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Why Do Labor Unions Advocate for Minimum Wage Increases?

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Listed:
  • Clemens, Jeffrey

    (University of California, San Diego)

  • Strain, Michael R.

    (American Enterprise Institute for Public Policy Research)

Abstract

Over the past decade, organized labor has played a significant role in advocating for minimum wage increases. Why might this be, given that the minimum wage may act as a substitute for the bargaining power offered by labor unions? In this paper, we study the interplay between minimum wages and union membership. We estimate that each dollar in minimum wage increase predicts a 5 percent increase (0.3 pp) in the union membership rate among individuals ages 16–40. Consistent with a classic "free-riding" hypothesis, however, we find that minimum wage increases predict declines in union membership among the minimum wage's most direct beneficiaries. Instead, increases in union membership occur among much broader groups that are not directly affected by the minimum wage.

Suggested Citation

  • Clemens, Jeffrey & Strain, Michael R., 2023. "Why Do Labor Unions Advocate for Minimum Wage Increases?," IZA Discussion Papers 16059, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16059
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    References listed on IDEAS

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    1. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
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    5. Jeffrey Clemens & Michael R. Strain, 2017. "Estimating the Employment Effects of Recent Minimum Wage Changes: Early Evidence, an Interpretative Framework, and a Pre-Commitment to Future Analysis," NBER Working Papers 23084, National Bureau of Economic Research, Inc.
    6. Jeffrey Clemens & Michael R. Strain, 2018. "The Short‐Run Employment Effects Of Recent Minimum Wage Changes: Evidence From The American Community Survey," Contemporary Economic Policy, Western Economic Association International, vol. 36(4), pages 711-722, October.
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    1. Dosi Giovanni & Virgillito Maria Enrica, 2024. "Minimum Wage for Italy: From Social Justice to Productive Efficiency," Intereconomics: Review of European Economic Policy, Sciendo, vol. 59(4), pages 231-235.

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    More about this item

    Keywords

    political economy; social choice; minimum wage; unionization;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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