Unions and Upward Mobility for African-American Workers

John Schmitt
April 2008

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Executive Summary

This paper examines the impact of unionization on the pay and benefits of African-American
workers. The most recent data suggest that even after controlling for differences between union and
non-union workers —including such factors as age and education level— unionization substantially
improves the pay and benefits received by black workers.

On average, unionization raised black workers' wages 12 percent --about $2.00 per hour-- relative to
black workers with similar characteristics who were not in unions.

The union impact on health-insurance and pension coverage was even larger. African-American
workers who were in unions were 16 percentage points more likely to have employer-provided
health insurance and 19 percentage points more likely to have a pension plan than similar non-union
workers.

These union effects are large by any measure. To put these findings into perspective, between 1996
and 2000, a period of sustained, low unemployment that helped to produce the best wage growth
for low-wage workers in the last three decades, the real wage of 10th percentile workers (who make
more than 10 percent of workers, but less than 90 percent of workers), rose, in total, about 12
percent. The 12-percent union wage boost for black workers, therefore, was equal in magnitude to
four years of historically rapid real wage growth.

Over the same boom period in the 1990s, employer-provided health and pension coverage among
the bottom fifth of workers rose only about three percentage points for health insurance (up 3.2
percentage points) and pensions (up 2.7 percent) – only about one-fifth of the impact of
unionization on health-insurance coverage and about one-sixth of the impact on pension coverage
for African Americans.

The benefits of unionization were even higher for black workers in typically low-wage occupations.
Black workers in unions in otherwise low-wage occupations earned, on average, 14 percent more
than their non-union counterparts. Unionized black workers in low-wage occupations were also 20
percentage points more likely than comparable non-union workers to have employer-provided
health insurance, and 28 percentage points more likely to have a pension plan.

Our findings demonstrate that black workers who are able to bargain collectively earn more and are
more likely to have benefits associated with good jobs. We conclude that better protection of
workers’ right to unionize would help improve the pay and benefits of African-American workers.

http://www.cepr.net/documents/publications/unions_2008_04.pdf