Union workers paid 11.2% more than non-unionized workers: EPI

Heidi Shierholz, Economic Policy Institute senior economist and former chief economist at the Department of Labor, joins Yahoo Finance’s Kristin Myers to break down a new EPI report on the outlook for unions amid COVID-19.

Video Transcript

KRISTIN MYERS: Union workers earn on average 11.2% more than their non-unionized counterparts. That's all according to a study from the Economic Policy Institute. Now, the report highlights that given coronavirus, worker protections are needed now more than ever. So to discuss, we are joined by one of the study's authors-- Heidi Shierholz, Economic Policy Institute Senior Economist and Director of Policy. Also want to mention that Heidi is the former chief economist at the US Department of Labor under the Obama administration.

So, Heidi, you know we see here that the reasons are good for workers in terms of pay. As I mentioned, on average, they earn 11.2% more than their non-unionized counterparts. But I also want to highlight the differences in race here. Black workers that are represented by a union are paid 13.7% more than their non-unionized peers. Hispanic workers that are unionized are paid 20.1% more. So that's obviously clear indicators of how unions are great for workers when it comes to pay. I'm wondering if you can also highlight other benefits that can come from participating in unions, just outside from that paycheck.

HEIDI SHIERHOLZ: Yeah, I think that's a really important question. Because people think, you're in a union, you get higher pay. But actually, one of the most important things about being in a union is not just higher pay, but also better benefits. Workers who are in unions get better health insurance coverage from their employers than similar workers who aren't in unions-- same with retirement benefits, same with things like paid sick days, vacation days. The whole package that people get when they're in a union is just better than what similar workers get who aren't in unions.

And then I think another key thing that is important to talk about is that unions don't actually just help workers who are in unions. They actually help all workers. When there is a significant share of unions in a sector-- a significant share of workers who are in unions in a sector or in a place, you actually see really big spillover effects onto non-union workers of the good aspects of unionization.

So if you say, I'm a non-union employer and I know that my workers that I want or need could potentially go around the block and get a good job at a union shop, then I have to pay my workers better, give them better benefits, give them more voice on the job. So it really does-- unions obviously help workers who are in unions, but they also really raise standards across the board.

KRISTIN MYERS: Now, as we've seen, the coronavirus pandemic has really slammed just workers of all stripes and all sectors. I'm wondering if you could thread the needle for us a little bit more fully on how the pandemic is highlighting, as you guys are saying in your study, the need for collective bargaining more than ever. I'm wondering if you could talk us through that a little bit.

HEIDI SHIERHOLZ: Yeah, that's been a real thing in this recession-- that we've seen the federal government has not stepped in and put in place, for example, emergency health and safety standards to protect workers. occupational safety and health administration under the Trump administration has not moved to put in emergency standards. So you really see workers just floundering out there-- essential workers having no choice but to go to work when they don't have the appropriate protections, when measures aren't being taken to protect their safety and health.

But the exception there has been unionized workers, who have really been able to get enhanced safety measures, paid sick days, premium pay, other kinds of things that make it-- that are the kinds of ways we would want-- the kinds of provisions we would want workers to have at a time like this. Unions have really been essential in making that happen. It's really underscored just how important unions are, not just at a time like this, however, but more broadly.

KRISTIN MYERS: I have so many questions for you, Heidi. I know I'm running out of time, so I want to ask you about a criticism that a lot of unions-- rather that unions-- collective bargaining in general get-- essentially, that unions decrease the number of jobs in the economy. That's from a report from the Heritage Foundation.

They also said that a lot of the job losses in manufacturing, for example, happened among union workers primarily. So I want to ask you about that criticism and if, in this time of economic stress, if unions could actually perhaps slow the economic recovery that we're seeing, particularly in unemployment.

HEIDI SHIERHOLZ: What you see with the unions is that they actually enhance productivity. They're really good for the economy. One way you can think about that is it's really important in a high functioning business to have a lot of communication all around the business. And what unions do is they're a way to aggregate worker preferences and worker knowledge to communicate to management.

So when that relationship is effectively working, it really does enhance productivity at companies. So it's really important-- this is a really important question, because I think there is this myth out there that unions are bad for the economy, and that couldn't be further from the truth. And another key thing is one thing we know is that inequality isn't good for the economy.

When you have all the gains of growth in the economy going to a small sliver of people at the top, you have people who are not spending as much money as if that money had gone to, say, middle class workers, or workers at the low end of the income distribution who get that money out the door and stimulate the economy.

Unions help reverse rising inequality. They help make sure that the gains of the economy don't just go to the already affluent, they're actually spread much more fairly. So in that way, unions are good for the economy too. So it's a really important-- I think we have had this kind of neo-liberal narrative out there that unions are-- they hamstring our economy and the more recent evidence-- and actually, there's a changing understanding not just in the economics field, but more broadly, that unions and other kinds of labor market institutions like that are really, really important to economy that works for everyone.