What are Labor Unions?

How do you protect your rights as a worker? Who is there to help defend you against unfair and unjust work conditions? Both of these questions have an answer, and it’s a solution that many are familiar with. The answer is a labor union. From construction to teaching, there are labor unions out there for just about any field of work.

What is a Union?

A labor union, also sometimes referred to as a union, trade union, or workers union is a group of people who band together in areas such as a trade or industry to help improve areas in their field of work.

Such areas could be a work environment, pay, or benefits. Representatives are appointed within the group to negotiate a solution to a problem with the employer. 

For example, the representative of a union group negotiates the desired benefits package that the employees agreed upon.

This process is known as collective bargaining and has been used by unions as an effective way to communicate their needs to their employer. 

How Do Labor Unions Protect Workers’ Rights?

A labor union protects the rights of all members of the union. There is safety in numbers, and a labor union is a prime example.

When a large number of people band together for a common cause that they believe in, they are more likely to achieve their goals.

Once an issue is identified, such as employers exploiting employees by having them work extra without being paid, a union will jump into action. 

First, they create a detailed description of the issue.

Once they complete that, they collectively vote on a solution that best fits the workers’ or employees’ needs. Finally, the union representative(s) will attempt to negotiate the solution with the employer. 

These negotiations can take weeks or even months. Unfortunately, there are times when employers refuse to agree on a solution.

Such situations have sparked heated controversy in some fields and have ultimately led to what are called strikes.

A strike, or a complete stop of work, can also last anywhere from a few days to a few months and are typically only used as a last resort. 

The History of Labor Unions

Since their conception, labor unions have been making history.

Take, for instance, the current state of American railroads. It seems an impending strike is ever on the horizon, as a solution that fits both sides can be impossible.

This is an example of how unions are making history today, but unions have existed for hundreds of years. 

The first recorded workers’ strike in the United States was in 1768 by journeymen tailors protesting unfair wages.

Not long after, in 1794, shoemakers in Philadelphia formed what was called the Federal Society of Journeymen and Cordwainers.

With the industrial revolution in high gear, the landscape was fertile ground for unions to begin sprouting up. 

During these early eras, other unions were formed to protect those who were traditionally excluded from such things.

For example, women, African Americans, and unskilled immigrants began creating their own unions to help protects themselves from unfair treatment and abuse. From then until now, unions have made their mark on American history. 

Labor Unions: Pros and Cons

As with everything in this world, there are pros and cons associated with labor unions. 

Let’s start with the pros:

  • Unions protect workers’ rights. 
  • Through collective bargaining, unions can secure higher wages and better benefits for workers.
  • Unions can create better work environments and trends that benefit workers across various areas, such as minimum wage, benefits, and paid time off.

Now, let’s look at some cons:

  • If you want to be a part of a union, you will be expected to pay certain dues and fees.
  • Seniority is often the focus of unions, making it difficult for new, high-performing employees to advance. While at the same time, it also makes the termination of poor-performing employees difficult.
  • Unions can become expensive, especially when litigation and negotiation costs are added up if anything were to go through a grievance process.

Key takeaways

  • Labor unions are an integral part of the American workforce.
  • Despite having some less-than-ideal sides to them, unions have many positive effects on society.
  • History indicates that unions have contributed significantly to the protection of workers’ rights across a plethora of fields.

Connected Business Concepts

Economies of Scale

In Economics, Economies of Scale is a theory for which, as companies grow, they gain cost advantages. More precisely, companies manage to benefit from these cost advantages as they grow, due to increased efficiency in production. Thus, as companies scale and increase production, a subsequent decrease in the costs associated with it will help the organization scale further.

Diseconomies of Scale

In Economics, a Diseconomy of Scale happens when a company has grown so large that its costs per unit will start to increase. Thus, losing the benefits of scale. That can happen due to several factors arising as a company scales. From coordination issues to management inefficiencies and lack of proper communication flows.

Network Effects

In a negative network effect as the network grows in usage or scale, the value of the platform might shrink. In platform business models network effects help the platform become more valuable for the next user joining. In negative network effects (congestion or pollution) reduce the value of the platform for the next user joining. 

Negative Network Effects

In a negative network effect as the network grows in usage or scale, the value of the platform might shrink. In platform business models network effects help the platform become more valuable for the next user joining. In negative network effects (congestion or pollution) reduce the value of the platform for the next user joining. 

Creative Destruction

Creative destruction was first described by Austrian economist Joseph Schumpeter in 1942, who suggested that capital was never stationary and constantly evolving. To describe this process, Schumpeter defined creative destruction as the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Therefore, creative destruction is the replacing of long-standing practices or procedures with more innovative, disruptive practices in capitalist markets.

Happiness Economics

Happiness economics seeks to relate economic decisions to wider measures of individual welfare than traditional measures which focus on income and wealth. Happiness economics, therefore, is the formal study of the relationship between individual satisfaction, employment, and wealth.

Command Economy

In a command economy, the government controls the economy through various commands, laws, and national goals which are used to coordinate complex social and economic systems. In other words, a social or political hierarchy determines what is produced, how it is produced, and how it is distributed. Therefore, the command economy is one in which the government controls all major aspects of the economy and economic production.

Animal Spirits

The term “animal spirits” is derived from the Latin spiritus animalis, loosely translated as “the breath that awakens the human mind”. As far back as 300 B.C., animal spirits were used to explain psychological phenomena such as hysterias and manias. Animal spirits also appeared in literature where they exemplified qualities such as exuberance, gaiety, and courage.  Thus, the term “animal spirits” is used to describe how people arrive at financial decisions during periods of economic stress or uncertainty.

State Capitalism

State capitalism is an economic system where business and commercial activity is controlled by the state through state-owned enterprises. In a state capitalist environment, the government is the principal actor. It takes an active role in the formation, regulation, and subsidization of businesses to divert capital to state-appointed bureaucrats. In effect, the government uses capital to further its political ambitions or strengthen its leverage on the international stage.

Boom And Bust Cycle

The boom and bust cycle describes the alternating periods of economic growth and decline common in many capitalist economies. The boom and bust cycle is a phrase used to describe the fluctuations in an economy in which there is persistent expansion and contraction. Expansion is associated with prosperity, while the contraction is associated with either a recession or a depression.

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