Unionized workers are seeing their pay grow faster than nonunion employees. Here's why it might have 'staying power.'

By Hannah Erin Lang

Compensation growth for unionized private-sector employees shot ahead of nonunion workers in the first months of the year, according to the Labor Department.

The labor movement had some big moments this past year - and that's fueling faster pay gains for unionized workers, while other employees lag behind.

In the first quarter, total compensation for unionized private-sector workers was up 5.3% from a year ago, compared to a 3.9% gain for nonunion workers, according to the Department of Labor's most recent employment cost index report.

Pay gains for union workers have been picking up steam for the last year, while nonunion employees have seen total compensation growth slow since 2022.

The first quarter's steep compensation increase might be partly due to volatility in quarterly ECI data, said Heidi Shierholz, president of the Economic Policy Institute, a left-leaning think tank. The bump could also be due to annual cost-of-living pay increases built into existing union contracts, she said.

But Kate Bronfenbrenner, a professor at Cornell University's School of Industrial and Labor Relations, said the jump is a direct result of the U.S. labor movement's growing momentum over the last year.

Hundreds of thousands of workers walked off the job in 2023, and employees from teachers to delivery drivers to Hollywood actors achieved big bargaining victories.

Last month, workers at a Volkswagen (XE:VOW) plant in Chattanooga, Tenn., factory voted to join the United Auto Workers, showing labor's growing clout could carry weight even in the historically union-resistant South.

Earlier this year, thousands of hospitality workers in California won higher pay and increased pension contributions from 34 hotels in the state after repeated strikes.

In Chicago, grocery workers held a vote to unionize a Trader Joe's store in April. The outcome of the election is unclear, thanks to one contested vote.

Worker victories over the last year weren't just limited to headline-making moves at major employers, Bronfenbrenner said - the momentum also spread to smaller companies and units.

"We know the big [wins], but there were lots of them," she said.

As for the lagging compensation growth for other workers? Bronfenbrenner said she's not so sure what's behind it - though she noted some of the economy's fastest-growing jobs right now, from restaurant servers to nurse aides, tend to be lower-paid and non-union.

Better wages and benefits at unionized employers tend to increase pay even for non-union workers in similar lines of work, she noted, as companies offer more compensation to offset the incentive to organize.

"Usually you see that happen, but these data don't seem to show that," she said. "It could be that these gains are just too great."

Shierholz agreed that recent wins for organized labor have helped drive compensation gains for union employees.

"There's a lot of energy around unions right now," she said. "I think that has to be playing a role."

She expects that momentum to continue.

"Workers have, in the last couple of years, relearned the lesson of the importance of joining together with your coworkers when you're not being treated fairly," she said. "I believe that will have some staying power."

Has your pay at work kept up with rising prices? Have union efforts impacted your workplace? Let us know at readerstories@marketwatch.com. One of our reporters might reach out to you to learn more.

-Hannah Erin Lang

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05-07-24 1120ET

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