What impact will unionization have on your hiring strategy?

Fast food workers help customers.

Labor unions are nothing new. Efforts at unionization date back centuries but became popular in the late 1800s and early 1900s when workers were forced to work more than 8 hours a day, over 40 hours a week for little pay, no benefits, and zero time off. Despite improvements in working conditions, fewer workers (just 10.7%) today are represented by labor unions, down from its peak of 34% in 1954. 

Only now, talks of unionizing are beginning to spread, and employers are starting to take notice. Here’s what you need to know when it comes to unions and how they can impact hiring, wages, and more. 

Where Workers are Unionizing

In certain industries and professions like education, transportation, and nursing, unions have been—and still are—quite common. But as behemoths like Amazon and Starbucks swat off workers’ unions’ demands for better pay and protections, employers may be wondering if they, too, are at risk of seeing similar requests among their own workers. 

Monster’s economist, Giacomo Santangelo, says we won’t see unions formed in every industry or at every company. In these instances where talks of organizing are occurring, he says it’s largely among freelancers, independent contractors, and part-time workers.  

The reason why unionization was necessary at one point in history was that workers demanded that they be treated well,” Santangelo says. “But in the gig economy, people can actually volunteer to be exploited by their employer. They can voluntarily give up their labor rights. Now, those people who tend to unionize in the gig economy are the ones who have been in the gig economy for a number of years and have realized that this was a choice they made. Now they’re older and they’re going to need healthcare, they’re going to need to start thinking about their future, and this job is not offering them that..” 

How Labor Unions May Affect Wages and Hiring 

Workers’ rights are important, but unionizing may come at a cost that can have adverse effects on the labor market. Santangelo says, “The belief is that unionization is going to raise the cost of production because an organized labor force is going to force a firm to pay benefits and to increase costs above what they should be. Therefore, firms are then going to have to turn around and increase the prices of goods that they’re offering to consumers.” 

This presents a serious issue in today’s economic climate where inflation is already sky high, and wages are rising at their fastest pace in 20 years. Should workers organize, Santangelo says companies will either have to raise prices even further or find ways to cut costs. He says, “Unionization will raise wages above a level that is appropriate and efficient, and it will lead to increases in unemployment.” 

Understand Worker Demands 

No employer wants to see a slowdown in production or be forced to lay off workers as a result of union activity. “It’s important to remember that the only reason why workers want to unionize is that they’re unhappy,” Santangelo says. “They’re unhappy because they’re being asked to do something that they don’t want to do. It’s the definition of exploitation. So, if employers are giving benefits and all the things that workers want, then the workers don’t have to organize.” 

So, what do workers want? Monster’s Future of Work report found that today’s workforce is looking for: 

  • Salary protection/fair compensation (up 6% compared to last year)
  • Financial compensation beyond salary
  • Healthcare benefits
  • Flexible work schedules
  • Paid time off

Finding balance may be key for employers to maintain production and profits while also keeping workers happy. After all, unions don’t just happen overnight. 

Stay on Top of Labor Market Trends 

Monster aims to provide employers with the insight needed to move forward, whether it involves unionization, recruitment, or management. As you plan your hiring strategy over the next month, check out Monster Intelligence for a deeper dive into data and labor market trends and what they mean for your business.