Question

What are the four main methods by which a union can raise wages?

Short answer

The four main methods by which a union can raise wages are: 1) Collective Bargaining, where the union negotiates on behalf of workers to establish employment conditions, including wages; 2) Strikes, where union members stop working until their wage demands are met; 3) Political Action, where unions engage in activities to influence public policy in favor of higher wages; and 4) Establishing Industry Standards, by raising the bar for wages and working conditions, thus pressuring non-union employers to match these standards.

Step-by-step solution

1. Collective Bargaining

Collective bargaining is the process where the union, representing a group of workers, negotiates directly with the employer to establish employment conditions, including wages. By negotiating as a collective, the union can leverage the power of its membership to demand higher wages than individual workers might be able to accomplish.

2. Strikes

A strike is a work stoppage where union members collectively refuse to work until their demands are met, which may include higher wages. Strikes can be costly to employers due to the loss of productivity and potential harm to the company's reputation. The threat of a strike or an actual strike itself can pressure employers to raise wages to meet the demands of the workers and resolve the strike.

3. Political Action

Labor unions may engage in political action, such as lobbying, endorsing candidates, or providing financial support to political campaigns, to influence public policy in favor of higher wages and better working conditions. Unions can push for legislative changes to increase the minimum wage, overtime pay, and other wage-related issues, which can lead to higher wages for workers.

4. Establishing Industry Standards

Unions can work to establish industry standards for wages and working conditions, which can put pressure on non-union employers to match these standards to compete for skilled workers. By raising the bar for the industry as a whole, unions can indirectly contribute to raising wages even for non-union workers. This can be achieved, for example, by making agreements with multiple employers, publishing information on agreed wage rates, or partnering with professional associations to promote fair wage practices.

Key concepts

Collective Bargaining

Collective bargaining is one of the primary ways in which unions can influence wages. This process involves negotiating directly with employers on behalf of a large group of workers. By acting as a united front, unions can secure better wages and working conditions than most individuals could achieve alone. The idea behind collective bargaining is strength in numbers. When workers band together, they create a formidable negotiating power.
In collective bargaining, the union and the employer discuss and create agreements that cover various aspects of employment. These might include wage levels, work hours, benefits, and more.

• Wage Agreements: Specific wages are set for different roles within the company.
• Benefits: Negotiations might also cover health insurance, retirement plans, and other benefits.
• Work Conditions: This can include safety practices, leave policies, and other work-related issues.

The results of these negotiations are typically formalized in a contract, which is legally binding. These contracts can last for several years, allowing employees to work with guaranteed benefits and wages during that time.

Strikes

Strikes are another method used by unions to raise wages and improve working conditions. A strike occurs when workers collectively stop working, often walking out of their job sites, to demand better terms. This drastic action can grab the employer's attention and highlight the importance of the workforce.
Strikes put pressure on employers in several ways:

• Loss of Productivity: Without the workers, business operations can severely be disrupted.
• Reputational Damage: A strike might damage the company's reputation among customers and investors.
• Financial Pressure: The lack of productivity can result in financial losses.

Because of these pressures, employers might be more willing to meet the demands of the union, including raising wages. However, strikes are usually considered a last resort due to the risks they pose to both workers and employers, such as lost income and potential legal implications.

Political Action

Political action is another strategy used by labor unions to elevate wages and working conditions beyond the negotiating table. Unions engage in political action by participating in the electoral process, lobbying government officials, and advocating for legislation that supports labor rights. Through these methods, they can influence public policy and secure better wages for workers.
Political action can take various forms:

• Lobbying: Unions may attempt to influence legislators to create laws that benefit employees, like minimum wage increases.
• Endorsing Candidates: Endorsing and supporting political candidates who are sympathetic to labor causes can lead to favorable policies.
• Campaign Contributions: Providing financial support to candidates or propositions that align with workers' interests.

When successful, these political efforts can result in broad regulatory changes that lift the wages and improve the conditions of workers on a wider scale, benefitting even non-union members.

Industry Standards

Establishing industry standards is a powerful indirect approach unions use to elevate wages and working conditions across entire industries. This method involves setting wage and working conditions benchmarks that become the norm rather than the exception, exerting pressure on all employers to adhere to these standards to stay competitive.
Industry standards can be achieved in different ways:

• Multi-Employer Agreements: Unions negotiate agreements with multiple employers within the same industry to standardize wages and conditions.
• Publishing Wage Rates: Making agreed-upon wages publicly known to encourage broader adoption across the industry.
• Partnerships: Collaborating with professional associations to promote fair wage practices and establish benchmarks.

By raising the bar for the entire industry, unions not only improve conditions for their members but can also lead to elevated standards even for non-union workers. This approach emphasizes creating a fair playing field, forcing employers to offer competitive wages to attract skilled workers.