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Union Membership in the United States: The Divergence between the Public and Private Sectors

Author

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  • Henry S. Farber

    (Princeton University)

Abstract
I document the dramatic divergence between the fortunes of unions in the public and private sectors in the United States since the 1970s. While the union membership rate in the private sector fell from 25 percent in 1975 to 8.2 percent in 2004, the rate in the public sector increased from the same level in 1975 to over 35 percent in 2004. I propose reasons for this divergence, focusing on differences in four factors: 1) employment dynamics, 2) the nature of products produced, 3) the role that unions can play, and 4) incentives faced by employers. I examine the effect of legislation governing collective bargaining in the state and local government sectors on union density and wages of union and nonunion workers. Exploiting within-state variation in laws by type of worker, I find that union density is significantly higher where unions are allowed to negotiate union security provisions (e.g., agency shop) and where employers have a legal duty to bargain with labor unions. I find there is a small positive effect on earnings of legislation allowing union security union security provisions and a surprising negative effect on earnings of a legal duty to bargain. On balance, unions in the public sector have grown relative to unions in the private sector for important structural reasons. Lack of market competition for the products of the public sector and lack of fiscal discipline through the political process makes the value of unions to public sector workers relatively high. Public policy governing labor relations in the public sector, working in conjunction with these structural factors, has provided an environment in which unions can thrive.

Suggested Citation

  • Henry S. Farber, 2005. "Union Membership in the United States: The Divergence between the Public and Private Sectors," Working Papers 882, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:503
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    References listed on IDEAS

    as
    1. Gregory M. Saltzman, 1988. "Public Sector Bargaining Laws Really Matter: Evidence from Ohio and Illinois," NBER Chapters, in: When Public Sector Workers Unionize, pages 41-80, National Bureau of Economic Research, Inc.
    2. Freeman, Richard B, 1988. "Contraction and Expansion: The Divergence of Private Sector and Public Sector Unionism in the United States," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 63-88, Spring.
    3. Ellwood, David T & Fine, Glenn, 1987. "The Impact of Right-to-Work Laws on Union Organizing," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 250-273, April.
    4. Richard B. Freeman & Robert Valletta, 1988. "The Effects of Public Sector Labor Laws on Labor Market Institutions and Outcomes," NBER Chapters, in: When Public Sector Workers Unionize, pages 81-106, National Bureau of Economic Research, Inc.
    5. William T. Dickens & Jonathan S. Leonard, 1985. "Accounting for the Decline in Union Membership, 1950–1980," ILR Review, Cornell University, ILR School, vol. 38(3), pages 323-334, April.
    6. Henry S. Farber & Bruce Western, 2001. "Accounting for the Decline of Unions in the Private Sector, 1973-1998 ," Journal of Labor Research, Transaction Publishers, vol. 22(3), pages 459-485, July.
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    Cited by:

    1. Michele Campolieti & Robert Hebdon & Benjamin Dachis, 2014. "The Impact of Collective Bargaining Legislation on Strike Activity and Wage Settlements," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 394-429, July.
    2. John Schmitt & Alexandra Mitukiewicz, 2012. "Politics matter: changes in unionisation rates in rich countries, 1960–2010," Industrial Relations Journal, Wiley Blackwell, vol. 43(3), pages 260-280, May.
    3. Monique Marks & Jenny Fleming, 2006. "The Right to Unionize, the Right to Bargain, and the Right to Democratic Policing," The ANNALS of the American Academy of Political and Social Science, , vol. 605(1), pages 178-199, May.
    4. Açıkgöz, Ömer Tuğrul & Kaymak, Barış, 2014. "The rising skill premium and deunionization," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 37-50.
    5. David Lewin & Jeffrey H. Keefe & Thomas A. Kochan, 2012. "The New Great Debate about Unionism and Collective Bargaining in U.S. State and Local Governments," ILR Review, Cornell University, ILR School, vol. 65(4), pages 749-778, October.
    6. Scott Legree & Tammy Schirle & Mikal Skuterud, 2017. "The Effect of Labor Relations Laws on Unionization Rates within the Labor Force: Evidence from the Canadian Provinces," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 605-639, October.
    7. Sunyoung Pyo, 2020. "Contingency factors explaining policy adoption: body-worn camera policy across US states," Policy Sciences, Springer;Society of Policy Sciences, vol. 53(3), pages 413-435, September.
    8. Niklas Potrafke, 2006. "Parties Matter in Allocating Expenditures: Evidence from Germany," Discussion Papers of DIW Berlin 652, DIW Berlin, German Institute for Economic Research.
    9. Stephen R. Porter, 2013. "The Causal Effect of Faculty Unions on Institutional Decision-Making," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1192-1211, October.

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    More about this item

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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