Labor Union Advantages to an Employer

Roughly one in every eight Americans belongs to a labor union. The main role of unions is to protect employee rights in the workplace and to negotiate salaries, benefits, training and other conditions of employment. While unions exist to protect employees, they also present several benefits for employers. Organizations with labor unions have the opportunity to reduce turnover, simplify their budgeting processes and reap several other benefits.

Research by labor experts Richard Freeman and James Medoff concluded that organizations with labor unions experience less employee turnover. This may be, in part, because of the better pay and benefits negotiated through the collective-bargaining process. Unions also allow employees to feel like they have a voice in the workplace, which can reduce feelings of frustration that could lead to turnover.

Labor unions often will help organizations select vendors for benefits, and some larger state and national unions even offer benefit plans that can be purchased by organizations or individual employees. Because benefits are spelled out in union contracts for several years at a time, benefit administrators do not need to spend considerable time and effort each year researching alternate vendors or plans.

Unions bring fairness and consistency to employee compensation. Employers need not live in fear of one employee learning another employee's salary. Salary schedules typically are spelled out clearly in union contracts. At union shops, employers do not need to contend with the individual salary demands of dozens, hundreds, or even thousands of employees. The union will negotiate salaries for the entire group of member-employees.

Because employer contracts with labor unions often last several years (between three and five years is common), employers know what they will be spending on salaries and benefits well into the future. This helps organizations produce detailed and accurate budget forecasts. Few non-union organizations know what their labor costs will be so far into the future.

Disciplining employees can be one of the greatest management challenges at any organization. Union contracts often codify the discipline process and create a series of rules and steps that are deemed fair by both the union and the employer. A case study performed on the Internal Revenue Service and its staff union, the National Treasury Employees Union, showed that when employers and unions work together on disciplinary procedures, the end process may be seen by employees as more consistent and equitable.