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Why Do Labor Unions Advocate for Minimum Wage Increases?

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  • 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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    Keywords

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    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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