What happens to pay when companies unionize? A new study by a Massachusetts Institute of Technology-trained economist comes to a surprising conclusion: Wages fall.
Dr. Brigham Frandsen compared companies whose workers narrowly voted to unionize with those whose employees voted narrowly to stay non-union. He found that average wages at the narrowly unionized companies fell 2-4 percent relative to those that narrowly rejected unionization.
Unions attempt to raise wages. Why would unionizing cause them to fall? Frandsen found a straightforward explanation. Average wages did not change for workers who stayed with their company. But many of the most productive—and highly paid—workers quit after their companies unionized and took jobs with non-union firms. Their replacements tended to have lower wages, so the exodus of talent pulled down the average.
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