Disadvantages of Labor Unions

by Sarah Kuta ; Updated December 04, 2018
Businessman discussing with female coworkers

Labor unions are organizations that represent workers and their interests. Many professions have them and there are literally hundreds of different labor unions across the country, including those representing teachers, electricians, factory workers, plumbers and dozens of other professions. Though advocates tout the benefits of labor unions, there are also some disadvantages to consider.

What Are Labor Unions?

Labor unions are organizations or groups formed to represent workers. The goal of these groups is to promote the interests and needs of workers including their pay, hours and working conditions. Unions are intended to create a collective voice for workers – their philosophy is that there's strength in numbers.

According to the most recent data available from the U.S. Bureau of Labor Statistics, 10.7 percent or 14.8 million Americans – wage and salary workers – were members of unions in 2017. While some unions have paid staff members, others operate with volunteer members who are elected to leadership positions. Union chapters and boards may hold regular meetings to discuss upcoming events or initiatives.

High Union Dues

Workers pay union dues that help cover the cost of things like full-time union staff members, government lobbyists, lawyers and strike funds. For workers, the major drawback is the cost of union dues and initiation fees. These vary greatly depending on the organization but can be several hundred dollars per year.

Union dues have significantly increased over the past years. Financial experts say that unions are now charging workers about 10 percent higher dues. In 2015, union members living states with compulsory dues were paying around $610 a year. The annual union due in right-to-work states was $432.

Video of the Day

Brought to you by Techwalla
Brought to you by Techwalla

Less Collaborative Work Environment

Research has also found that unions can create a less collaborative work environment between workers and their managers. Forming a union could also ultimately contribute to a business shutting down, which means workers are out of jobs.

Unionized workers often report that their employers act superior and show them less trust compared to how they treat employees who are not part of a union. Since employers and unionized workers usually represent divergent interests, conflicts may arise. This can affect employee morale, reduce productivity and negatively impact communication.

High Labor Costs

On the employer side, unions can create higher annual labor costs for the company. According to the U.S. Bureau of Labor Statistics, union members had median weekly earnings of $1,041, whereas nonunion members earned $829. While this is a benefit to workers, it's a disadvantage to employers, who are trying to keep costs as low as possible.

By being forced to pay higher wages, companies may need to reduce the number of jobs or lay off employees. For example, most of the manufacturing jobs lost over the past 30 years have been among unionized workers. This ultimately affects the local and national economy as the company's ability to expand its operations.

Makes Hiring and Firing Difficult

Some union labor contracts can also make it more difficult for employers to fire workers, even if firing is warranted. For example, many agreements require a "just cause" before a unionized employee can be fired.

The meaning of this term depends largely on the context as well as on each individual case. Employers may only be able to terminate an employee if they have substantial proof of his guilt, warned him about the consequences of his actions and made this decision after considering his past record and the severity of his offense. Completing these steps requires a lot of time, money and paperwork.

If there are rules related to tenure and seniority, union contracts can also make it more challenging to promote qualified employees who have fewer years on the job than other employees. The lack of career advancement opportunities can impact productivity, as there are few incentives for employees to work hard to get ahead.

About the Author

Sarah Kuta is an award-winning Colorado writer and editor with a journalism degree from Northwestern University. She regularly writes about personal finance, saving for retirement, business, startups and saving money. Her work has appeared in Don't Waste Your Money, The Penny Hoarder, the Associated Press, the Denver Post and other publications.

Cite this Article A tool to create a citation to reference this article Cite this Article