Eli5 What is a Union?

Question

What does it mean for employees to want to start a union? What’s a union? What does it do? Why do people want it and why do company’s fire you over it?

In: 2

Answer 1

A union is a collective bargaining agreement. A union is a legally protected entity. A union represents the interests of the workers at a factory (or mine or whatever industrial setting) so they will do things like negotiate pay for all hourly workers on their behalf. This leads to higher wages. Union wages, on average, are 20% higher than non union wages. Union members have to pay dues to the union. This varies union to union but on average it’s 5% of your salary goes to the union. So for the union member it works out to roughly 15% more pay.

If union contract negotiations fail with the company, or the company violates the contract, the union may strike. This is where all union members do not go to work. The union will pay the union members a portion of their pay during this time from the dues collected during normal operation. Typically it’s only 1/2 or 1/4 pay during a strike. So it can be pretty rough on the strikers too. Although the company is getting 0 work done. So it hurts the company a lot as well. Typically this gets the company to capitulate and give in to the union demands. Typically if a work environment is a union facility, then you must join the union to work there.

Anyway unions are disliked by companies specifically because the union has so much control over the operation of a facility. As well as raising the cost of doing business.

There’s also “right to work” states. That provide legal protection to workers who want to work at a facility without joining the union. This is obviously really bad for the unions as it takes away a lot of their bargaining power. Sure they can still strike, but the non union members can’t, so the business will still be getting work done as well.

Anyway the whole thing is such a headache that for smaller or even medium sized operations it’s frequently cheaper for a company to shut down a facility and set up in the next city/state over. Which obviously means everyone who works there loses their jobs.