The cost of a unionized workplace

    By Nicholas Pell | Small Business

    A union in your business probably costs more than you think.

    If you’re an employer in the middle of a unionization drive, you have every reason to be concerned. A successful unionization cost will increase your overhead. If you aren’t worried already, learning the full cost of a unionized workplace will give you a reason to act.


    Unionized workers earn a wage well in excess of what non-unionized workers earn. The average unionized employee earns nearly a third above what his non-unionized counterpart makes. Remember that union members have to pay union dues. To get a union contract without an increase in wages is to effectively take a pay cut for your employees. Can your business afford a 30 percent hike in wages? If not, you should consider every legal means at your disposal to stop the union in its tracks.


    Unionized employees extra cost isn’t just related to wages. The total compensation package will also increase in cost. The overwhelming majority of unionized workplaces in America have benefits such as paid sick leave, health insurance and pensions. All told, 84 percent of unionized workplaces have health care, 83 percent have paid sick leave and 87 percent have a pension. This can literally bankrupt a company that is on the edge, particularly when coupled with the increased cost of wages.

    “Good Faith Bargaining”

    A more intangible cost, “good faith bargaining” is required by the National Labor Relations Act. While you likely always bargain with employees in good faith, this takes on a particular meaning when you must deal with a third-party bargaining organization like a union. The law prohibits employers with a recognized union from:

    • Bargaining with employees individually.
    • ·Failing to disclose information such as your intent to sell a business.
    • Sending unqualified or uninformed negotiators to bargain with the union.
    • Any conduct that can be deemed destructive to the act of collective bargaining.

    The last clause in particular is problematic, precisely because it is so vague. In addition to the increased cost of labor, you will also have to hire legal consultants who can advise you in best practices for bargaining with a union.

    Employee Discipline

    Once the union comes in you are no longer in control of how your employees are disciplined. While you can have discipline procedures in place, the matter becomes complicated by the existence of the union and the grievance procedure. When an employee does not agree with your disciplinary actions -- verbal, written or otherwise -- he has the option to file a grievance with the union. This results in less flexibility to creative disciplinary procedures, as the union has an effective veto power over your decisions.

    Related to this is the complication in rewarding employees. Union contracts include strict guidelines on how raises are handed out. Further, seniority is generally the determiner for who gets promoted, not skill, experience or suitability for the position. This will make it more difficult for you to attract the top talent, as well as hold on to ambitious employees seeking advancement.

    Fighting a Unionization Drive

    The best way to avoid the costs of a union is to stop it before it takes root. While the law limits what you can do to prevent a union from taking hold in your workplace, you should make any legal effort to keep out a third-party bargaining unit. In a worst-case scenario, a union can drive up costs so high that you might go out of business. This is not good for you or your employees. If you listen to why employees want a union you might be able to address their concerns without the need for a union.

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