Unions don’t deliver for workers

OPINION:

Unions like to claim that they are the ultimate champions for workers, fighting for better pay and benefits. But do they deliver? A new report from the Mercatus Center, paired with recent news about layoffs at UPS, suggests unions might not be the golden ticket workers hope for.

The latest data suggest it’s time to rethink how unions operate in America.

Released in June, the Mercatus report digs into 147 studies to see whether powerful unions truly bring better outcomes for workers. The findings are eye-opening. In some cases, unions can boost wages — in the short term, although many of these gains disappear when factoring in important variables among the states.

But even these short-term gains come with a massive catch. Thanks to unions’ monopoly bargaining power, their demands need not reflect true market forces. The end result? Fewer jobs, slower company growth and higher prices for consumers. Overall, these downsides hurt workers and the economy.

One doesn’t need to look far to see these findings in action. Take the recent UPS layoffs. In August 2023, the Teamsters Union touted its new UPS contract as a historic victory, claiming historic wage increases and increased benefits. Fast forward to January 2024, when UPS announced it was eliminating 12,000 jobs. Just a year later, it said it was cutting its delivery business with Amazon in half by the second half of 2026 and was aiming to shutter 10% of its buildings.

Why the cuts? Because the union’s monopoly bargaining power allows it to demand wages that make it tough for companies to stay competitive. When costs climb, even giants like UPS have little choice but to cut jobs or invest less in the future. The UPS saga is a shining example of what the Mercatus report highlights: union power can backfire, leaving workers worse off in the long term.

Since the 1980s, the wage gap between union and non-union workers has shrunk. Global competition and new technology mean companies can’t just pay more without consequences. The report notes that unionized firms often see slower employment growth and less investment. That’s bad news for workers hoping for job security or career growth. At UPS, those generous contracts didn’t stop the company from slashing jobs to stay afloat in a tough market.

So, what’s the fix? The Mercatus report suggests rethinking union rules to reduce their monopoly-like grip. Instead of one union controlling all workers in a workplace, we could allow multiple worker groups to compete, giving employees more choices. Congress could also amend labor law to allow workers who don’t support unionization to negotiate with their employers without union involvement, a concept called worker’s choice. This solution would reintroduce competitive forces into employer negotiations and lessen the negative impacts associated with monopoly bargaining power. A bill proposing this solution was introduced in 2023, and Congress should take a second look at it.

Some groups, like the Economic Policy Institute, continue to argue that unions are still the best way to lift the middle class, reduce inequality and boost prosperity. But the evidence tells a different story. When unions push for contracts that go beyond what the market will bear, companies struggle, and workers — like those at UPS — can end up worse off.

The Heritage Foundation has called unions “labor cartels” for a reason: Their actions can hurt workers and consumers by limiting economic growth and driving up costs. Workers deserve better than long-term losses disguised as short-term wins.

It’s time for a new approach. Let’s reform unions to focus on empowering workers without crippling businesses. By loosening outdated rules and encouraging more worker voices, we can create a system that truly delivers for everyone — not just a select few. The UPS layoffs and the Mercatus report are a wake-up call. Let’s listen before more workers pay the price.

• Steve Delie is director of labor policy at the Mackinac Center for Public Policy, a research and educational think tank in Michigan.