Employee Union protects interest of employees in terms of compensation, fringe benefits, working environment, conditions, overall cost to the company and pay inequalities. The findings presented by Julianne Treme suggests that Union does not play a major role in respect of wages though he accepts union’s role in ensuring good working conditions, securing job, and other civil rights of the workers. This paper discusses the research done by Julianne Treme, analyses his findings further and presents a conclusion which contradicts as well supports the research work of Julianne Treme.
“The wage rates, fixed between the union and the employers, are in excess of the competitive rates. From the point of view of the whole economy, monopoly in business or in labor will always result in a misallocation of resources and will usually result in an under-utilization of resource”.
I do not agree with statement. Some studies mentioned that without union it is very difficult to bring wage rate up matching up with inflation rate and employee productivity. From year 1980 till today the increase in productivity is around 75 percent whereas the wages went up by only 23 percent after adjusting inflation also. Hence unionization plays a very important role in maintaining appropriate wages. The employees who are not associated with unions get less pay.
A study conducted by John Schmitt to provide more insight on impact of unionization on wage. The author analyzed the data from year 2003-07 and observed the pattern in increase in wages of employees. John divided the employees in three class; low-wage employees, medium wage employees and high wage workers. Findings of the study revealed that unionization create a great impact on the salary of low wage employees which goes down respectively. The low wage workers received an increase of 20.6 % whereas medium wage employees received 13.7 % and higher wage employees got hike by 6.1 %. The study was also carried out for fifty sate of Columbia and it was found that the same pattern was existing. Unionization influences the salary of low wage employee’s most.
“There is nothing sacred about the almighty market. Workers make low wages not because the market dictates that they be so but because they are not powerful enough to make their employers pay them more. There is no doubt that unions force employers to pay their workers higher wages”.
I agree with the statement. If worker do not put pressure on employer, it is very difficult to get competitive compensation.
Some facts and figures that will make argument more strong are as follow:
America Year 2009, total 13.7 Percent of the employees was part of union. Based on report of SEIU (Service Employees International Union), majority of the union employees were organized by SEIU till 2010. Some data presented in report of Bureau of labor statistics shows that: in year 2010 the average weekly earnings of union employee was $ 917 whereas the average weekly earnings of non-union employee was $ 717. A total increase of $ 200 per week means more than $ 2000per month. Though the data presented may increase or decrease depending upon the type of industry. If we look at public sector companies we will notice that wages of union employees is $ 165 higher then what non-union people are getting. This difference went down when we look at the data of private sector employees. In private sector union employee gets $ 155 higher than what non-union employees get. For example we can take health care industry. In health care industry nurses registered under union get around 16 percent higher salary and diagnostic technicians get around 31 percent higher wage. Other employees who are associated with union get 33 percent higher wage (Economic News Release).
A study conducted by Richard B freeman and James L Medoff focused on analyzing the union impact on the earning of individuals. Finding of the research mentioned that wages of unionized employees are approx 10 to 20 percent higher than those who are not associated with union. Another study conducted by Peter Linneman, Wachter and Carter evaluated the impact of union employees on their wages. Study strengthens the fact that unionization help in increasing the wages. Authors also mentioned that some industries has noticed a sharp increase in wages where the number of union employees were declining. The rise in wages was ranging between 21 percent to around 64 percent.
“Management has been surprised more than once to find that a unilateral decision granting a substantial wage increase failed to prevent union organization of employees”.
I agree with the statement that union does not only provide benefits in terms of increasing wages. The compensation is not limited to only salary but employees also received other benefits like insurance policy, health coverage, leave entitlement, better retirement plan, and the like. Union registered employees get health coverage around 30 percent higher than non-union employees. They also get extra days of paid leave ranging between 20 to 30 percent higher than non-union employees.
Unions play a major role in securing the interests of employees by keeping them updated with the recent developments, latest information and government regulations. A number of research reports suggest that unionized workers succeeded in grabbing twenty percent more percent wages than those who are not unionized. Unionized workers availed almost twenty six percent more leaves than those workers who are not unionized. The study covers a period of last thirty years and observed this trend from the last thirty years.
Works Cited
"Economic News Release." 27 January 2012. Bureau of Labor Statistics. 30 March 2012
Freeman, Richard B. and James L. Medoff. "The impact of the percentage organized on union and nonunion wages." The Review of Economics and Statistics (1981): 561-72.
Peter D. Linneman, Michael L. Wachter and William H. Carter. "Evaluating the evidence on union employment and wages." ILR Review (1990): 34-53.
Schmitt, John. "The Union Wage Advantage for Low-Wage Workers." CEPR Reports and Issue Briefs (2008): 17-26.
