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The Impact of Unions on Wage Determination

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Although there has been a recent decline in union memberships, unions are nonetheless still prevalent in public and private organizations. Discuss the four specific areas in which unions still have an impact on wage determination.

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Solution Summary

This solution provides a description of four different areas in which unions continue to have an impact on wage and benefit determination, namely: raising unionized wages, reducing wage inequality, setting a pay standard for non-unionized workers, and improving employee benefits.

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The impact of unions on wage determination:

1. Raise unionized wages

Unions work through negotiation in a collective bargaining system to raise wages for their union members. Since closed shops became illegal in the 1980s, workers who do not belong to unions also gain from this collective bargaining within their company. Union wages are suggested to be as much as 15% higher, which is considered a phenomenon known as "union wage premium." This is in comparison to nonunion workers doing comparable work.

2. Reduce inequality in wages

Union wages in companies are based on experience, ...

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