New research shows that labor unions can help reduce the risk of poverty

labor union protest
Participants carry signs during a march and rally by labor union supporters in Los Angeles.

  • Belonging to a labor union lowers the likelihood that you’ll fall into poverty, new research shows.
  • Living in a state with higher unionization rates even if you’re not a member also helps.
  • Had union membership not declined since the 1970s, we could expect poverty rates to be lower today.
  • See more stories on Insider’s business page.

Belonging to a union or living in a US state where organized labor is relatively strong helps lower the likelihood that you’ll fall into poverty, according to our new research.

In a peer-reviewed study, we examined how unionization is correlated with poverty. We analyzed data on poverty and unionization rates from 1975 through 2015 using the Panel Study of Income Dynamics, which is widely considered to be the gold standard for tracking individuals over time. We used a variety of poverty measures in our analysis.

We found that households in which there was at least one union member had an average poverty rate of 5.9%, compared with 18.9% for nonunion households, based on a relative measure of poverty rather than an absolute measure, by which what it means to be poor is fixed over time.

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We also wanted to examine the impact of living in a state with a higher rate of unionization to see whether this broadly affected the likelihood that someone would be in poverty compared with states with lower union membership. Using the same relative measure of poverty, we found that states with higher unionization rates had average poverty levels about 7% lower than states with lower unionization rates.

Our findings imply that a 5% decline in union membership translates, on average, into a 2% increase in the probability that a resident of the state will fall into poverty.

Why it matters

When policymakers and academics develop plans to address poverty, they rarely, to our knowledge, consider the impact of labor unions.

And yet research across social science disciplines show time and again that labor unions have been central to bolstering the American middle class by raising wages and expanding access to fringe benefits.

Thus, it is logical, though rarely discussed, that unions would also reduce the risk that people become impoverished.

Our study also helps explain why the United States has a relatively high rate of poverty18% as of 2017 – compared with other rich democracies. France and the Norway, for example, boast poverty rates in the single digits as well as higher rates of union membership.

Our results suggest that had union membership not declined dramatically since the 1970s, we could reasonably expect poverty rates would be significantly lower.

What’s next

We intend to conduct additional research, both within the United States and among other countries, to better understand the mechanisms linking unionization to poverty.

More broadly, the biggest open question is whether US labor unions can expand their membership again and provide these types of protections against adverse economic forces.

Tom VanHeuvelen, assistant professor of sociology, University of Minnesota and David Brady, professor of public policy, University of California, Riverside

The Conversation
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Unit, a tech startup targeting small businesses for unionization, is attracting retail workers looking for modern ways to organize

liquor store employee grocery carts
“There are a bunch of exploited workers in the retail space,” Unit founder Jamie Earl White told Insider.

  • Americans largely support labor unions, but the US membership rate has dropped steeply since 1983.
  • Unit, a new startup launched in December 2020, is looking to help workers bust anti-union firms.
  • “We have a mission to support the rights of workers to organize,” said founder Jamie Earl White.
  • See more stories on Insider’s business page.

Unit, a new tech startup, is looking to bolster private-sector unionization rates by focusing on small workplaces that do not normally get the attention of large labor groups across the US.

The company, launched in December 2020, offers individual groups looking to organize software tools, a web app, and dedicated staff who act as labor advisers to better help clients navigate unionization efforts. To begin with, individuals can invite their coworkers onto the platform. Once enough interest in unionizing builds up, Unit assigns a full-time adviser to the drive.

“The simplest metaphor for understanding it is that we’re a labor consultancy, just like a union busting firm,” White told Insider. “But we work on the other side. We work for the workers.”

Unit’s software features workplace mapping for the purposes of gauging employee interest, surveys and voting, as well as other elements that typically constitute the “paperwork” behind creating a new union, White said. In terms of price, Unit costs members 0.8% of wages earned over the course of a year.

Catering to a ‘bunch of exploited workers in the retail space’

In 2019, White began speaking with labor advisers, organizers, and individuals who’d organized their own workplaces. He said many of those early supporters still advise Unit, whose client list just four months in remains undisclosed. Since the software only recently went live, White said Unit is likely months away from publicizing any signed collective bargaining agreements.

Unit, however, is tailored to help a specific kind of workplace: those in the private sector, with less than 200 employees. The workspaces that have begun to use Unit are a cross-section when it comes to industry, but include retail establishments. White said that these workplaces tend to be “underserved” by traditional unions.

“If you’re a labor union, you have to pay the bills and to send a full-time labor organizer to one of these smaller workplaces just doesn’t always make sense economically,” he said.

That’s why White says he sees his startup coexisting within the current labor union landscape, rather than acting as a “disruptor” to the traditional model, which White said caters to larger workspaces.

White said he’s been surprised by some of the workplaces that have opted to use Unit. He had been expecting to mostly attract “white collar tech workers” who were “already on Slack all day.” Instead, some of Unit’s “fastest-moving workplaces” are “blue collar,” including retail workers.

“There are a bunch of exploited workers in the retail space,” he said.

White said that his app is intended to make it “much easier” for workers to “get started” creating a union within their workplace.

But as expected, anti-union measures from management present a problem. White estimated that one such workplace has spent $2,000 per worker on anti-union measures, including sudden paid leave for pro-union supporters, the rearrangement of schedules intended to separate pro-union workers, and anti-union captive audience meetings.

“Management is afraid of losing power,” he said. “They’ll sometimes put an amount of money investing in anti-union measures that could have just gone to the workers.”

One feature that Unit is currently working on is inoculation training tools for anti-union meetings, as well as messaging for businesses on how expensive fighting drives can be.

White hopes to transform Unit into a worker-owned company down the road, although currently it’s a benefit corporation funded by venture capital. White did not disclose how much Unit has raised so far, or which venture capitalist firm is backing the company, saying that the startup will release this information later this week.

He said that this fact engenders some “skepticism” among labor movement activists, despite the fact that the VC backers are “onboard with our mission.” According to White, Unit’s business model inspires “confidence” among skeptics, as the startup has an incentive to do right by its clients: the workers.

“We have to make this work for workers,” he said. “Otherwise we don’t have an advising business at all, if we’re not doing a good job there.”

A complicated labor market

Having launched in December, Unit hit the scene at a fraught moment for the US labor market. As of February 2021, 4.1 million individuals are considered “long-term unemployed,” according to the Bureau of Labor Statistics. Meaning, they’ve been without a job for at least 27 weeks. That is an increase of up to 3 million year-over-year, reflecting the devastation wreaked by the coronavirus pandemic.

Union membership has also plummeted over recent decades. In 1983, the US had a union membership rate of 20.1%. In 2020, that number dropped to 10.8%. However, despite that sharp decline in membership, union rates increased slightly by 0.5% in 2020.

A recent survey by polling and analytics firm Gallup additionally found that 65% of respondents approved of labor unions. That percentage has steadily increased in Gallup’s annual labor-related surveys since the percentage of respondents in favor of unions fell to an all-time low of 48% in 2008.

“If we do good work, there’s going to be a higher percentage of unionized people in the United States,” White said.

White, a Texas native who moved to Boston to study engineering, said he first got involved with labor issues while in graduate school at the Massachusetts Institute of Technology in 2011, when Occupy Wall Street was also in full-force.

Back then, White participated in student groups supporting the Service Employees International Union’s “Justice for Janitors” campaign. Justice for Janitors is an ongoing social movement that focuses on bottom-up organizing for increased wages and benefits for custodial workers.

That experience, combined with papers he read on the future of labor organizing from the Century Foundation, a progressive think thank, served as a “starting blueprint” for Unit.

“We have a mission to support the rights of workers to organize and improve their places of work,” he said. “Mission-wise, that is very aligned with the traditional labor movement and what people have been trying to do for centuries.”

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