My colleague here at the School of HRM at York, Tony Fang, found a while back that the union wage premium in Canada is about 7.7% (see page 13), meaning that unionized workers earn that much more on average than nonunion workers. Unionized workers also receive significantly better benefits and pension plans.
If you are a nonunion worker earning less than what a unionized worker earns at a competitor, for example, a rational response would be to say, “Man, why am I working for so much less? I should join a union too.” Some people do think that way. However, many people respond to hearing of good wages and benefits enjoyed by unionized workers with hostility, as in, “those damned union workers, we should get rid of unions“. I’ve noted before how neo-conservatives like to argue that good wages negotiated by unions are a terrible, terrible thing, as if low wages are much preferable.
I started thinking about this after I was interviewed on a radio station a while back, and the host said that people are angry at the wages union workers are being paid, and she asked me what I had to say to those people. I said that maybe they should join a union. The host gagged and almost died right there on the spot. Apparently that wasn’t the answer she was looking for. Sounded like common sense to me. What was the “correct” answer to that question?
Why do people get mad that other workers earn more than them? I was reading an interesting book the other day by Robert Frank, called Falling Behind: How Rising Inequality Harms the Middle Class. He provides an interesting insight into this question by using a model that is something like this. He imagines two worlds that are identical (ie. prices of goods are the same in both worlds), except for one thing:
World A: You earn $100,000, but everyone else earns $120,000.
World B: You earn $80,000, but everyone else earns $60,000.
In World A, you can buy a bigger house and nicer stuff than in World B, but everyone else can buy even nicer stuff and more stuff than you. In World B, you can afford less of everything, but that would still be more than everyone else could buy. In other words, you are relatively better off in World B compared to everyone else, but you are absolutely better off in World A.
Which world would you prefer to live in?
Frank says that most people select World B. They are concerned more about how they fare relative to others than the absolute level of their income. That might help explain why many nonunion workers get so angry when they learn that unionized workers earn more than them. It might also help explain why the vast majority of unionized workers are happy with being in the union: Lipset and Meltz found that 90.5% of American and 85.8% of Canadian union members would vote to remain in the union if asked.
But it still doesn’t explain why nonunion workers don’t clammer to join unions in order to try and climb the ladder of relative earnings. Is it because they believe there are “negatives” associated with being a union that outweigh the “benefits”? Do you have any explanation for why nonunion workers get angry at higher union wages?
Unionized Workers Earn More. Does that Piss You Off?
