Companies have less power to pass price increases on to consumers without going out of business. What explains these apparently contradictory findings? The economy has become more competitive over the past generation. However, that does not mean that expanding union membership will raise wages: Few workers who join a union today get a pay raise.
The average union member earns more than the average non-union worker. Economic research finds that unions benefit their members but hurt consumers generally, and especially workers who are denied job opportunities. Companies pass on those higher wages to consumers through higher prices, and often they also earn lower profits. A labor cartel restricts the number of workers in a company or industry to drive up the remaining workers' wages, just as the Organization of Petroleum Exporting Countries (OPEC) attempts to cut the supply of oil to raise its price. To whom should policymakers listen? What unions do has been studied extensively by economists, and a broad survey of academic studies shows that while unions can sometimes achieve benefits for their members, they harm the overall economy.
Critics point to the collapse of many highly unionized domestic industries and argue that unions harm the economy. What do unions do? The AFL-CIO argues that unions offer a pathway to higher wages and prosperity for the middle class.
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