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Unions and Upward Mobilityfor Service-Sector Workers
John Schmitt
April 2009
Center for Economic and Policy Research
1611 Connecticut Avenue, NW, Suite 400Washington, D.C. 20009202-293-5380www.cepr.net
Unions and Upward Mobility for Service-Sector Workers
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Contents
Executive Summary...........................................................................................................................................1
Introduction........................................................................................................................................................2
Unionized Service-Sector Workers Earn More, More Likely to Have Benefits.......................................3
Conclusion..........................................................................................................................................................6
References...........................................................................................................................................................7
Appendix.............................................................................................................................................................8
Health..............................................................................................................................................................8
Pension............................................................................................................................................................8
Union..............................................................................................................................................................8
Low-Wage Occupations...............................................................................................................................9
Data.................................................................................................................................................................9
About the Author
John Schmitt is Senior Economist at the Center for Economic and Policy Research in Washington,DC.
Acknowledgments
The Center for Economic and Policy Research gratefully acknowledges financial support for thisproject from the Public Welfare Foundation, the Arca Foundation, and the Ford Foundation. Thefindings and conclusions presented in this report remain those of the author alone and do notnecessarily reflect the opinions of these foundations. The author would like to thank Hye Jin Rhoand Matt Sherman for assistance.
Unions and Upward Mobility for Service-Sector Workers
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Executive Summary
Historically, unionization in the United States has been closely tied to manufacturing, including wellpaid and highly visible jobs in steel and autos. For decades, however, manufacturing employmenthas been falling as a share of national employment, contributing to a broader, long-term decline innational unionization rates. As manufacturing employment has declined, the service sector hasgrown to account for more than three-fourths of all jobs in the United States. The data suggest that even after controlling for systematic differences between union and non-union workers, union representation substantially improves the pay and benefits received in the sector.On average, unionization raised service-sector workers’ wages by 10.1 percent – about $2.00 perhour – compared to non-union service-sector workers with similar characteristics.For service-sector workers, the union impact on health-insurance and pension coverage was evenlarger. Those in unions were about 19 percentage points more likely to have employer-providedhealth insurance, and about 25 percentage points more likely to be in an employer-provided pension. The benefits of unionization are also large for service-sector workers in low-wage occupations. Forservice workers in the 15 lowest-paying occupations, unionization raises wages by about 15.5percent. For the same group of service-sector workers in low-wage occupations, unionization is alsoassociated with a 26 percentage point greater likelihood of having health insurance and a 23percentage point greater likelihood of pension coverage. The findings demonstrate that service-sector workers who are able to bargain collectively earn moreand are more likely to have benefits associated with good jobs. The data, therefore, suggest thatbetter protection of workers’ right to unionize would have a substantial positive impact on the pay and benefits of service-sector workers.
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