what to do? Receiving pushback from peons? It drives these people nuts, as Howard Schultz is so readily proving these days.