Unions and collective bargaining
Why One Voice Gets Ignored and Ten Thousand Don't
The single most effective thing most workers can do to raise their wages has nothing to do with their individual performance.
The Idea
There is a persistent myth in how most of us think about pay: that wages are a reflection of what we are worth, determined by skill, effort, and market forces operating fairly on individuals. The reality is that wages are, at their core, a negotiation — and the outcome of any negotiation depends enormously on how much power each party brings to the table. This is where collective bargaining enters. When workers negotiate as a group rather than as individuals, they fundamentally change the balance of that power. An employer can easily replace one worker who demands more; replacing an entire workforce is a different calculation entirely. Collective bargaining formalises this logic — workers agree to present their demands jointly and, crucially, to withhold their labour together if those demands are not met. The economic literature on this is less ambiguous than public debate suggests. Unions raise wages not just for their members but often for non-union workers in the same industries, because employers must compete for labour in a tightened market. They also compress wage inequality — the gap between the highest and lowest earners within unionised sectors tends to be narrower. Beyond wages, collective agreements shape working hours, safety conditions, and access to benefits that individuals negotiating alone would struggle to secure. What is genuinely underappreciated is how much of what we now take for granted — the weekend, limits on working hours, protections against arbitrary dismissal — was not gifted by enlightened employers. It was extracted, collectively, over decades of organised pressure.
In the World
In the early 1970s, nearly one in three workers in the United States belonged to a union. By 2023, that figure had fallen to roughly one in ten. The decline was not uniform — it followed industries, geographies, and policy shifts — but one moment captures the turning point with unusual clarity. In August 1981, President Ronald Reagan fired 11,000 striking air traffic controllers who had walked off the job demanding better pay and shorter hours. The Professional Air Traffic Controllers Organization, PATCO, had actually endorsed Reagan in the 1980 election. When he dismissed them en masse and banned them from federal employment for life, it sent a signal that reverberated far beyond aviation: the state would no longer act as a neutral arbiter between labour and capital, and employers who followed suit would face little political consequence. What happened to wages in the decades after is instructive. Productivity — the amount of economic output generated per hour of work — continued rising steadily. But median wages largely stagnated in real terms. The gap between productivity and pay, which had moved roughly in parallel during the high-union decades of the mid-twentieth century, began to widen and has not closed since. This is not a coincidence that economists argue over whether it is correlation or causation — most labour economists treat the relationship as well-established. The decline of collective bargaining removed the mechanism by which workers claimed their share of the productivity gains they were generating.
Why It Matters
Understanding collective bargaining changes how you read a lot of economic news that might otherwise seem abstract. When a headline reports record corporate profits alongside stagnant wages, that is not a paradox — it is the predictable result of a shift in negotiating power. When a strike is reported, the instinct to frame it as disruption misses the more important question: what does the outcome tell us about who holds leverage in this economy right now? At a personal level, this matters even if you have never been in a union and never expect to be. The overall level of unionisation in your sector affects your wages — because it shapes what employers believe they must offer to attract and retain staff. A worker in a heavily unionised industry earns more, on average, than an identical worker in a non-unionised one, even without joining. It also reframes the common advice to negotiate individually — to ask for a raise, to know your worth, to advocate for yourself. That advice is real and useful. But it operates within a structure of power that individual negotiation cannot reshape. Knowing that structure exists is the first step to thinking clearly about it.
A Question to Ponder
If the balance of power in wage negotiations has shifted so significantly over the past fifty years, what would it actually take to shift it back — and who would need to want that enough to make it happen?
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