What Effect do Unions Have on Wages Now and Would 'What Do Unions Do' Be Surprised?
NBER Working Paper No. 9973
We explore the various claims made by Freeman and Medoff (FM) in their famous book What do unions do? about the impact of unions on wages and update them with new and better data. The main findings are as follows. 1) Private sector union wage premium is lower today than it was in the 1970s. 2) The union wage premium is counter-cyclical. 3) There is evidence of a secular decline in the private sector union wage premium. 4) There remains big variation in the premium across workers. 5) There is big variation in industry-level union wage premia. 6) State level union wage premia vary less than occupation and industry level premia. 7) Union workers remain better able than non-union workers to resist employer efforts to reduce wages when market conditions are unfavorable. 8) There has been a decline in the unadjusted wage gap relative to the regression-adjusted wage gap. 9) Public sector wage effects are large and similar to those in the private sector.