Unionization Substantially Increases the Wages of Service-Sector Workers

After decades of disappointing wage growth for many American workers, a new report from the Center for Economic and Policy Research (CEPR) shows that unionization significantly boosts the wages of service-sector workers.

The report, "Unions and Upward Mobility for Service-Sector Employees," finds that unionization raises the wages of the average service-sector worker by 10.1 percent, which translates to about $2.00 per hour.

On average, unionization increases the likelihood that the average service-sector worker will have employer provided health insurance by 19 percentage points. Unionized service-sector workers were also 25 percentage points more likely to have a pension than their non-union peers.

"The vast majority of jobs in this country are now in the service sector," said John Schmitt, a Senior Economist at CEPR and the author of the study. "The data show that workers in service jobs benefit as much from unionization as workers in manufacturing do."

The impact of unions on service-sector employees in low-wage occupations was even more substantial. For workers in the 15 lowest-paying occupations, unionization raised wages by 15.5 percent. The likelihood of having health insurance increased by about 26 percentage points and the likelihood of having an employer-sponsored pension increased by about 23 percentage points.

"Unions give the biggest boost to workers in low-paying occupations because these are the workers that have the least bargaining power in the labor market," Schmitt said. "Unionization can turn what would otherwise be low-paying jobs with no benefits into middle-class jobs."

Over the period covered in the report, 13.3 percent of service-sector workers were either members of a union or covered by a union contract at their workplace.

The report analyzed data on workers from the Census Bureau's Current Population Survey (CPS) for the years 2004 through 2007.

Additional state-specific information is available from the following organizations:

California
Susan Duerksen, Director of Communications
Center on Policy Initiatives
3727 Camino del Rio South, Suite 100
San Diego, CA 92108
Ph: 619-584-5744 x 64
Cell: 619-804-1950

Florida
Bruce Nissen, Director
Research Institute for Social and Economic Policy
Center for Labor Research and Studies
Florida International University Miami, FL 33199
305-348-2616
Fax: 305-348-2241

New York
James Parrott, Deputy Director and Chief Economist
Fiscal Policy Institute
11 Park Place Suite 101
New York, NY 10007
212-721-5624
212-721-5415

North Carolina
John Quinterno, Research Associate
NC Budget & Tax Center
919-856-3185

Ohio
Amy Hanauer, Executive Director
Policy Matters Ohio
3631 Perkins Avenue, Suite 4C-East
Cleveland, OH 44114

216-361-9801 (phone)
216-361-9810 (fax)

Pennsylvania
Mark A. Price, Ph.D., Labor Economist
Keystone Research Center
412 North 3rd Street
Harrisburg PA 17101
717-255-7181