Unions and Upward Mobility for Women Workers

[References and tables from original.]

Executive Summary

In 2007, women made up 45 percent of union members. If the share of women in unions continues to grow at the same rate as it has over the last 25 years, women will be the majority of the unionized workforce by 2020.

This paper uses the most recent data available to examine the impact of unionization on the pay and benefits of women in the paid workforce. The data suggest that even after controlling for systematic differences between union and non-union workers, union representation substantially improves the pay and benefits that women receive.

On average, unionization raised women's wages by 11.2 percent - about $2.00 per hour - compared to non-union women with similar characteristics. Among women workers, those in unions were about 19 percentage points more likely to have employer-provided health insurance and about 25 percentage points more likely to have an employer-provided pension.

For the average woman, joining a union has a much larger effect on her probability of having health insurance (an 18.8 percentage-point increase) than finishing a four- year college degree would (an 8.4 percentage-point increase, compared to a woman with similar characteristics who has only a high school diploma). Similarly, unionization raises the probability of a woman having a pension by 24.7 percentage points, compared to only a 13.1 percent increase for completing a four-year college degree (relative to a high school degree). For the average woman, a four-year college degree boosts wages by 52.6 percent, relative to a woman with similar characteristics who has only a high school degree. The comparably estimated union wage premium is 11.2 percent - over 20 percent of the full four-year college effect.

Introduction

In 2007, women made up 45 percent of union members. If the share of women in unions continues to grow at the same rate as it has over the last 25 years, women will be the majority of the unionized workforce by 2020.

This paper uses the most recent data available to examine the impact of unionization on the pay and benefits of women in the paid workforce. The data suggest that even after controlling for systematic differences between union and non-union workers, union representation substantially improves the pay and benefits that women receive.

On average, unionization raised women's wages by 11.2 percent - about $2.00 per hour - compared to non-union women with similar characteristics. The union impact on health-insurance and pension coverage was even larger. Among women workers, those in unions were about 19 percentage points more likely to have employer-provided health insurance,5 and about 25 percentage points more likely to be in an employer-provided pension.

These union effects are large by any measure. For the average woman, joining a union has a much larger effect on her probability of having health insurance (an 18.8 percentage-point increase) than finishing a four-year college degree (an 8.4 percentage-point increase, compared to a woman with similar characteristics who has only a high school diploma). The same is true for the average woman's chances of having a pension plan. Unionization raises the probability of having a pension by 24.7 percentage points, compared to only a 13.1 percent increase for completing a four-year college degree (relative to a high school degree). The union wage effect even compares well to a four-year college degree, once the cost of four years of public or private college tuition are factored in. For the average woman, a four-year college degree boosts wages 52.6 percent, relative to a woman with similar characteristics (age, race, state of residence) who has only a high school degree. The comparably estimated union wage premium is 11.2 percent - over 20 percent of the full four year college effect.

Earlier research finds substantial union effects on wages and benefits for workers overall; among many others see Blanchflower and Bryson (2007), and Schmitt (2008). Over the period 2004-2007, the average wage of women workers, in constant 2007 dollars, was $17.32 per hour. The union wage premium at the mean wage estimated here is 11.2 percent, which translates to $1.94 per hour.

An employer- or union-sponsored plan for which the employer paid at least a portion of the insurance premium. To be clear, we believe that universal health care, where eligibility is not connected to an individual's employment status or particular employer, would be a substantial improvement over the current system, which leaves many workers and their children without health insurance.

The employer- or union-provided pension may or may not include an employer contribution to the plan. The National Center for Education Statistics estimates that for the 2006-2007 academic year, the average cost of a public four-year college was $5,685 per year; a public two-year college, $2,017; a private four-year college, $20,492; a private two-year college, $12,620.

Women Workers in Unions Earn More, More Likely to Have Benefits

Over the period 2004-2007, in the workforce as a whole, about 13.5 percent of all workers were unionized. Over the same period, as Table 1 shows, about 12.5 percent of women workers were in a union or represented by a union at their workplace (see row 1). Union women typically earned substantially more than their non-union counterparts. In 2004-2007, the median unionized woman earned about $18.77 per hour, compared to $13.30 per hour for the median non-union woman worker. Unionized women were also much more likely to have health insurance (75.4 percent) and a pension (75.8 percent) than women workers who weren't in unions (50.9 percent for health insurance, 43.0 percent for pensions).

The data presented in the first row of Table 1 cover all women in the workforce, including those at the bottom, middle, and top of the wage distribution. The last row of the table looks only at women employed in the 15 lowest-wage occupations.9 As was the case for the female workforce as a whole, unionized women in low-wage occupations earned substantially higher salaries and were much more likely to have health insurance and a pension plan than were their non-union counterparts in the same occupations. The median union woman in a low- wage occupation ($11.95) earned almost three dollars more per hour than the median non-union woman ($9.00).

Unionized women workers in these same low-wage occupations also had large advantages over nonunion women with respect to non-wage benefits. Almost 60 percent of unionized women in lowwage occupations had health insurance, compared to just over 25 percent of non-union women in the same occupations. For pension plans, the union gap was also substantial: 58 percent of the 15 low-wage occupations are: food preparation workers, cashiers, cafeteria workers, child-care workers, cooks, housekeeping cleaners, home-care aides, packers and packagers, janitors, grounds maintenance workers, nursing and home-health aides, stock clerks, teachers' assistants, laborers and freight workers, and security guards. Together, these occupations represent about 15 percent of total U.S. employment.

Unionized women in low-wage occupations had a pension, compared to only 21 percent of their non-union counterparts.

The data in Table 1, however, may overstate the union effect because union workers may be more likely to have characteristics associated with higher wages such as being older or having more formal education. In Table 2, therefore, we present a second set of results using standard regression techniques to control for these potential differences in the union and non-union workforces.

Controlling for these other effects does reduce the union wage and benefit effect, but the effect of unionization on the wages and benefits remains large. After controlling for workers' characteristics, the union wage premium for all women workers is 11.2 percent or about $2.00 per hour. For women, the union advantage with respect to health insurance and pension coverage also remains large even after controlling for differences in workers' characteristics. Unionized women were 18.8 percentage points more likely to have health insurance and 24.7 percentage points more likely to have a pension than their non-union counterparts.

The benefits of unionization are also large for women in low-wage occupations. For women in the 15 lowest-paying occupations, unionization raised wages 14.3 percent. Unionization was also associated with a 26.0 percentage point greater likelihood of having health insurance and a 23.4 percentage point greater likelihood of pension coverage. The regressions control for age (and age squared), education (five levels of educational attainment), gender (wherever observations for men and women appear in the same regression), state of residence, and two-digit industry. The wage regressions use ordinary least squares; the health-insurance and pension regressions are probits. These estimates of the union wage premium are likely to be underestimates of the true union effect on workers' wages. Hirsch and Schumacher (2004) have documented that the procedure that the Census Bureau uses to impute wages for workers who fail to report wages in the CPS imparts a substantial downward bias in standard union wagepremium regressions such as the ones reported here.

Conclusion

Women are on course to become the majority of unionized workers. The most recent data suggest that even after controlling for differences between union and non-union women, unionization substantially improves the pay and benefits received by women workers. After controlling for relevant workers' characteristics, the union wage premium for women is 11.2 percent or about $2.00 per hour. The union advantage for women is even larger with respect to health insurance and pension coverage. Union women were about 19 percentage points more likely to have health insurance and about 25 percentage points more likely to have a pension than their non-union counterparts.

The substantial wage and benefit advantages of unionization also apply to women in otherwise lowwage occupations. Among women in the 15 lowest wage occupations, after controlling for a host of differences in worker characteristics, unionization raised wages about 14 percent, the likelihood of having health insurance about 26 percentage points, and the likelihood of having a pension about 23 percentage points.

These benefits are large in economic terms, even when compared to extensive public and private investments in education.

These findings demonstrate that women who are able to bargain collectively earn more and are more likely to have benefits associated with good jobs. The data strongly suggest that better protection of workers' right to unionize would have a substantial positive impact on the pay and benefits of women in the workforce.

John Schmitt is Senior Economist at the Center for Economic and Policy Research in Washington, DC.

Acknowledgments

The author thanks Hye Jin Rho and Matt Sherman for research assistance. The Center for Economic and Policy Research gratefully acknowledges financial support for this project from the Arca Foundation, the Public Welfare Foundation, and the Ford Foundation. The findings and conclusions presented in this report remain those of the author alone and do not necessarily reflect the opinions of these foundations.