Worker power is an important channel by which workers can achieve economic security and mobility in the labor market. This landscape report summarizes the state of knowledge on the different pathways workers can use to exercise their power and voice to achieve higher wages and better working conditions. Higher wages allow workers and families to move out of poverty, avoid material hardship, and raise their living standards. Better working conditions can improve workers’ attachment to the labor force and make them more productive and loyal employees. WorkRise commissioned this report from two leading labor scholars: Ioana Marinescu, a labor economist and associate professor at the University of Pennsylvania School of Social Policy and Practice, and Jake Rosenfeld, professor of sociology at Washington University in St. Louis. Marinescu and Rosenfeld propose a two-part framework of how workers achieve greater power and mobility and in the labor market:
- Leaving one’s current job for a better option (referred to as “exit”)
- Organizations and institutions such as labor unions that allow workers to exercise their voice in the workplace, including through input on working conditions and firm decisions (referred to as “voice”).
The authors review empirical evidence on the market forces and policies that allow workers to express power through exit. They also summarize evidence on major institutions and policies that enable workers to gain power through voice. A summary of key findings in these two areas is as follows:
- Market forces that influence workers’ ability to exert their voice through exit include labor market tightness (the ratio of job openings to job seekers); labor market concentration of employers through mergers and other means; labor supply elasticity (how likely workers are to leave a job if their wages go down); job differentiation, or how jobs differ in what they pay and how workers prioritize wages against other job attributes, such as proximity to home or nonwage benefits; and workers’ relative lack of information about jobs and employers.
- Evidence shows that tight labor markets (where job openings outnumber job seekers), labor markets where employers are forced to compete for workers, a labor supply that is highly elastic or responsive to wages, and better information provision to workers about jobs and employers can increase worker power.
- Income supports, including personal wealth and public benefits without work requirements such as direct cash assistance, can also increase worker power by raising workers’ reservation wages, or the minimum wage they are willing to accept to take a job, therefore improving their outside options.
- Public policies to support worker power through exit include more robust antitrust enforcement to ensure labor market competition; limitations on noncompete agreements that prevent workers from joining a competitor after leaving their current employer; limiting occupational licensing requirements that make it harder for workers to switch jobs or occupations; and policies that correct information imbalances between workers and employers, including salary history bans (which prevent employers from asking applicants for salary history) and pay transparency laws (which mandate that job postings disclose wages and salaries).
- Black workers’ power is severely limited by labor market discrimination perpetuated by employers, customers, or coworkers. But policies aimed at eliminating discrimination, including “ban the box” provisions that prohibit employers from requiring criminal background checks and bans on asking for credit histories and drug testing, have tended to backfire because absent that information about a candidate, employers rely on racial stereotypes to draw conclusions. New policies or avenues are needed for enforcing antidiscrimination laws so Black workers’ wages, power, and well-being are protected.
- Well-designed minimum wage policies and other policies focused on improving working conditions can also limit employer power in the labor market by setting a floor on job quality without undermining job creation.
- Unions have historically provided a crucial platform for workers to gain power and voice in the workplace through collective bargaining for better wages and working conditions. Revitalizing unions and other forms of collective voice and action is an important pathway for workers to gain power in the labor market. Yet the US has experienced a gradual decline in private-sector union membership since the 1960s, and the share of private-sector workers in unions is now around 6 percent. Other industrialized nations have experienced similar declines in private-sector union membership, with Sweden and Denmark being exceptions.
- Market forces, employer actions, and weak enforcement of labor laws have contributed to unions’ decline. There is strong evidence to suggest that globalization, automation, the fissuring and disintegration of traditional employment and supply chain relationships have eroded the power of organized labor. Starting in the 1960s, employers’ resistance to organized labor grew in scale and effectiveness, leading to a more adversarial relationships between employers and unions. The lack of enforcement of the National Labor Relations Act—the nation’s main labor law—led to employer violations going unpunished and more losses for unions during election drives.
- Yet low union membership rates should not be interpreted as a lack of desire for union representation on the part of the American public. Recent surveys indicate that a majority approve of unions and that many more workers would join a union if given the opportunity.
- An abundance of research shows that unionized workers earn a wage premium above what their nonunionized counterparts earn. Research also shows that unions were able to secure generous health and retirement benefits for members. Unions have also successfully campaigned to raise wages and improve the working conditions of workers with incomes at or near the federal poverty level. Yet other studies show that the benefits of unions extend beyond their membership by establishing norms around wages and working conditions that get adopted by nonunionized firms. Many studies have demonstrated empirically that a decline in union membership has been accompanied by a rise in income inequality.
- Alternatives to traditional labor unions have emerged in the US and international contexts, and many models are focused on improving conditions for an entire industry or sector, beyond a single firm or enterprise. Worker centers and other nonunion worker organizations and campaigns have effectively organized many low-wage and immigrant workers in low-paying industries such as food service, home health care, and domestic work. In other industrialized nations, wage and standard boards can set pay floors for industries and occupations. Sectoral bargaining schemes let workers and employers across an entire sector enter into agreements about wages and benefits, including sector-wide workforce training and skill development so workers can gain new skills for better jobs and aren’t locked into working for a single employer. And codetermination, or worker representation on corporate boards, is an established practice in Germany and could improve opportunities for worker power.
- Policies to strengthen worker power through voice include passing the Protecting the Right to Organize (PRO) Act, which proposes significant reforms to current labor law and is currently stalled in the US Senate; requiring labor participation in major economic policymaking bodies; using the procurement power of federal and state government to require contractors to abide by minimum wage and labor standards; and expanding apprenticeships through labor-industry partnerships.
The authors identify several gaps in knowledge on both exit and voice as mechanisms for worker power that would merit further research investment:
- Further research is needed on how market forces shape the racial disparities in wages and labor market power among Black and white workers. Discrimination is a major driver of these disparities, and more data and evidence are needed on how employers, coworkers, and customers express this discrimination to guide policies to eradicate it.
- More research is needed on whether banning salary histories and implementing salary transparency laws can correct information asymmetries between workers and employers and whether they can increase labor market competition and workers’ outside options. Additional evidence is needed on the relationship between wage theft and health and safety violations and labor market competition, and whether income support programs such as food stamps can increase outside options and worker power.
- On the topic of voice, the authors propose several promising avenues for further inquiry
- What legislative pathways beyond the PRO Act could help rebuild unions and worker power?
- What do workers want from collective representation, and how are existing models for worker voice, including unions, falling short?
- How can employers be engaged on issues of worker power, and how are their attitudes evolving? In-depth interviews and surveys of employers could yield information on the worker empowerment models they might support and incentives to stimulate a more cooperative relationship.
- How effective are nonunion or alternative models of worker voice in helping workers achieve greater voice and economic mobility?