Some Interesting Data Points About the "Union Difference" Deserve A Closer Look
When government workers are extracted, the "union difference" has narrowed considerably.
The Bureau of Labor Statistics’ (BLS) annual release of union membership data last week has garnered a lot of press about overall union membership in the U.S.
The topline of the BLS summary is that union membership grew in the private sector, but declined in the public (government) sector, bringing overall union membership in 2023 down to 10 percent from 10.1 percent in 2022.
However, one area that unions often highlight from the annual data, the “union difference”—which is the difference between union vs. non-union weekly earnings—is getting a bit more scrutiny than it has in the past.
Despite the fact that the BLS warns, when comparing union vs. non-union earnings, that “earnings differences reflect a variety of influences, including variations in the distributions of union members and nonunion employees by occupation, industry, age, firm size, or geographic region,” this is often overlooked.
When unions and their allies in mainstream media promote the “union difference,” what they typically rely on is the BLS figure that includes both government workers and private-sector workers.
The narrowing union difference
Although the “union difference” between union vs. non-union workers is, overall $1263 vs $1090, as the SEIU promotes in the above graphic, once one removes government workers from the equation and focuses on the private-sector only, the gap narrows considerably.
Among private-sector workers, the weekly earnings gap narrows to $1168 for unionized workers vs. $1077 for non-union workers—an 8.45% difference.
However, as union dues may range from 1.5-4.0% of gross wages (depending on the union and union local), the union difference is even less.
In addressing the narrowing gap, Rachel Greszler, a senior research fellow in workforce and public finance in the Thomas A. Roe Institute, points out that the “gap between union and nonunion wages fell by two-thirds between 2007 and 2023, from 24.9% to 8.4%.”
“Selection bias,” Grezler adds, “such a union’s seniority-based pay scales and ‘last-hired, first-fired’ layoff rules, can also elevate union wages above nonunion wages.”
Until recently, the wage differential between union and nonunion workers in the U.S. was around 25%. That gap has plummeted in recent years as nonunion workers’ wages have grown faster than those of union workers. Between 2019 and 2023, nonunion wages rose 22.2% (before inflation) while union wages rose only 15.8%. [Emphasis added.]
While the media focuses on the overall union difference, as the differences vary by industry, it is helpful to look at each industry separately because, as BLS states, “earnings differences reflect a variety of influences…”
One can look at the “union difference” by industry at this link.
On a related topic, Benjamin Williams, a Fellow with the Foundation for Economic Education’s Henry Hazlitt Project for Educational Journalism takes a rather unique look at an oft-sited graph on income inequality and unions in this Tik Tok video.