Discussion about adopting policies to support sectoral bargaining -- a type of collective bargaining that provides union contract coverage for most or all workers in a particular sector -- has been growing in think tank and academic circles and with some leading Democratic politicians. The push for sectoral bargaining has been driven in large part because sectoral bargaining leads to much greater union contract coverage compared to purely workplace-level bargaining systems. This means more workers receive higher wages and benefits and society has lower racial and gender pay gaps as well as less economic inequality.
But some union allies worry that promoting sectoral bargaining could reduce union membership because some versions can create a free-rider problem, whereby similarly placed workers benefit from sector-wide agreements whether they are members or not.
Yet, as I highlight in a new Center for American Progress report, there is little evidence that sectoral bargaining -- particularly when it operates in conjunction with workplace-level bargaining – reduces union membership and a significant amount finding that sectoral bargaining typically supports high union membership.
This perhaps counterintuitive finding occurs because sectoral bargaining also creates processes that encourage union membership. Under sectoral bargaining, employers have less incentive to fight their workers’ efforts to unionize because employers face similar labor costs pursuant to sector-wide agreements whether their workers are unionized or not. This can reduce employer opposition to unionization and thereby make organizing new workers easier. It also means that existing unionized workers, their employers, and their high union standards are protected from being undercut by low-paying companies.
In addition, sectoral bargaining provides new recruitment opportunities for unions: They can recruit from workers that they already have a connection to because they are covered by a sectoral bargaining agreement. Workers covered by a sectoral agreement are primed to credit the union for improving their working conditions. Furthermore, under sectoral bargaining, workers have incentives to unionize to have power in negotiations, particularly in sectoral systems that do a good job of also supporting worksite-level bargaining and integrating the levels of bargaining.
Critically, sectoral bargaining structures in other developed democracies typically include additional policies that support union membership such as worksite access for unions, robust worker rights, and programs where unions help deliver governmental benefits to their members.
Real-world examples in other countries back up this theory and demonstrate that the pro-union forces unleashed by sectoral bargaining are generally more powerful than the free-rider problem it fosters.
For example, after Uruguay revitalized sectoral bargaining, labor union membership significantly increased. In contrast, New Zealand, Australia, and Britain experienced sharp reductions in union membership when they severely weakened or eliminated sectoral bargaining.
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Cross-country research clearly shows benefits for union membership. Sectoral bargaining is more “conducive” to growth in union membership than worksite-only bargaining according to research on 35 countries by Magnus B. Rasmussen, professor at the University of South Eastern Norway. Rasmussen found this is particularly true for workers in jobs that are “inherently hard to organize.”
Similarly, Jelle Visser, a professor at the University of Amsterdam, found that greater bargaining centralization (with sectoral bargaining more centralized than worksite bargaining) has a “significant, positive and robust impact” on union membership. Bruce Western, from Columbia University, studied economically advanced countries to find that more centralized bargaining was “essential for union growth.”
This academic research highlights what is plainly obvious: among the countries who are members of the Organization for Economic Cooperation and Development (OECD, the organization of 38 developed democracies) those with the highest union membership – Iceland, Sweden, Finland, Denmark, Norway, Belgium, and Italy—all have sectoral systems. In contrast, the countries with the lowest union membership in the OECD – United States, Turkey, Colombia, Hungary, Lithuania, and Estonia -- all have primarily workplace bargaining.
Still, some sectoral bargaining countries have low union membership – especially France, with just 11 percent membership. But France is not a model the United States should emulate. Its system is designed in ways that limit union density.
In the French system, the government and employers provide most of the financial support for unions, with dues making up only a small fraction. Collective bargaining is based on the support unions receive in special workplace elections for employee representatives, not on union membership. Further, essentially all rights and benefits of union contracts are provided to most French workers. This means France has a greater free rider problem than in other sectoral systems because many other sectoral systems extend just some parts of union contracts to nonmembers—such as wages, but not all benefits or on-the-job protections. All these factors reduce membership.
Beyond the national-level analysis, case studies of union organizing campaigns also show that sectoral bargaining can facilitate worker organizing and membership.
Cases of organizing campaigns highlight how workers can organize around sectoral issues. They also show that the sectoral systems helped workers achieve their goals and promoted further organizing and membership. The interplay between workplace and sectoral organizing was often important in these cases.
Amazon workers in Italy, for example, conducted a large systemwide strike as well as other smaller worksite actions in part to get Amazon to fully comply with national sectoral agreements for similar workers. These strikes were important in helping achieve a first contract with Amazon. The contract supports union recruitment by facilitating union communication with workers through the company’s systems.
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In the United States, workers have also organized around sectoral standards -- and have even done so under sectoral standard setting systems that fall short of sectoral bargaining and thus create less of a push for collective action.
For example, a number of cities have passed sectoral minimum wage laws and several states have enacted worker boards policies -- where representatives of workers, employers, and the government set minimum workplace standards for entire industries as is done in California’s sectoral fast-food council and Minnesota’s nursing home workforce standards board. State-level worker standards boards are not exactly sectoral bargaining, as government plays a direct role in the negotiations and the standards are not union contracts. Indeed, because federal law largely preempts U.S. states from passing laws that directly support union organizing and collective bargaining, state worker standards boards are far from the model version of sectoral bargaining systems that could be enacted at the federal level. Still, workers have frequently taken actions and joined unions in part because of the sectoral structures these policies create.
After several cities passed sectoral minimum wage laws, unions “continued to grow membership,” according to a review by the Institute for Research on Labor and Employment at U.C. Berkeley. Under a sectoral minimum wage in Santa Monica, California, union density for large hotels increased to 70 percent from 0 percent. Home-care workers in Nevada created a sectoral standards board and then unionized several employers as part of their efforts.
The bottom line from research in the U.S. and around the world is that sectoral bargaining can and generally does support high union membership. Sectoral bargaining can create a virtuous circle where sectoral efforts encourage worker engagement and make their efforts more likely to succeed.
Still, sectoral bargaining is not a standalone solution to boost union membership. Sectoral bargaining should be promoted along with other reforms to support workplace bargaining and grassroots organizing.
David Madland is a senior fellow at the Center for American Progress and the author of “Re-Union: How Bold Labor Reforms Can Repair, Revitalize, and Reunite the United States.”
