Today, despite the ongoing economic and social toll of Trump’s draconian mass deportation policy, prime-age Latina workers continue to drive much of the strength in the employment rates of Hispanic workers. But we also see signs of weakness for younger workers between the ages of 16 and 24. New data released this year also show that Hispanic adults and their families share growing concerns about their employment security. We highlight each of these dynamics below.

Prime-age Latina workers are writing much of the employment story for Hispanic workers in 2026  

To trace the performance of Hispanic workers since last year, we examine 12-month moving averages of the employment-to-population ratio for prime-age Hispanic workers (ages 25–54) available in the EPI Data Library. There are a few reasons for this that are important to highlight. First, our 12-month moving average smooths much of the month-to-month noise due to sampling size limitations. We also focus exclusively on employment rates because it is not influenced by changes in labor force participation in the way that the unemployment rate is. Lastly, by focusing on prime-age workers—who are less likely to be out of the labor force due to schooling or retirement—our analysis is less influenced by changes in college attendance and the aging of the population.  

As seen in Figure A, the average employment rate for prime-age Hispanic workers stands at a historic high as of August 2026. These workers have managed to make inroads in employment despite a sluggish labor market experiencing weak-to-modest job growth.  

This story of resilience amid uncertainty continues to be largely attributed to prime-age Latina workers, who have managed to not just maintain their employment rate from 2025, but to build on last year’s gains. 70.7% of prime-age Latina workers had a job between September 2025 and August 2026—a new record high. While a significantly larger share of prime-age Latinos work relative to Latinas, their employment rate remains largely unchanged and below previous peaks.

Figure A

Prime-age Latinas are even outpacing their peers, who have historically enjoyed higher employment rates but have been more adversely impacted by the weaker labor market. Figure B shows that the average employment rate of prime-age Latinas continued to rise through August 2026, while that of their Black and white peers declined or flattened. This is because Latinas are more heavily concentrated in some of the economic sectors leading the charts in job growth, such as leisure and hospitality. Despite these gains, Latinas continue to be disproportionately affected by the gender pay gap due to the compounding effects of discrimination and occupational segregation. 

Figure B

Young Hispanic workers have not seen their employment situation improve over the last year 

Not all Hispanic workers have avoided a worsening employment situation in the last year. For example, the employment rates of young Hispanic workers between the ages of 16 and 24 have struggled to maintain consistent gains in the last year. While the average employment rate for young Latinos is now improving after a sharp drop last year, employment among young Latinas is falling along with that of other young workers and recent graduates.  

More broadly, this uneven progress may help us understand why more than half of Hispanic adults expressed concerns about finding or keeping a job last year. These growing employment fears remind us how difficult it is to achieve broad-based employment gains in a labor market struggling to regain its footing amid a mass deportation policy that will cost millions of jobs and an uncertain macroeconomic environment that continues to reproduce inequality. 

Outside of a crisis or recession, Americans’ perceptions of how the country and economy are being managed have never been so negative. Many have attributed this voter unhappiness to a crisis of “affordability.”

It is objectively true that it is too hard for most American families to afford a secure and dignified life. But the word “affordability” leads too many people—including policymakers—to fixate on prices. Affordability is not just about prices; instead, it’s the outcome of a race between incomes and prices.

This is not just economists quibbling. Focusing on prices will lead policymakers to ignore far too much of the useful playing field when thinking about what changes could make life better for working families.

In this article, we make the following arguments:

• Far too many families are unable to afford a decent economic life.
• The primary cause is a large increase in income and wage inequality, with incomes and wages for the vast majority of families lagging far behind what they could and should be.
• This rise in inequality was caused by increasingly unequal “market” incomes (e.g., wages and salaries, returns on investments), while changes in taxes or transfers (e.g., Social Security, Medicare, unemployment insurance) slightly dampened the rise of income inequality.
• The large rise in income inequality was driven by intentional policy changes that affected typical workers’ leverage and bargaining power in the labor market—and that means they can be reversed.
• In capitalist economies (like ours), labor markets are inherently tilted toward employers—but historically and globally, broadly shared prosperity has only been achieved when policies that intentionally support workers (like strong unions, adequate minimum wages, and full employment mandates) have provided a countervailing force against employers’ power in labor markets. 
• Much of the post-1979 period in the United States saw an assault on worker-friendly policies, and this led directly to the rise in inequality and to weak income growth for working families.

Americans’ economic dissatisfaction has real roots

The U.S. economy is the richest in the world, yet the gap between what it could deliver to working families versus what it actually delivers is maddening. This gap can be measured with some precision. Figure A shows inflation-adjusted household income for the middle-fifth of U.S. families between 1979 and 2022, as well as what this growth could have been had it simply grown as fast as average incomes did in this period. 

This gap is driven by inequality. Average incomes can only rise faster than incomes at the middle if some groups—the ultra-rich in this case—see strongly above-average growth. This gap between average growth and growth experienced by the middle reached staggering levels by 2022 (the most recent data from the Congressional Budget Office). In that year, inequality’s rise since 1979 deprived middle-income families of an average of $28,100. Life for these families would be far more affordable today if they had this money coming in each year. And that’s well within our grasp. Average income growth is by definition attainable. All that’s needed are policies that ensure income growth is broadly shared, instead of policies that cause staggeringly fast income growth among the top 1% and much slower income growth for working people. 

Figure B shows this inequality another way—charting average annual growth rates for the 1979–2022 period for a number of groups ranked by their position in the income distribution. The strikingly bad news from this figure is that only household groups above the 90th percentile saw income growth that matched or exceeded average income growth. How can more than 90% of households be below average when it comes to income growth? This is possible because the top 5%—and especially the top 1%—saw astoundingly fast growth over this period. 

For any given average growth rate, faster growth at the top of the scale must be matched by slower growth at the middle and/or bottom. It is this zero-sum dynamic of inequality, not anything to do with prices, that has been the crushing drag on regular Americans trying to afford a better life over time.

Staggering inequality is a choice

This growth in inequality has been driven by the rules governing markets—rules our elected leaders determine—not by taxes or transfers. Figure A showed the staggering $28,100 gap in market (pre-tax and transfer) income between what families in the middle-fifth actually made in 2022 versus what they could have made had inequality not risen. Figure C shows how large this gap is after the federal government gets involved on the tax and transfer side of the equation. 

Taxes obviously reduce incomes, but transfers (social insurance like Social Security and income support payments like unemployment insurance) raise incomes. For the middle-fifth of US households, this effect is largely a wash—their current income levels in Figures A and C are very similar. But because the United States still has a progressive federal tax system (though not as progressive as we would like), the rise of inequality in this post-tax and transfer data is slightly muted—i.e., federal taxes and transfers shrink the gap somewhat. By 2022, the annual gap after accounting for federal taxes and transfers is $17,698—still a sum of money that would be transformative for American families.

Essentially, federal taxes and transfers undid roughly one-third of the rise in income inequality, allowing rich households to pocket roughly two-thirds of their gains.*

This rise in inequality was overwhelmingly driven by an intentional, multipronged policy campaign to suppress wages that was undertaken by shareholders, other capital owners, and corporate executives, with policymakers greasing the skids along the way.4 The primacy of wage suppression can be seen in Figure D, which compares the economy’s potential to pay higher wages and incomes with the actual hourly pay of typical workers in the United States. 

We measure the economy’s potential to pay higher wages by productivity, which is the output and income generated in the economy in an hour of work on average. And we define typical workers’ pay as the wages and benefits of workers in production and nonsupervisory positions, a group that constitutes over 80% of the economy’s private-sector workforce, excluding higher-wage managers and executives. As you see in the figure, in the three decades after World War II, productivity and pay mostly moved roughly in tandem, with typical workers’ pay rising 83% as fast as productivity. After 1979, these lines diverge sharply, with workers’ pay rising only about 43% as fast as productivity. 

If typical workers’ pay had risen in line with productivity growth in the years since 1979, their hourly pay would be 43% higher today. For a full-time, full-year worker making the median wage, this would constitute annual wages that are almost $23,000 higher.5 Where did that $23,000 go? Instead of paying workers more as their productivity rose, corporate executives, other already highly paid professionals, and shareholders captured those gains for themselves.

This growing gap between what shows up in typical workers’ paychecks and benefits versus the overall income being generated in the economy is the root story of American inequality and of today’s affordability crisis.

This pay-productivity gap can be decomposed into two parts: the portion driven by rising inequality in “labor” income (income earned from work), and the portion driven by a shift from labor income to “capital” income (income from investments, like when a stock increases in value). Growing inequality within labor incomes—earnings growing much faster among high-paying jobs than among middle- and low-paying jobs—accounts for almost 80% of the gap. The remaining 20% is accounted for by a shift from labor income to capital income.6 Below we say a bit more about each of these.

Rising inequality of labor incomes

The larger factor in the rise of overall income inequality is the growing inequality within labor incomes. This often surprises people, who assume the story of rising inequality is mostly one of the profits of rich corporations rising while most of their workers are left behind. It’s true that most workers in these corporations do not benefit, but the powerful employees who do prosper—CEOs and other executives—receive astronomical salaries that are classified as labor income in economic data, and these inflated executive salaries do cut into corporate profits. 

In addition, below the stratospheric level of corporate managers at large companies, there is a stratum of workers in medicine, legal services, and finance who command huge salaries. It’s not a large group of people, but the rise in their pay has been extreme. Figure E highlights this radical inequality within labor incomes, showing annual earnings of various wage groupings. (To keep the figure legible, pre-1979 data are not shown.) Prior to 1979, wage growth among very high wage workers—those in the top 10%, the top 1%, and the top 0.1%—was roughly in line with wage growth for the vast majority (i.e., for the bottom 90%). But between 1979 and 2023, cumulative growth in average annual earnings for the bottom 90% of workers was 44%, compared with 133% for the top 1%. For the top 0.1%, this growth was 354%—so high it doesn’t fit in the figure.

Given that labor income remains the large majority of all income generated in the economy, this huge rise in inequality within labor incomes is a key driver of the economy-wide march to greater inequality. Workers at the top of the wage scale were largely able to insulate themselves from the campaign of wage suppression launched by corporate owners. Of course, some of them were active participants in this campaign and got a significant cut of its benefits (think CEOs and lawyers for union-busting law firms). But the vast majority of workers (roughly 90%, as we see in Figure B) were on the losing side of this wage suppression campaign and found their wages falling far behind the economy’s potential to deliver strong and sustained wage growth. 

In some ways, the influence of rising inequality within labor incomes might be underestimated. For decades, U.S. tax policy has levied lower tax rates on capital income than labor income, and a great deal of capital gains escapes taxation entirely due to loopholes. 

Many of the same people who have been privileged enough to insulate themselves from wage suppression are also privileged enough to have excellent accountants who can make their incomes appear in whatever form results in the lowest taxes.7 For example, CEOs are overwhelmingly paid with “performance-based” measures, which means measures tied to the value of their companies’ stock prices. Twenty years ago, the large majority of this stock-based pay for CEOs came in the form of stock options, which are contracts that give the CEO the right (but not the obligation) to buy shares of stock at a set price. If the market price went above this set price, CEOs could exercise these options and pocket the difference as pay. The gains from exercised stock options are recognized by the IRS as labor income, taxed accordingly, and classified in data as labor income. But over the past two decades, there has been a pronounced shift in the stock-based pay of CEOs away from stock options and toward the outright granting of stock. In this case, CEOs are not given a right to buy shares at a preferential price; they are simply given shares.8 What’s important for the split between capital and labor incomes is that these non-option forms of stock-based compensation are far less likely to be captured in measures of wage incomes. So this tax evasion strategy artificially depresses estimates of labor income in the economy.

The shift from labor to capital incomes

While most of the pay-productivity gap stemmed from the rising inequality within labor earnings discussed above, a nontrivial portion of this gap stemmed from a shift in overall income from labor to capital. This goes far beyond the tax avoidance trick described above for CEO compensation—including paying regular working people less so that shareholders get more. If, for example, a corporation were able to suppress its workers’ pay while raising customers’ prices and/or cutting what it paid suppliers (which generally means those suppliers paying their workers less), it would earn higher profits. By successfully suppressing wages to boost profits, American corporations have made their stock more valuable. Imagine an investor buys $100 in company stock with the expectation of an annual return of $5. If the company undertakes a successful campaign of wage suppression that boosts annual returns to $10, many other investors will buy company stock—bidding up share prices.

So even though this labor-to-capital shift in overall income is the smaller player in generating overall income inequality, it still had profound effects on American economic life. Estimates indicate that anywhere from 40% to nearly 100% of the entire nominal gains in the U.S. stock market since 1989 can be attributed to this shift of income from workers to capital owners.9

The rise in US stock prices in recent decades is a key driver of another kind of economic inequality: inequality of wealth.^† One of the primary sources of wealth, the ownership of corporate equities (e.g., shares of stocks), is incredibly concentrated; the top 10% of households own about 85% of all corporate equities, and the top 1% own nearly 40%.10

The concentration of corporate equities combined with the role of wage suppression in making these equities far more valuable leads to a clear implication: The wage suppression of recent decades is not just by far the biggest driver of the rise in income inequality; it is also by far the biggest driver of the rise in wealth inequality. Most of the rise in wealth inequality in recent decades has been the outcome of an intentional transfer away from workers to the top. 

Labor markets are not fair

This rise in inequality in recent decades has attracted much attention from researchers—along with everybody else struggling to pay for groceries and keep the lights on. For a long time, economists’ role in the debate over inequality was to look for reasons why well-functioning, competitive markets could generate lots of inequality. This often led to explanations that essentially blamed workers for the outcomes. The argument was that the fair and competitive labor market had spoken and that these workers were falling behind because their skills and efforts had been found wanting. The precise failure identified was often workers’ alleged inability to adapt to the quickening pace of technological change in the economy. 

But the evidence supporting this view of inequality driven by apolitical forces working through fair and competitive markets was incredibly thin.11 That led many researchers to examine whether labor markets are by their very nature tilted against workers, making it very difficult to secure regular raises that match overall economic growth. 

There is ample evidence for this view—that excess employer-side power makes labor markets generally unfair and inefficient, and that truly fair, competitive labor markets are the exception, not the rule. For example, many employers, and particularly those of low- and moderate-wage workers, rarely if ever negotiate pay; instead, they post take-it-or-leave-it wage offers.12 And when a given employer lets its wages lag behind those of potential competitors, workers’ exit from the lower-wage firm is far less common than would be predicted under truly competitive labor markets (where employers robustly compete for workers).13

This employer-side power is rooted in many obvious factors in real-world labor markets that make it hard for workers to effectively search for better jobs and, therefore, force employers to compete over them. These include things like lack of information about wages and benefits offered by other employers, transportation restrictions that require workers to look for jobs only in places near their homes or public transit nodes, and child care considerations that require a job’s location be compatible with picking up kids at a regular time, along with many other factors. 

Another barrier to competition is the obvious fact that in the short run, most employers need the income a new worker would generate for their business far less than most workers need the income from a job. In a jobsite of 100 workers, having a month go by understaffed by a single worker reduces business income by roughly 1%. In a household with a single worker, having a month go by without a job reduces income by essentially 100%. 

Employers exploit these barriers to employees finding better options by “marking down” wages below what would be necessary for employers to attract and retain workers in competitive labor markets. These markdowns can be large enough to push workers’ pay well below the value they produce for the employer (i.e., below the “market clearing” wage). This makes them not just unfair, but inefficient—a drag on economic growth. 

Key policy choices that led to rising inequality 

Having realized the role of employers’ power in determining labor market outcomes, the importance of specific policies is magnified. For example, before the 1990s, many economists were extremely skeptical that minimum wages could do much good in raising wages without steep downsides like job loss. Why? Because they erroneously used models of competitive labor markets. 

But more accurate models that include employers’ power reveal significant room to raise minimum wages without generating job losses. The evidence over the past 30 years has been highly persuasive that minimum wages could be much higher than they were in the 1980s and 1990s without causing job losses and that the benefits for low-wage workers would be large.14

The period of rising inequality since 1979 was one of profound institutional change in labor markets. The federal minimum wage, for example, lost 35% of its value between 1979 and 2025 as legislative inaction (i.e., not raising it) allowed it to be battered into irrelevance by inflation.15 This was also a period that saw a pronounced acceleration in the decline of unionization rates of American workers.16 It was a time when high levels of unemployment were tolerated by policymakers for extended periods in the name of fighting inflation.17 And it was a time when increasing integration between the rich United States and a poorer global economy was done on terms that were written by and for corporate interests.^‡

Several years ago, researchers at our organization, the Economic Policy Institute, reviewed the research on how much specific policy choices likely contributed to growing inequality. Adding together the impacts of the changes like those listed above could easily explain the lion’s share of the rise in inequality since 1979.18

For example, one key policy change was the practical abandonment of the Federal Reserve’s full employment mandate. By law, the Fed is supposed to pursue both stable inflation and full employment (which means trying to keep unemployment as low as is consistent with stable inflation). But between 1979 and 2007 (right before the Great Recession), the Fed largely acted as if it did have a mandate to pursue stable inflation but did not have one to pursue full employment. 

After the Great Recession, the Fed admirably reversed course and tried to push the economy back to full employment, but its tools proved too weak given the magnitude of the shock. In such situations, fiscal policy—taxes and spending—should be used aggressively to restore full employment. But in the 2010s, political gridlock and excess caution kept policymakers from doing this, and much of that decade was plagued by excess unemployment. 

Excess unemployment does not just leave willing workers locked out of jobs. It also saps the ability of still-employed workers to demand raises. For nonunion workers, their chief leverage for getting wage increases is threatening to quit. This threat is only credible when unemployment is low. Consequently, the too-high unemployment rates for most of the period from 1979 to 2019 were a drag on wage growth. In our estimates, too-high unemployment may well have explained nearly a third of the entire pay-productivity gap over that period19—not to mention the devastation it wrought for millions of families.

Another key policy change was the failure to keep the playing field level between workers looking to organize and join unions and the employers who wanted to stop them. The National Labor Relations Board is supposed to safeguard this right, but its tools have proved too weak in the face of fierce employer opposition to unions, and policy changes to strengthen these tools have consistently been blocked. The results of throttling the growth of new unions have been profound; our estimates are that declining unionization likely explains a quarter of the pay-productivity gap since 1979.20 Crucially, the decline in unionization did not just hurt workers who otherwise would have been unionized. By far the biggest of the wage-suppressing effects of deunionization has been on the broad pool of nonunion workers. As unions lose strength, they stop being able to set industry-wide pay standards that even nonunion employers feel like they have to meet to avoid hemorrhaging employees. 

The wage-depressing effect of trade flows from poorer nations—flows encouraged by the corporate-led trade agreements the United States has signed in recent decades—can likely explain another 10 to 15% of the pay-productivity divergence since 1979.21

The wrong incentives

Tolerating excess unemployment, throttling workers’ ability to join unions, failing to update the minimum wage as costs rise, and signing corporate-friendly trade agreements were some of the many instruments of wage suppression undertaken and abetted by policymakers in recent decades. At the same time, choices legislators made on tax policy boosted the incentive for capital owners and corporate managers to aggressively use these instruments to increase their wealth. 

When ultra-high incomes and corporate profits are taxed at high (i.e., appropriate) rates, the incentives for powerful individuals to rig the rules of markets to suppress regular workers’ wages are much smaller. Key research shows that this incentive effect is real and powerful. For example, across countries, the larger the tax cuts on the rich enacted in recent decades, the greater the increase in pre-tax inequality.22 And, the lower the top tax rates for individuals, the higher the levels of pre-tax CEO pay.23 High taxes reduce the benefits of rule-rigging, so cutting taxes increases rule-rigging. This means that raising taxes on the richest households and corporations results in new revenue and more equal pre-tax incomes. But from the mid-1970s, tax rates for high-income households and corporations have been cut steadily and deeply in the United States, reducing both tax revenues and wages for working people.

Income inequality, not high prices, is behind the affordability crisis

We opened this article with a claim that affordability is the outcome of a race between income and prices. Our long walk through the economics and history of recent American inequality highlights that intentional policy choices have deprived typical households of income they could have otherwise claimed. Without this inequality, a middle-income household today would have tens of thousands of dollars more per year—and this would obviously make affording a decent life much easier. 

But some might wonder if we have still given prices short shrift in how much they contribute to affordability challenges. We don’t think so, for a number of reasons. We sketch three of them here.

First, all of the income, wage, and productivity statistics we have included in this article have been real (i.e., they have been adjusted for the impact of inflation). And it is unambiguously true that real (inflation-adjusted) incomes are the proper way to measure living standards and economic possibilities for households. 

Getting distracted by price growth while missing what’s happening with income will lead to wrong conclusions about economic performance over even relatively recent periods of time. Figure F compares two periods, both starting one year before a deep recession struck and then running five years: 2007–2012 and 2019–2024. In the first period, inflation averaged 1.8%, while in the second it ran more than twice as fast at 4.2%. Yet real (inflation-adjusted) wage growth for low- and middle-wage workers was far faster in the second period. For the lowest-wage workers, real wages fell by 2.1% in the first period but rose by 15.3% in the second. For workers in the middle of the wage scale, real wages fell by 1.5% in the first period but rose by 5.8% in the second. 

Over very short periods of time (one to two years), it is true that a rapid spike in prices tends to drive down real incomes and wages. But over any longer period (even as short as three to five years), assessing how the economy is doing for typical families rarely bears much relationship to price growth.

Second, even when researchers adjust for inflation differently at different parts of the wage and income distribution, the impact is modest. Such measures account for things like lower-income families spending a higher share of their income on rent and groceries and a lower share on vacations. But there are surprisingly small differences in overall price growth faced by families at different income levels. For example, from 2019 to 2025, when the price of housing and groceries was on peoples’ minds for good reasons, the inflation rate faced by the bottom 40% of households was just 0.2% higher than for the top 20% of households.24 In short, the growth in prices faced by different groups varies far less than the growth of their incomes and wages. 

Third, a key insight in assessing affordability debates is that one person’s cost is another person’s income. If the cost of a pound of coffee doubles from $10 to $20, this constitutes $10 of additional income that somebody is getting. Perhaps the coffee grower or the shipper or the grocery store shareholders or the CEO or the cashiers or some other link in the supply chain is getting an extra $10 (or several of them are getting some slice of it). This means that rapidly rising prices cannot result in less income overall, so they are highly unlikely to actually make an entire economy poorer. Instead, the groups that face only the price increase lose out while groups receiving the extra income win. 

This fact that every price is an amalgamation of various income streams also means policymakers can more usefully target wage and income policies rather than price policies. Again, my bill at the grocery store pays for the wages of cashiers, the pay of the company CEO, the dividends to shareholders, the payments to suppliers, and more. Even if we’re unhappy about this grocery bill, we likely don’t want all of those price components to get squeezed. We probably want the wages of cashiers to rise while hoping to rein in CEO pay and shareholder dividends. Policies that only look to restrain prices—price controls, for example—make no such distinction, so we don’t know who in the grocery supply chain will bear their burden (though we can guess it’s more likely to be the cashiers than the CEO). But if we raise minimum wages, change labor law to allow more widespread unionization, and raise taxes on the ultra-rich and on corporate profits, we have a very good idea of which incomes will be boosted and which will get squeezed.

Creating a fairer economy

It is deeply depressing that intentional policy acts led to the enormous rise in inequality that is making life so much harder for so many people. If tens of millions of American households had tens of thousands of extra dollars in their bank accounts each year while billionaires had significantly less money, the country would be a much better and happier place.

What brings us hope is the knowledge that because the rise in inequality was not the inevitable outcome of a modern economy, it can be halted and reversed. Today’s workers have the skills and abilities needed to support much higher incomes with no loss in efficiency or employment—if we change policy to give them these higher wages. This is excellent news. Of course, many of today’s elected leaders—and their donors—have little interest in reducing inequality, so the road ahead is long. But the foundational ingredients for a fairer and more efficient economy are clear: 

• Keep unemployment rates low for long periods of time and fight recessions fiercely when they inevitably occur. 
• Restore the right to organize new unions and bargain collectively. 
• Raise minimum wages, including the federal minimum wage. 
• Enact rules for the global economy that support healthy wage growth, not just healthy corporate profits. 
• Crush the incentive to rig the rules of the economy by raising taxes significantly on ultra-rich households and corporations. 

The details on how we create a fairer economy are more complex—and they do matter! But understanding that the affordability crisis facing American families is overwhelmingly an inequality crisis is a necessary and useful place to start.

*Since this analysis goes through 2022, it does not include the tax or benefits cuts (including to Medicaid and the Supplemental Nutrition Assistance Program) in the One Big Beautiful Bill Act that President Trump signed into law in July 2025. These will further increase inequality.

^†Wealth is the value of a person’s assets (e.g., the equity in their home, stocks and bonds in their retirement accounts, or their baseball card collections) minus the value of their debts.

^‡For details, see “A Trade Policy That Puts Working Families First.” 

Footnotes

1. Congressional Budget Office, The Distribution of Household Income, 2022 (January 2026), cbo.gov/publication/61911.

2. Congressional Budget Office, The Distribution.

3. Congressional Budget Office, The Distribution.

4. For a much deeper dive into the specifics of this policy campaign of wage suppression, along with empirical assessments of how much it cost American families, see L. Mishel and J. Bivens, “Identifying the Policy Levers Generating Wage Suppression and Wage Inequality,” Economic Policy Institute, May 13, 2021, epi.org/unequalpower/publications/wage-suppression-inequality.

5. The median wage for U.S. workers in 2025 was $25.67. This (and a lot more) can be found at data.epi.org. Multiplying this median wage by 0.43 and then by 2,080 (hours worked by a full-time/full-year worker) yields the $23,000 figure.

6. Earlier estimates of how much inequality within wages contributed to the pay-productivity gap can be found here: L. Mishel, “Growing Inequalities, Reflecting Growing Employer Power, Have Generated a Productivity–Pay Gap Since 1979,” Working Economics Blog, September 2, 2021, epi.org/blog/growing-inequalities-reflecting-growing-employer-power-have-generated-a-productivity-pay-gap-since-1979-productivity-has-grown-3-5-times-as-much-as-pay-for-the-typical-worker. The easy way to update this (which we did for this report) is to compare productivity with growth in overall average compensation of American workers since 1979. This overall average compensation rose by roughly 76% since 1979. Given typical workers’ pay growth of just under 30%, this means that 46% (76% minus 30%) of the divergence between typical workers’ pay and productivity is a difference between typical workers’ pay and average pay.

7. See here for an estimate of how much of today’s reported capital incomes would be more properly classified as the returns to work (i.e., labor incomes): A. Eisfeldt, A. Falato, and M. Xiaolan, “Human Capitalists,” NBER Working Paper no. 28815, National Bureau of Economic Research, April 2022, nber.org/papers/w28815.

8. For more on CEO pay levels and their composition, see J. Bivens, E. Gould, and J. Kandra, “CEO Pay Has Skyrocketed Since 1978,” Economic Policy Institute, September 25, 2025, epi.org/publication/ceo-pay.

9. For this estimate, see D. Greenwald, M. Lettau, and S. Ludvigson, “How the Wealth Was Won: Factor Shares as Market Fundamentals,” Journal of Political Economy 133, no. 4 (April 2025): 1083–1132; and A. Atkeson, J. Heathcote, and F. Perri, A Macroeconomic Perspective on Stock Market Valuation Ratios (Federal Reserve Bank of Minneapolis, Research Division, January 2026), minneapolisfed.org/research/sr/sr682.pdf.

10. See Table 10 in: E. Wolff, “Household Wealth Trends in the United States, 1962 to 2019: Median Wealth Rebounds… but Not Enough,” NBER Working Paper no. 28383, National Bureau of Economic Research, January 2021, nber.org/system/files/working_papers/w28383/w28383.pdf.

11. For a much deeper dive into the weakness of claims that inequality was driven by technology rewarding skilled workers and penalizing less-skilled workers, see J. Schmitt, H. Shierholz, and L. Mishel, Don’t Blame the Robots: Assessing the Job Polarization Explanation of Growing Wage Inequality (Economic Policy Institute, November 19, 2013), epi.org/publication/technology-inequality-dont-blame-the-robots.

12. One study found that roughly 75% of low-wage jobs were ones where employers made take-it-or-leave-it posted offers: R. Hall and A. Krueger, “Evidence on the Incidence of Wage Posting, Wage Bargaining, and On-the-Job Search,” American Economic Journal: Macroeconomics 4, no. 4 (October 2012): 56–67; and R. Hall and A. Krueger, “Evidence on the Determinants of the Choice Between Wage Posting and Wage Bargaining,” NBER Working Paper no. 16033, National Bureau of Economic Research, May 2010, nber.org/system/files/working_papers/w16033/w16033.pdf.

13. For evidence on how nonresponsive worker quits are to wage cuts relative to predictions of competitive markets, see A. Dube, L. Giuliano, and J. Leonard, “Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior,” American Economic Review 109, no. 2 (February 2019): 620–63.

14. For a comprehensive review of this evidence, see D. Cengiz et al., “The Effect of Minimum Wages on Low-Wage Jobs,” Quarterly Journal of Economics 134, no. 3 (August 2019): 1405–54.

15. Economic Policy Institute, “Minimum Wages: Real Minimum Wage (2025$),” 2026, data.epi.org/minimum_wage/minimum_wage_levels/line/year/national/real_minimum_wage_2025/overall?timeStart=1938-01-01&timeEnd=2025-01-01&dateString=1979-01-01&highlightedLines=overall.

16. P. Romero and J. Whittaker, A Brief Examination of Union Membership Data (Library of Congress, June 16, 2023), congress.gov/crs-product/R47596; and H. Meyerson, “Economic Inequality Is Undermining America: Worker Solidarity Will Build a Better Future,” AFT Health Care 3, no. 2 (Fall 2022): 33–36.

17. S. Galan, “Monthly Federal Funds Effective Rate, Unemployment Rate and Inflation Rate in the U.S. During Paul Volcker’s Terms as Federal Reserve Chairperson from 1979 to 1987,” Statista, October 2022, statista.com/statistics/1338105/volcker-shock-interest-rates-unemployment-inflation/?srsltid=AfmBOoqoXQ4yTpqiSJMevwNFbnNGEETrwhlltEeVrJuA1rThyYCBBkFl.

18. Mishel and Bivens, “Identifying the Policy Levers.”

19. J. Bivens, “Focus on the Boom, Not the Slump—the Fed’s New Policy Framework Needs to Stop Cutting Recoveries Short,” Working Economics Blog, Economic Policy Institute, June 18, 2019, epi.org/blog/focus-on-the-boom-not-the-slump-the-feds-new-policy-framework-needs-to-stop-cutting-recoveries-short-epi-macroeconomics-newsletter.

20. Mishel and Bivens, “Identifying the Policy Levers.”

21. Mishel and Bivens, “Identifying the Policy Levers.”

22. A. Fieldhouse, Rising Income Inequality and the Role of Shifting Market-Income Distribution, Tax Burdens, and Tax Rates (Economic Policy Institute, June 14, 2013), epi.org/publication/rising-income-inequality-role-shifting-market.

23. J. Bivens, “Using Tax Policy to Restrain CEO Pay: Best Practices and Smart Alternatives,” Economic Policy Institute, December 13, 2023, epi.org/publication/using-tax-policy-to-restrain-ceo-pay-best-practices-and-smart-alternatives.

24. Authors’ analysis of data obtained from: Federal Reserve Bank of New York, “Economic Heterogeneity Indicators (EHIs),” 2026, newyorkfed.org/research/economic-heterogeneity-indicators.

The cost of this wage suppression is real. Because wages make up a large share of income for most U.S. working families, lost wage growth meant sluggish income growth. However, there was one group where wage growth, and corresponding income growth, was substantial: the top 1%, whose wages skyrocketed by 182% since 1979. This uneven growth implies that today’s labor market, and the income derived from it, is deeply unbalanced. Rather than workers reaping the rewards of their rising productivity, a growing share of their labor has gone to the top 1%, leading to rising wage and income inequality.  

Decades of sluggish wage growth for typical workers—paired with the message that it was workers’ own fault for not obtaining the necessary skills for today’s economy—have left many pessimistic about whether policy changes can help them earn more. But if we want to achieve broad-based economic security in the U.S. economy, there is no alternative to raising pay for workers up and down the wage distribution. The U.S. economy generates enough income in aggregate to provide decent rates of pay growth for all workers—the challenge is a political one.

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The cost of inequality to middle-class households

The stakes of rising inequality for middle-income households in the United States are enormous. By 2022, steadily rising inequality was costing these households roughly $30,000 per year.

Figure 1 compares actual income growth of the middle fifth of nonelderly households since 1979 with what this income growth could have been had inequality not increased. The graph highlights market-based incomes because rising inequality was driven entirely by this income category—earnings from the labor market and business income like dividends and interest payments. We focus on incomes of nonelderly households because inequality largely stemmed from unbalanced labor market power, and nonelderly income is dominated by labor earnings.

In 2022, the average market income of the middle fifth of households was $96,335. But their income would have been $127,011—roughly 32% (over $30,000) higher—had inequality not increased after 1979. Put another way, if the middle fifth of households had seen market income grow at the overall average rate—an overall average pulled up by stratospheric growth at the very top—their income could have been roughly $30,000 higher by 2022.

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Income inequality is driven by unbalanced power in labor markets

The inequality in market-based incomes highlighted in Figure 1 was overwhelmingly driven by unbalanced power in labor markets that prevented typical workers from seeing their paychecks keep up with overall economic growth. Figure 2 shows hourly pay (including benefits) for the roughly 80% of the private-sector workforce who are not managers or supervisors and a measure of economy-wide productivity—defined as the income generated in an average hour of work in the U.S. economy. The rising gap between these lines is how we define wage suppression—keeping typical workers’ wage growth slower than growth in incomes in the rest of the economy.

In the three decades following World War II, hourly compensation for the vast majority of workers rose 2.1% on an annualized basis, roughly in line with productivity growth of 2.5%. But for most of the last five decades (except for a brief period in the late 1990s), pay for the vast majority lagged further behind overall productivity. Over the entire 1979 to 2025 period, hourly pay for a typical worker rose just 0.6% while productivity increased 1.4% on an annualized basis. This means that workers have been producing far more than they receive in their paychecks and benefit packages from their employers, and this wedge has grown substantially over time. Some of those gains in productivity went to greater profits for corporations but an even larger portion went to highly paid managers and professionals, resulting in a vast increase in wage inequality over the last five decades.

Had we pursued policies to support broad-based wage growth—instead of wage suppression—typical workers would have much higher pay today. In fact, if annual pay for production and nonsupervisory workers had instead tracked productivity growth since 1979, their pay would be 45% higher, or $30,000 more than it is today.

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Wage suppression boosted profits

The declining labor share of corporate-sector income—the share of corporate income received by workers in the form of wages and benefits—explains a portion of the wedge between productivity and pay. The labor share of corporate-sector income has not recovered to its pre-pandemic level, and remains well below its 1979 to 2008 average. Figure 3 illustrates the labor share of corporate-sector income since 1979. Typically, the labor share rises during recessions because profits fall much faster than wages during downturns. Then, in the early stages of recovery, the labor share falls significantly as profits increase much more rapidly than wages. Usually, the labor share then rises again late in an expansion as labor markets tighten and workers regain the bargaining power necessary to secure wage increases. Since 2000, no business cycle expansion has gone on long enough with unemployment low enough to put serious upward pressure on the labor share of income. Small upticks were seen sporadically over the last 15 years, but this progress, but this progress has stalled out.

Two things about the shift from labor compensation to profits in recent decades deserve some context. First, even as measured in official data, this shift explains well under half of the overall wedge between productivity and pay—the biggest piece of this gap remains inequality within labor compensation (we return to this point further below). Second, some of the changes in the official data might be more the outcome of accounting decisions than of fundamental changes in the economy.

Since the early 2000s, capital income (dividends, capital gains, and business income) has been taxed at lower rates than labor income. Highly privileged economic actors who have the ability to engage in tax evasion by reclassifying their income have likely done so in this time—relabeling income once classified as wages and salaries as capital income instead to pay lower tax rates. Recent research has estimated that roughly a third of the decline in the labor share of income might be driven by this kind of tax evasion rather than by a genuine change in which factors of production are seeing income gains.

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Highly paid corporate managers and professionals benefited the most from wage suppression

The largest portion of the growing wedge between productivity and pay can be explained by the astronomical wage growth for those at the highest end of the wage distribution. The ability of those at the very top to claim an ever-larger share of overall wages is evident in Figure 4. Annual earnings for the top 1% have grown 182% since 1979, while wages of the bottom 90% have grown just 44%. If the wages of the bottom 90% had grown at the average pace over this period—meaning that wages grew equally across the board—then wages for the bottom 90% would have grown by 65%, far higher and roughly 50% faster than the actual growth experienced. Earnings are so concentrated at the top that average growth is well above the 90th percentile of the earnings distribution. That means workers need to be among the highest 10% of wage earners to even experience average earnings growth. And everyone else—more than 90% of the workforce—saw less than average growth over the last four and a half decades.

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Since 1979, middle-wage workers only saw short-lived real wage growth during tightening labor markets

Between 1979 and 2025, the hourly wages of middle-wage workers (workers earning the median wage) cumulatively grew just 30%—about 0.6% per year. Yet even this disappointing cumulative wage growth occurred only because wages grew in the late 1990s and the late 2010s–2020s. Apart from these two periods, the wages of middle-wage workers were totally flat or in decline since 1979. Figure 5 shows real median wages since 1979. The red portions of the line highlight periods when median wage growth was genuinely stagnant, while the green portions highlight when growth occurred.

In the absence of strong institutions and labor standards like robust unions and high minimum wages, strong wage growth occurs only when labor markets are tight. In tight labor markets, the relative scarcity of workers gives them more power in the workplace to effectively demand decent hourly wage growth across the board.

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Wage suppression was not driven by increased benefits

The suppressed “pay” portion of the pay–productivity chart includes wages and benefits, suggesting that benefits have not offset slow wage growth. In fact, by many measures benefit generosity and availability have deteriorated alongside wage suppression. We explore trends in two key employment benefits in Figure 6: employer-sponsored health insurance and retirement coverage. We define employer-provided health insurance as insurance for which the employer pays some or all of the premium. We define retiree coverage as coverage a worker receives at their firm that offers it. We isolate workers who are strongly attached to their job, working at least 20 hours per week and 26 weeks per year.

For workers, sluggish pay has been compounded by the fact that health insurance and retirement coverage have declined significantly over time. Health insurance fell from 69.0% to 52.2% between 1979 and 2024. At the same time, retiree coverage nearly fell by half from 50.6% down to 29.0%. Furthermore, plan generosity has suffered with the trend away from defined benefit to defined contribution retirement benefits, as well as the shift to high deductible health plans.

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CEO pay grabs a larger share of wages

In a nation of increasing inequality, the most extreme disparities are between the heads of large American corporations and typical workers. Figure 7 tracks the ratio of pay of CEOs at the 350 largest public U.S. firms to the pay of typical workers. In 1965, these CEOs made 21 times what typical workers made. As of 2025, they make 325 times typical workers’ pay. This higher pay for CEOs does not reflect any increased contribution to corporate output or growth in the skills or productivity of CEOs. CEO pay gains help explain the growing divergence between pay and productivity. Further, the pay of CEOs and other highly placed corporate managers sets norms and market benchmarks across a range of elite occupations. The pay of specialty physicians, lawyers, consultants, and even sectors like university and nonprofit administration is likely pulled upward by rising pay for corporate executives.

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Tolerating excess unemployment has been deeply damaging for wage growth

As a rough rule of thumb, real wages for middle-wage workers outright fall when unemployment is greater than 5%.

Prioritizing high-pressure labor markets—those identified by extended periods of low unemployment—is key to providing lower- and middle-wage workers the leverage to bid up their wages. Figure 8 shows that the threshold for achieving any real wage growth at all is around 5% unemployment. In general, real wages grow when unemployment is lower than 5%, but they fall when unemployment is higher. Extended periods of low unemployment can also reduce wage inequality and racial disparities.

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The federal minimum wage no longer lifts wages

Figure 9 shows the decline in the real (inflation-adjusted) value of the federal minimum wage since its high in 1968. The last increase to the minimum wage was enacted in 2009, 17 years ago, which is the longest period without a minimum wage increase since its inception in 1938.

The minimum wage is essential for establishing the wage levels for the bottom fifth of wage earners. Today’s low-wage workers are far more educated, older, and experienced than low-wage workers in 1968. Yet, despite being more skilled and productive, their wages are 43% lower than wages earned in 1968, and 32% lower than the most recent increase in the minimum wage 17 years ago. The failure to raise the federal minimum wage has especially adverse effects on women and Black and Hispanic workers.

Luckily, many states have refused to follow the federal government’s inaction and have passed higher minimum wages at an increasing rate over the past two decades. Seventeen states and the District of Columbia now have minimum wages of at least $15 per hour, and more workers live in states with minimum wages over $15 than in states only bound by the too low federal minimum wage.

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The assault on collective bargaining hurts all workers

One of the main causes of wage suppression and rising wage inequality is the decline of collective bargaining, which lowers the wages of both union and nonunion workers. Collective bargaining not only raises wages for organized workers but also leads other employers to raise the wages and benefits of nonunion workers to come closer to union wage standards.

The erosion of collective bargaining can explain from one-fifth to one-third of the growth of wage inequality between 1973 and 2007; it had a greater impact on men than women. This erosion of unionization occurred despite large numbers of workers indicating they would prefer collective bargaining if they had a choice. But the political power of those with the most income, wealth, and power has prevented the adoption of laws to modernize our labor–management system and enable workers to pursue collective bargaining.

Figure 10 shows how wages could have grown if unionization hadn’t declined since 1973. If union density in 2025 had been the same level as union density levels of 1973 (14 percentage points higher than it is today), median wages would rise by 10.1%.

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Key findings:

• CEO pay at the top 350 U.S. firms rose 14.0% in 2025 to an average of $27.9 million.
• CEOs made 325 times as much as the typical worker in 2025. It hasn’t always been this way. In 1965, CEOs were paid 21 times as much as a typical worker.
• From 1978–2025, top CEO compensation skyrocketed 1,316% while typical workers’ compensation increased only 28%.
• CEO pay has not climbed so fast because their skills or productivity rose spectacularly. It has risen instead simply because CEOs have gained and used increasing leverage over the corporate boards that set their pay.
• Policymakers can rein in excessive CEO pay through more progressive tax policy, corporate governance reforms, and strengthened labor standards, including laws that make it easier for workers to unionize. One new EPI policy proposal calls for default collective bargaining at firms where the CEO-to-worker pay ratio is especially exorbitant.

Our latest analysis finds that CEO pay rose 14.0% at the top 350 U.S. firms in 2025 as the CEO-to-worker pay ratio hit 325-to-1.

Between 1978 and 2025, CEO pay jumped an astronomical 1,316% while typical workers’ pay only rose 28%. As a result, the CEO-to-worker pay ratio increased more than tenfold since 1978.

Figure A demonstrates the rise in the CEO-to-worker pay ratio using both the realized and granted CEO compensation measures (for more on our methods and additional analysis, see EPI’s CEO pay landing page). The pay ratio increased a modest amount between 1965 and 1978, but then exploded in the late 1990s and has remained extraordinarily high since then, ebbing some during recessions and stock market losses.

CEO Pay

Media reports have called attention to Elon Musk’s Tesla pay package for 2025, which the company reports as $158 billion. We should note that this $158 billion is not in our measure of CEO pay—largely because it was not paid and likely never will be—and therefore cannot explain the uptick in CEO pay in 2025. The $158 billion refers to the potential pay Musk could receive only if Tesla meets a number of performance metrics related to its output and share price in coming years. Most market observers deem it highly unlikely that Tesla will meet these metrics, and a large portion of this $158 billion has already been “lost” since some of the performance metrics were required to be met in 2025 and were not. In some ways, the $158 billion expense reported by Tesla is just an accounting exercise—the amount that other shareholders’ stock would have been diluted had the performance metrics been met.

CEO pay is strongly related to the stock market, though less on stock options

The jump in CEO pay in 2025—though striking—isn’t surprising given how closely CEO pay tends to track gains in the stock market, as the S&P 500 rose a similar 11.8% in 2025.

While salaries were only about 5% of total CEO pay in 2025—which averaged $27.9 million—the vast majority of CEO pay (82%) was in the form of stock options or stock awards. However, there has been a marked shift away from stock options to stock awards over the past two decades. As Figure B shows, the share of compensation in stock options has fallen from 85% in 1992 to 26% in 2025.

CEO Pay

This shift to stock awards has been driven by executives’ search for lower taxes as well as regulatory changes made in the early 2000s. Stock options are more likely to be considered ordinary or W-2 income rather than other stock-based pay, which is taxed at a lower rate. Further, companies used to be able to offer stock options to executives without notifying shareholders of the expense. But a regulatory change after 2006 required the full expensing of stock options in reports to shareholders, making them appear more costly to grant.

While tax incentives and these regulatory changes may have incentivized this shift away from stock options, this shift has also likely led to a slightly better alignment of CEO pay to longer-term company success. Stock options allow executives to benefit from rising stock prices, but do not penalize them for falling prices. Stock awards, conversely, expose executives to the cost of falling stock prices as well as the benefits of rising prices. While an improvement, the shift from stock options to stock awards has obviously not been a transformational win for making CEO pay more generally fair and rational.

This shift from stock options to stock awards also has implications for the measured share of corporate-sector income accruing to capital versus labor. Over a full business cycle, the labor share of income has often reflected the leverage workers have to increase their wages versus capital owners’ ability to keep revenue in the form of profits (see Figure C). For arcane tax and data reasons, income from stock options is more likely to be recorded in economic data as labor earnings than is income from other forms of stock-based pay. Therefore, some of the losses in labor’s share of income in Figure C may be in part due to the changing ways top executives are receiving their compensation rather than simply the unequal balance of power between capital and labor.

CEO Pay

Policymakers can rein in excessive CEO pay

The rapid growth in CEO pay over the last several decades has not been driven by rising CEO productivity. Instead, it has simply been the result of executives’ ability to leverage their political and economic power to increase their own pay. As such, excessive pay can be reined in with policy changes.

Policymakers can alter tax policy to lower incentives for excessive CEO pay and change corporate governance laws to give shareholders greater ability to penalize excessive pay packages. Lawmakers can also strengthen labor standards to give workers more leverage to secure a larger share of the income generated by the firm, leaving less for CEOs (and shareholders) to claim.

Policymakers can further boost leverage for typical workers by strengthening the right to organize and form unions. For starters, Congress can pass the Protecting the Right to Organize (PRO) Act to make it easier to organize for the tens of millions of U.S. workers who want unions at their workplace. Further, policymakers can pass legislation instituting default collective bargaining when CEO-to-worker pay ratios are especially exorbitant.

Key takeaways:

• So-called right-to-work (RTW) laws undermine workers’ ability to form unions. Unionization rates are clearly lower in RTW states—and since unions raise wages, that suppression lowers pay.   

• States with RTW laws are also more likely to have other anti-worker laws and generally weaker labor standards. This is likely because both RTW and other anti-worker policies stem from the same anti-worker political roots, and because RTW’s suppression of unions deprives these states of strong potential political champions (unions) for other pro-worker policies.  

• Non-RTW states are more likely to have pro-worker policies like higher minimum wages and prevailing wage laws, restrictions on noncompete agreements, pay transparency policies, and more protective unemployment insurance benefits. 

• As a result, workers in RTW states are paid 6.7% less on average than workers in non-RTW states—more than double the 3.2% wage penalty we found in 2015. That means the RTW wage penalty has increased in recent years and now translates to over $4,000 less per year for a median full-time worker in a RTW state.

• The RTW wage penalty is steeper for women (7.3%) than for men (6.3%), and for Black (9.7%) and Hispanic workers (10.0%) than for white workers (5.4%).   

• Lawmakers already have the policy tools they need to boost wages and improve other outcomes for workers: 

• • At the state level, rolling back existing RTW laws is the most powerful lever.  

• • At the federal level, the Protecting the Right to Organize Act (which includes a ban on RTW) would be transformational for efforts to organize workers.  

• • Policymakers could also make progress on numerous other fronts, such as making UI systems more protective and raising minimum wages. 

In the United States, so-called right-to-work (RTW) laws are anti-union state policies promoted by big business interests to weaken unions and limit workers’ bargaining power. Despite the name, RTW laws do not provide any sort of job protection or right to a job. Rather, the deceptively named policy starves unions of resources, making it harder for them to negotiate collectively for better wages, benefits, and working conditions.

RTW laws emerged in the 1940s as part of anti-union campaigns to suppress worker organizing and maintain Jim Crow labor relations in Southern states; these campaigns worsened economic inequality and racial disparities (Childers 2024). Today, 26 states have active “right-to-work” statutes.1

As intended, RTW laws reduce union density (the share of workers who are either members of a union or covered by a union contract). These policies prohibit unions and employers from negotiating over union security—the contract terms under which workers covered by a union contract either join the union or pay an agency fee covering their share of representation costs. This deprives unions of critical resources and suppresses union membership (Sherer et al. 2026). RTW states—specifically those with RTW laws for at least 25 years—have an average union density rate of 6.2%, far less than half the union density rate in non-RTW states (16.0%) (see Appendix Table 1).

RTW laws not only reduce the number of workers with collective bargaining agreements but also limit unions’ political power to advocate for stronger labor standards for workers more broadly. This is, in part, why states without anti-union restrictions are more likely to pass protections such as prevailing wage mandates, restrictions on noncompete agreements, higher minimum wages, and pay transparency laws.

To assess the effects of RTW laws on outcomes for workers, we analyze whether wages are lower in RTW states after controlling for key demographic-, job-, and state-level characteristics (see Appendix Table 1 for full demographic controls as well as median and average wages by RTW status). We find that wages in “right-to-work” states are, on average, 6.7% lower than in non-RTW states. This penalty is worse for Black and Hispanic workers, as well as young workers and those without college degrees. Notably, the penalty is also larger for nonunion workers. This is because strong unions benefit workers across the state, not just those in unionized workplaces (Shierholz et al. 2026). In RTW states with weaker unions, nonunionized workers do not experience these positive “spillover” effects.

Pro-worker policies are more common in states without RTW laws

The strong correlation between wages and states’ RTW status is not surprising. Not only do RTW states have lower unionization rates, leaving workers with less leverage to bid up wages, but they often maintain other anti-worker policies. Combined, these anti-worker policies tilt bargaining power toward employers, weakening workers’ ability to garner higher wages. States without RTW laws are more likely to have a wide array of stronger labor standards in place that raise pay, protect workers’ ability to switch jobs, and support those who lose one. These same states—where unionization rates have not been suppressed by RTW laws—have a better safety net and stronger labor standards in part because stronger unions give workers more political power and the ability to better lobby for pro-worker policies writ large (Shierholz et al. 2026).

Figure A displays the incidence of these labor standards for states with and without anti-union RTW laws.2 This is far from a complete list of relevant policies that may correlate with RTW status and wage levels, but they are illustrative.

Figure A

Prevailing wage

Prevailing wage laws apply to certain contracts for public works and require that contractors and subcontractors pay the employees performing such work a prevailing wage rate. The prevailing wage rate is defined as the average wage paid to similarly employed workers in a specific occupation in the area of intended employment. Federal law requires this of federal contracts while state and local laws may apply to state and local contracts.

Prevailing wage laws are more common in non-RTW states. Figure A shows that nearly all (96.0%) of non-RTW states have prevailing wage laws, while only 23.1% of RTW states have these protections for workers on state contracts.3 Without prevailing wage requirements, contractors may reduce their workers’ wages to win bids on government contracts—putting contractors who pay their workers fair wages at a disadvantage.

Restrictions on noncompetes

Noncompete agreements are employment provisions that ban workers at a company from joining a competing business or starting their own for a set period after leaving a job. Noncompetes undermine economic dynamism and innovation; they depress business formation and labor mobility, hurt productivity and growth, raise prices, shrink workers’ wages, and restrict workers’ freedom (Shierholz 2024).

One of the most effective ways workers achieve higher wages is by securing another offer, and then either renegotiating their current salary or leaving for the new higher-paying job. It is not surprising then that workers in states that enforce noncompetes are paid less than similar workers in states that do not enforce noncompetes (Starr 2019). States without anti-worker RTW laws are nearly four times as likely to restrict noncompetes as RTW states (44.0% vs. 11.5%).4 In this analysis, we include only full bans on noncompetes and states with income-based restrictions. States with only small carve-outs for certain occupations provide a much weaker standard and are, by definition, less broad, so those aren’t included.

Minimum wage

Raising the minimum wage is particularly important for lower-wage workers. While the federal minimum wage has sat at $7.25 an hour since 2009, losing over 30% of its purchasing power, workers in 31 states enjoy a higher wage floor (Zipperer 2026). Non-RTW states are three times as likely to have minimum wages higher than the federal minimum compared with RTW states (92.0% vs. 30.8%). This is not a small difference. As of 2026, the average value of the minimum wage in non-RTW states is 60% higher—$5.36 more per hour—than in RTW states.5

Pay transparency

Pay transparency laws prevent employers from lowballing wage offers by requiring them to include wage information in job postings. While they vary, all laws include some requirement that employers provide salary information in job postings or if directly requested by applicants. Lack of knowledge about wages and benefits keeps potential workers in the dark and limits their ability to learn about and apply for better paid opportunities. A study on Colorado’s newly passed wage transparency law found that wages increased 4.2% faster than those in neighboring states without such laws (Shedge 2025). Further, wage transparency has the potential to reduce gender- and race-based discrimination by arming jobseekers with more information and limiting employers’ ability to pay different amounts to similarly qualified candidates. Only two RTW states have a pay transparency law, compared with 64% of non-RTW states.6

Unemployment insurance

Access to unemployment insurance (UI) also shapes workers’ ability to seek better wages. When a worker is laid off and their household income falls, unemployment insurance supports them and their family until they find another job. UI is a joint federal-state program that relies on state UI systems to effectively deliver benefits to unemployed workers. States differ in their rules and approaches under the federal UI framework, leading to wide variation in the share of unemployed workers receiving UI benefits (the UI recipiency rate).

Better UI not only cushions workers and their families but also provides workers with additional leverage in the labor market. When UI access and generosity fall, job seekers are forced to settle for lower wages and employers leverage this by offering less (Dahl and Knepper 2026). On the flip side, research shows a positive relationship between more UI generosity and wages (Rinz and Wasser 2026). The UI recipiency rate is significantly higher in non-RTW states compared with RTW states (32.8% vs. 18.7%).7 This is not surprising because non-RTW states have stronger unions, which fight to increase UI eligibility, ease of access, benefit levels, and benefit duration—to the benefit of all workers, union and nonunion (Hertel-Fernandez and Gould-Werth 2020). As with other pro-worker policies, better UI access can contribute to higher wages in non-RTW states.

Other policy levers

Not only do workers in non-RTW states enjoy higher wages, but they also benefit from increased economic security thanks to higher health insurance rates, higher public education spending, paid family and medical leave access, and no preemptions against higher labor standards. Every non-RTW state expanded Medicaid compared with fewer than two-thirds of RTW states (61.5%).8 Unsurprisingly, the uninsured rate is higher in RTW states than in non-RTW states (8.9% vs. 6.2%).9

Investments in public education deliver a more productive workforce and more informed and engaged society. Increased funding for schools not only improves educational attainment, but also increases wages and family incomes (Jackson, Johnson, and Persico 2016). Non-RTW states spend 45% more on public education than RTW states ($24,084 vs. $16,620).10 Paid family and medical leave provides essential benefits that help workers maintain their livelihoods while taking care of themselves and their families. These laws are also shown to increase labor force participation, job retention, and earnings (Glynn 2020). Only one RTW state has comprehensive paid family and medical leave provisions for private-sector workers, compared with 56% of non-RTW states.11

Finally, some cities, counties, and other local governments enact policies that raise standards for working people, but some state legislatures force those standards back down with preemption—the use of state law to void local ordinances. Preemptions apply to policies such as minimum wage, prevailing wages, paid leave, and fair scheduling (EPI 2025). Preemption laws interfere with local governments’ ability to set job quality standards. They suppress wages, exacerbate racial inequities, and reduce worker power (Sherer, Cohn, and Ahdoot 2025). These preemptions are more common in RTW states.

Workers in RTW states are paid less

Our analysis of the relationship between wages and RTW status puts states into three categories: long-term RTW states, always non-RTW states, and “switcher” states that have changed their RTW status since 2011.12 Appendix Table 1 provides descriptive statistics for these three groups of states, and Appendix Figure A provides a map of states by RTW status. Our estimates focus on comparisons between long-term RTW states and always non-RTW states.

A simple comparison of hourly wages, the primary variable of interest, reveals that average wages are 22.9% higher in non-RTW states ($40.28 in non-RTW states vs. $32.78 in RTW states). Median wages are 19.2% higher in non-RTW states ($28.79 vs. $24.16). Because there are differences between worker-, job-, and state-level characteristics in RTW and non-RTW states, and since some of these characteristics will directly impact workers’ wages, it is important to control for these factors in a multivariate regression model. This allows us to more accurately identify the relationship between RTW status and wages.

We estimate log wage equations using Bureau of Labor Statistics Current Population Survey Outgoing Rotation Group (CPS-ORG) data for 2023–2025. We pool three years of data to minimize any spurious year-specific economic relationships, thereby helping us achieve more precise estimates. The total sample consists of 234,155 workers, ages 16+, who earn wages and salaries. About 42% of the sample lives in states with RTW laws (see Appendix Table 1 for the sample’s full demographic breakdown).13

In Table 1, we construct a regression model, starting with an unadjusted framework and building up to a model that controls for the full range of explanatory variables. The dependent variable is the natural log of hourly wages.

The variable of interest is an indicator variable when the worker lives in a long-term RTW state. We also include an indicator in the regression for a switcher state, though that is not our focus of interest (see Appendix Table 2 for a complete set of regression results, including the coefficient for switcher states). There are currently 26 states with RTW laws on the books and 25 without them including Washington, D.C. (see Appendix Figure A). There are five switcher states that have adopted RTW in recent years: Indiana (2012), Michigan (2013), Wisconsin (2015), West Virginia (2016), and Kentucky (2017). In 2023, Michigan became the first state to repeal its RTW statute. We separate the five switcher states from the analysis to better isolate the relationship between wages and the long-run effects of RTW.

The naïve model, without any controls, suggests that workers in RTW states are paid 17.8% less than workers in non-RTW states (Model I in Table 1).14 But many factors contribute to wage differences: demographic characteristics such as age, race/ethnicity, gender, and level of education are relevant as well as job-related factors such as work hours, occupation, and industry. Since these vary across states, they reduce the measured relationship between RTW status and wages. Model II shows that when the analysis compares more similar workers with each other, the RTW penalty drops to 14.0%.15

There are other factors that are different in RTW states, aside from these individual and job-related characteristics. Most importantly, the cost of living. The cost of living in non-RTW states is higher than in RTW states, as shown in Appendix Table 1. In prior research, Gould and Kimball (2015) showed that choice of price indicator makes no material difference on the measured relationship between RTW and wages. Here we include the Bureau of Economic Analysis’ Regional Price Parity index: The regional price parity index is higher in non-RTW states.16 Not surprisingly, this correlates with wage levels and therefore is important to include in the model. As with earlier studies, we also include state unemployment rates to control for differences in economic conditions.

After including the full set of demographic, individual-, and state-level labor market and cost of living controls (Model III), our analysis finds that workers in RTW states are paid 6.7% less than similar workers in non-RTW states. For the average worker, this is a difference of $2.70 per hour, or more than $5,600 for full-time workers at 2,080 hours over the year. However, because the average is skewed upward due to wage inequality, an assessment at the middle of the wage distribution provides a more conservative but perhaps more robust estimate of the RTW wage penalty. Acknowledging that this is a likely understatement of the full relationship, the RTW wage penalty for the median worker at full-time hours is over $4,000 for the year.

Table 1

This does not mean that RTW laws are a causal explanation for this 6.7% wage penalty. As demonstrated earlier in this report, RTW status correlates strongly with a number of other anti-worker policies. Other research has attempted to calculate the causal effects of RTW laws on wages. Using the switcher states in the most recent period, Fortin, Lemieux, and Lloyd (2022) found smaller wage penalties, which is to be expected given the shorter time frame for measurement post-adoption. Our wage penalty for switcher states—shown in the final column of Appendix Table 2—is much smaller (closer to zero) than the coefficient for long-term RTW states, though not statistically significant at conventional levels. Dasgupta and Merchant (2023) also examine states recently adopting RTW laws and find a statistically significant decline in annual wages by almost $1,900. Again, these states are more recent RTW adopters, so the full effects we find may take time to materialize.

We find that this relationship between long-term RTW status and wages remains economically and statistically significant under alternative specifications of our econometric model. For instance, removing major industries and occupations changes the coefficient to -0.071. Restricting the model to RTW status as of 2026—removing the separate indicator for states that switched since 2011—yields a coefficient estimate of -0.060. Doing the same but dropping Michigan (since its status changed in the measurement period) results in a coefficient of -0.064. In our final model, we do not include an indicator for unionization, unlike Gould and Kimball (2015). If we reintroduce that variable, the coefficient is -0.063.

In each of our regressions discussed above, we include a three-year average as it improves data reliability and allows us to run smaller groups of the data (see next section). When we run our analysis using just 2025, our results do not change. In fact, when we run our three-year final model for the periods 2021–2023, 2022–2024, and 2023–2025, our coefficients remain in the -0.070 to -0.068 range.

Wage penalties are steeper for women, Black, Hispanic, and nonunion workers in RTW states

The RTW penalty is not uniform across demographic groups and other labor market characteristics. Table 2 below shows the results of a series of final-model regressions (comparable to Model III in Table 1) for a set of demographic groups.

We find that women’s wages in RTW states are penalized at a higher rate (7.3%) than men’s (6.3%). The wage penalty also persists across all racial and ethnic groups, but it is almost twice as large for Black (9.7%) and Hispanic (10.0%) workers as for similar white workers (5.4%) and more than twice as large as for Asian American and Pacific Islander (AAPI) workers (4.6%). Young workers between the ages of 16 and 24 face a greater penalty (8.4%) than older workers. And workers without a college degree experience a much higher penalty (7.8%) than workers with a college degree (4.7%).

Table 2

It is particularly important to note that RTW laws have a statistically significant negative effect on the wages of nonunion workers, as shown in the last row of Table 2. Our analysis indicates that nonunion workers in RTW states have wages that are 6.3% lower, on average, than their counterparts in non-RTW states. Union members likely experience a smaller penalty (3.6%) because their wages tend to be higher than those in nonunionized workplaces, regardless of the state’s RTW status (McNicholas et al. 2025). However, the wage impact of unions extends beyond those directly covered by a union contract. Unions lift wage standards across entire industries, meaning that nonunion workers in states with higher union density are more likely to receive better pay.

As the gap in wages and labor standards between RTW and non-RTW states has grown, so has the wage penalty

Using our final model (Model III in Table 1) with pooled 2023–2025 data, we find a 6.7% RTW wage penalty—a larger penalty than we found in earlier examinations. For example, we found a 3.2% wage penalty using data for 2009 (Gould and Shierholz 2011) and pooled 2010–2012 data (Gould and Kimball 2015). Some of the increase in the current estimate of the RTW wage penalty reflects small changes (likely improvements) in our methods. But part of the higher estimate persists even when we apply our current methods to earlier data: Applying these methods to the 2010–2012 data yields an RTW wage penalty of 4.7%.

One method change concerns “switchers”—states that changed from non-RTW to RTW status (or back) since 2019. In the 2010–2012 period, there were no switchers to affect the data.17 In our analysis, we isolate switchers from the long-term RTW group, but the RTW penalty remains negative and significant no matter how one deals with the issue of switcher states. For example, recategorizing the five switchers to match their 2012 status (all non-RTW) lowers the measured RTW wage penalty in the 2010–2012 period to 4.1%, but it remains significant.

Other changes relative to our earlier research include controlling for public-sector status; removing union as an independent variable from the regression; using the full working age range of 16 and up (as opposed to 18–64); and correcting an issue with nonrandom missing values to the metropolitan variable. We’ve further clustered standard errors at the state level as suggested by Douglas (2024), which does not affect the size of the coefficients, only the size of their standard errors and resulting statistical significance.18

Setting those minor model differences aside, a consistent comparison over time sees the RTW wage penalty rising from 4.7% in 2010–2012 to 6.7% in 2023–2025. One possible reason why this RTW wage penalty grew could be the increasingly divergent policy trajectories of RTW and non-RTW states over this period.

For example, the gap between minimum wages in RTW states and non-RTW states has grown since 2010, largely because policymakers in most RTW states have refused to increase their minimum wage despite the fact that the federal minimum wage has been stagnant in nominal terms since 2009. In that year, the average minimum wage in RTW states was $7.25 while the average minimum wage in non-RTW states was $7.54. That gap has grown enormously, from just $0.29 per hour in 2009 to $5.36 per hour by 2026 ($14.24 in non-RTW states vs. $8.89 in RTW states).

There were other potentially relevant policy changes between 2012 and 2025. The first state-level pay transparency law was passed in Maryland in 2020. Seventeen states followed suit in subsequent years, 15 of which were non-RTW states. On the flip side, six states have repealed their prevailing wage laws since 2012—all of which were RTW. Only one state, Michigan, reinstated its prevailing wage law. It did so in 2023, the same year it repealed RTW. While this is far from an exhaustive list, it’s not surprising that the measured RTW wage penalty has grown over time.

Repealing anti-union “right-to-work” laws and strengthening labor law is key to raising wages

The wage penalty for workers in RTW states has grown since the last time we conducted this research a decade ago. Long-standing and more recently enacted anti-union RTW laws in 26 states, in tandem with other anti-worker policies, have further eroded workers’ collective bargaining power, suppressed wages, and lowered labor standards. These outcomes are linked to clear policy choices, and lawmakers at every level of government have the tools they need to restore workers’ union rights, strengthen labor standards, and lift wages. Across the U.S., 56 million workers say they want a union in their workplace, yet only 10% of all workers have one (Shierholz et al. 2026). Current federal and state labor laws—including anti-union RTW laws—place too many obstacles in workers’ path to unionizing and give employers too much power to interfere with workers’ free choice.

First and foremost, states with RTW laws should follow Michigan’s recent lead and repeal them. Repealing state RTW laws will enable workers to unionize and raise wages across the country. Indeed, recent EPI research finds that equalizing collective bargaining rights across all states by repealing RTW laws that affect private employees and ensuring collective bargaining rights for public employees would increase national union density by almost 50% (from 9.9 to 14.4%) (Shierholz et al. 2026). States should also consider passing constitutional amendments that affirm collective bargaining rights and explicitly bar RTW-style restrictions, such as the 2022 Workers’ Rights Amendment in Illinois (Sherer 2026).

At the federal level, lawmakers should pass the Protecting the Right to Organize (PRO) Act. The PRO Act is designed to address major weaknesses of the National Labor Relations Act (NLRA), which has been severely eroded by amendments and court decisions. Among many other reforms, the PRO Act would eliminate the option for states to maintain anti-union RTW laws—restoring full bargaining rights to workers in all states as intended when the NLRA was originally passed in 1935 (McNicholas, Poydock, and Rhinehart 2021). Since its first introduction in 2019, the PRO Act has passed the House of Representatives twice with bipartisan support (Shierholz et al. 2026).

In addition to proposed PRO Act reforms that would enable newly unionized workers to pursue arbitration to achieve a first contract (if an employer fails to negotiate in good faith), federal labor law should set a minimum standard that such contracts include a cost-of-living adjustment (COLA). To further expand the benefits of collective bargaining, Congress should amend the NLRA to require default collective bargaining at any firm where CEO-to-worker pay ratios exceed 100 times what a typical worker makes in their industry (as this ratio would be one proxy for whether conditions at an employer are particularly unequal) (Shierholz et al. 2026). 

Legislators at both the state and federal level should also look to the list of anti-worker laws that are typically found in RTW states for more opportunities to rebalance unequal power in the labor market and improve wages and working conditions. These policies include:

• Raising the minimum wage;
• Banning noncompete agreements;
• Strengthening federal unemployment insurance guidelines and state UI systems;
• Removing state restrictions that preempt local governments from raising wages and strengthening labor standards.

These are among just a few of the policy levers states can use to raise wages and standards (EPI 2026b).

Our analysis suggests that repealing anti-union RTW laws and enabling workers to increase unionization levels are key to raising wages, both because RTW laws directly suppress unionization rates (and unions raise wages), and because weakening unions limits workers’ collective ability to shape other public policies.

Acknowledgements

The authors are grateful to Josh Bivens, Jennifer Sherer, Hilary Wething, and Ben Zipperer for their helpful comments and expertise.

Appendix

Appendix Figure A

Appendix Table 1

Appendix Table 2

Notes

1. See Appendix Figure A for RTW status. As of 2026, these states are Alabama, Arizona, Arkansas, Florida, Georgia, Iowa, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, North Carolina, North Dakota, Nebraska, Nevada, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, West Virginia, and Wyoming.

2. States are categorized as “RTW” or “non-RTW” based on their status as of 2026.

3. Authors’ analysis of prevailing wage laws from DOL (2023) and state legislative websites.

4. Authors’ analysis of noncompete restriction policies from EIG (2026).

5. Authors’ analysis of minimum wage data from EPI (2026c).

6. Authors’ analysis of pay transparency laws from GovDocs (2026).

7. Authors’ analysis of UI recipiency rate data from DOL-ETA.

8. Authors’ analysis of Medicaid expansion policies from KFF (2026).

9. Authors’ analysis of uninsurance rates by state, 2023 through 2025, from Carter (2025).

10. Authors’ analysis of per-pupil education spending data from NCES-NPEFS (2024).

11. Authors’ analysis of paid family and medical leave policies from Wielk (2026).

12. Prior to 2012, the last state to change its status was Oklahoma in 2001.

13. This analysis builds on earlier work by Gould and Kimball (2015); see the report for a full description of the methodology and list of controls.

14. Interpreting the results from these semilogarithmic functions requires utilizing the exponential function on the coefficient. Specific to the binary variable coefficient (β1) for RTW, the percent change in workers’ wages resulting from a state being RTW can be calculated by the formula: 100*[exp(β1)-1]. Typically, the result of this equation will be very close to the coefficient itself but will differ more as the coefficient becomes larger. We show the coefficient in the first row of Table 1 and the exponentiated result as a percent in the third row.

15. Full regression results for covariates in all three models can be found in Appendix Table 2.

16. Because the 2025 BEA RPP data were not yet available at the time of publication, we assign an average of 2022–2024 data to all years in our sample (2023–2025).

17. Gould and Kimball (2015) classify Indiana as non-RTW as its RTW law had just taken effect.

18. We do not control for state-level fixed effects, as Douglas (2024) suggested, because state-level fixed effects perfectly correlate with RTW status and would deem our results uninterpretable.

References

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Carter, Caitlin. 2025. “Health Insurance Coverage by State: 2023 and 2024.” U.S. Census Bureau, September 11, 2025. 

Childers, Chandra. 2024. The Evolution of the Southern Economic Development Strategy: Rooted in Racism and Economic Exploitation: Part One. Economic Policy Institute, May 2024. 

Dahl, B. Gordon, and Matthew Knepper. 2026. “Unemployment Insurance, Starting Salaries, and Jobs: Evidence from Multi-state Firms.” The Review of Economic Studies, rdag056. https://doi.org/10.1093/restud/rdag056.

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Douglas, Christopher C. 2024. Right-to-Work States Do Not Have Lower Wages. Mackinac Center, December 2024. 

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Key takeaways

• The label “right to work” is intentionally misleading. RTW laws provide no job protections. What they do is make it harder for workers to form and sustain strong unions.
• RTW laws are intended to weaken unions. They are linked to lower unionization rates, lower wages and benefits, and worse safety outcomes for all workers.
• RTW laws have racist, anti-union origins dating to the 1940s. For decades, big business and white supremacist groups promoted RTW laws to diminish workers’ collective bargaining rights and block multiracial organizing.
• RTW laws don’t boost job growth but do erode job quality and increase inequality.
• Trends on RTW are reversing. No state has adopted a new RTW law since 2017, and multiple states have repealed or rejected RTW.

Paraprofessionals—who work under the supervision of licensed teachers to provide focused instructional and behavioral support to students—provide crucial services and play a critical role in educating students with disabilities. Research has demonstrated that paraprofessional educators are key contributors to effective schools.

Despite this, the current pay of paraprofessionals is too low, and clear labor shortages of paraprofessionals have developed in public schools around the country—including in New York City. Paraprofessionals working for the New York City Department of Education have annual earnings ranging from $33,000 to $54,000. EPI’s Family Budget Calculator shows that a single adult with no children in New York City needs to earn $83,262 to afford a modest but adequate standard of living. An additional $10,000 would move those salaries closer to—but still well short of—a living wage. 

One clear sign that the city could benefit from greater public investment in paraprofessionals is the fact that New York City now spends more than $1.5 billion each year on special education due process cases. These costs arise when families successfully demonstrate that the public school system has failed to provide the services required under federal law, requiring the city to cover the cost of remedies such as private school enrollment (the most well-known subset of these are often referred to as “Carter cases”).

Boosting pay by $10,000 for the roughly 25,000 full-time paraprofessionals is estimated to cost the city about $244 million in 2027, roughly 15% of what the city spends on special education due process cases. While no single policy will eliminate these due process case costs, investing in the workforce that delivers crucial special education services can certainly strengthen recruitment and retention and increase the share of families of children with disabilities who are satisfied with the quality of education and support that is being provided in public schools. In turn, more families of special education students choosing to remain in public schools will reduce expenditures on due process cases, helping defray the cost of paying paraprofessionals closer to a living wage.

Finally, we should note that while the state and city of New York would benefit greatly from increased investment in the public sector, this investment obviously requires revenue. This revenue should come from those most able to provide it: high-income households and rich corporations. The quality of services provided to the city and state will depend crucially on whether or not policymakers are willing to raise the revenue needed to make these investments.

Imagine union membership tripling in the United States. It may sound radical—if you’ve forgotten history. In fact, more than 1 in 3 private-sector workers belonged to a union in the 1950s. The results? Wages grew in tandem with the economy. The middle class thrived. Black-white wage gaps shrank. Broadly shared economic growth was a reality, not an aspiration. That’s because when workers have bargaining power, they win better wages, benefits, and working conditions. This report shines a light on what we stand to win if we rebuild union power.

Over the last four decades, big corporations and the billionaires who run them have waged a relentless campaign against unions. And they have largely succeeded in reshaping the U.S. economy. By making it harder and harder for workers to organize and bargain collectively, the rich seized more and more income and wealth, destroying the U.S. middle class. Now the wealth of the richest Americans has exploded: The richest 0.1% own more than five times the combined wealth of the entire bottom half of the country.

And yet, workers haven’t given up. In 2025, unionization ticked upward. Public approval of unions has reached some of its highest levels in decades, and more than 50 million nonunion workers say they’d join a union tomorrow if they could. That’s because they know what unions deliver. In an economy that has been rigged against working people for decades, unions serve as a counterweight to corporate power—reducing inequality and building the kind of middle class that underpins a strong and inclusive economy.

It will take serious policy change to reverse nearly 50 years of deliberate attacks on working people and their institutions. It will require that politicians stand up to the superrich and corporate interests. It will require that workers continue to build power. But, as this report shows, we have much to gain from stronger unions. An organized and empowered workforce has powerful and far-reaching economic benefits.

Nearly four decades ago, I helped found the Economic Policy Institute because working people needed a voice in the economic debates that shape their lives. This report is exactly the work we envisioned: rigorous research that puts workers at the center of economic policy, and that arms all of us with the facts to fight for them. At a time when our economy is held in relatively few hands, we need this work—and we need unions—more than ever. 

Robert Reich
Professor, writer, and former Secretary of Labor

Executive summary

Union membership in the U.S. ticked up in 2025, breaking a decades-long trend of declining unionization. But today’s unionization rate doesn’t reflect the tens of millions of workers who want a union but can’t get one. This report examines what we stand to gain if we triple current union membership to 30%—restoring it to 1950s levels, when union strength delivered rising wages, narrowing racial wage gaps, and a thriving middle class.

Tripling union membership would:

• Deliver a 14.5% raise for the median worker—amounting to more than $7,700 annually, or nearly $270,000 over a 35-year career. These life-changing increases would benefit union and nonunion workers alike.
• Shift $1.2 trillion to workers annually. This would reverse a third of the increase in inequality experienced since 1979.
• Significantly narrow racial wage gaps. Because unions tend to boost wages more for Black and Hispanic workers than for white workers, tripling union membership would close racial wage gaps by more than one-third.
• Boost the number of people with health insurance. Since unions increase other forms of compensation, like health insurance benefits, the number of nonelderly people without health insurance would fall by about 25%. Unions further reduce uninsured rates by advocating for increased public benefits like Medicaid.
• Strengthen communities. States with high union density invest more in public education, have higher unemployment insurance recipiency rates, and have all adopted Medicaid expansion.
• Protect democracy. Unions boost voter turnout, equip workers with civic skills, and actively defend voting rights. States with high union density have passed far fewer voter restriction bills than low-density states.

Download the factsheet

Roadmap for tripling union density

Reversing decades of political neglect that has stealthily undermined workers’ rights to unions and collective bargaining will require comprehensive reform that weaves together tested approaches with bold new ideas, at both federal and state levels.

Two bills with bipartisan support could help restore collective bargaining

• The Protecting the Right to Organize Act would restore private-sector workers’ right to organize and bargain collectively. It would streamline the union formation process, establish penalties for labor law violations, override so-called “right-to-work” laws, and ban “captive audience” meetings.
• The Public Service Freedom to Negotiate Act would be the first federal law that guarantees all public-sector workers at the federal, state, and local levels the right to organize and collectively bargain.

Two bold new proposals could expand the benefits of collective bargaining and help tackle the affordability crisis

• Guaranteed annual raises for newly unionized workers. Legislation providing that newly unionized workers can use arbitration to achieve a first contract (if an employer fails to negotiate in good faith) should set a minimum standard that such contracts include a cost-of-living adjustment (COLA). For the typical worker, a 3% COLA means roughly $2,000 extra a year.
• Default collective bargaining when CEO-to-worker pay ratios exceed 100:1. Declining unionization and the stratospheric rise in CEO pay are deeply connected. Strengthening the bargaining power of workers in severely imbalanced companies would enable them to capture a larger share of the wealth their work creates.

States can remove anti-union laws and protect collective bargaining

Removing so-called “right-to-work” laws and restrictions on public-sector bargaining alone would increase union density nationally from 9.9% to 14.4%. Beyond removing those unionization barriers, states can also:

• Extend collective bargaining rights to workers currently excluded from federal law (in-home child care, home health care, agricultural, and gig workers);
• Protect workers’ right to refuse mandatory, anti-union “captive audience” meetings; and
• Extend unemployment insurance eligibility to workers on strike.

Introduction

In 2025, 14.7 million workers—10% of all wage and salary workers—were union members, an increase from 9.9% in 2024.1 Though small, the increase marks a departure from prior years’ downward trend in union density and coincides with record high public favorability of unions.2

This report examines what the U.S. might look like if union membership were to triple to 30%, restoring it to roughly its 1950s peak. We analyze the economic, social, and democratic impacts of this increase; examine the potential impact on state union density rates if all states were to remove anti-union policies; and offer policy recommendations to expand union membership.

While tripling union membership is an ambitious goal, it is fully consistent with workers’ own demand for unions. Recent survey data show that 43% of nonunion workers would vote to unionize if given the opportunity—the equivalent of about 56 million wage and salary workers (Ahlquist, Grumbach, and Kochan 2024; McNicholas, Poydock, and Shierholz 2026). If all these workers unionized, union density would rise from 10% to 48.7%—well above the 30% goal we examine in this paper.

Union decline, wage suppression, and affordability

As union membership has declined, workers’ wages have been suppressed and inequality has skyrocketed. The gap between typical workers’ pay and economy-wide productivity is at a historic high.3 Since 1979, productivity has grown 2.7 times as much as pay for typical workers (Figure A). This divergence reflects both rising wage inequality—high earners experiencing much stronger wage growth than typical workers—and a shrinking share of the economy’s income going to workers overall. Between 1979 and 2023, real (inflation-adjusted) earnings for the top 0.1% grew 354% (from $618,000 to $2.8 million), while earnings for the bottom 90% of households grew just 44% (from $30,000 to $43,000) (EPI 2026a). And workers are now taking home a historically low share of corporate-sector income—meaning shareholders and other capital owners are capturing more than ever before (EPI 2026b).

Figure A

Inequality has grown since 1979 because of intentional policy choices that suppressed wages for typical workers to accelerate income growth at the top. If pay for typical workers had kept pace with productivity over the past nearly five decades, their paychecks today would be more than 40% larger (EPI 2026c). Though affordability pressures are often framed as a problem of high prices, the real problem is this wage shortfall—and reversing that shortfall must be central to any serious affordability agenda. Collective bargaining is the most effective mechanism workers have to raise their wages and secure their fair share of economic growth. Expanding union membership and collective bargaining is central to addressing the affordability squeeze.

Unions raise wages for all workers

One of the most well-studied benefits of unions is the ability of collective bargaining to raise pay—resulting in a “union wage premium.”4 Historically, that premium has fluctuated around 15–20% (EPI 2026d). Unions also reduce inequality by compressing the wage distribution within firms, with the largest benefits going to workers at the bottom and middle. This is one reason the union wage premium is typically larger for those with less education, and for Black and Hispanic workers relative to white workers (Bivens et al. 2023).

Less appreciated is that unions also boost wages for nonunion workers. Higher wages at unionized firms make those jobs more attractive to nonunion workers, indirectly pressuring nonunion firms to raise wages to keep their workers. Nonunion firms may also raise wages to avoid unionization, especially when union density is already high in the relevant sectors and occupations.

Finally, unions also advocate for progressive changes in the tax and benefit system—indirectly raising pre-tax pay for low- and middle-wage workers. This happens in two main ways: First, when taxes on top incomes are higher, corporate executives have less incentive to maximize their own income at the expense of workers’ wages.5 Second, more generous social benefits like SNAP and Medicaid increase the bargaining power of lower-paid workers by making them less economically vulnerable and better able to reject low-quality jobs (Bivens 2026).6

These “spillover” effects of unions on the nonunion sector are significant and increase when union density is high. Rosenfeld, Denice, and Laird (2016) and Farber et al. (2021) find strong evidence that unions raise the wages of nonunion workers. Consistent with this, Fortin, Lemieux, and Lloyd (2021) estimate that between 1979 and 2017, declining unionization was responsible for 37% of the increase in inequality between the 90th and 50th percentiles of male workers—and more than half of that impact occurred because, as unions weakened, nonunion employers faced less pressure to offer higher wages.

Tripling union density would shift $1.2 trillion a year to working people

Our analysis of the relationship between union density and state median wages finds that for every 10 percentage point difference in union density, real median wages are about 7.2% higher.7 If we tripled union density from 10% to 30%, the real median wage for all workers (including both union and nonunion workers) would rise from $25.67 in 2025 to $29.39 per hour—a 14.5% increase.8 A full-time, full-year worker earning that wage would see annual pay rise by more than $7,700.

To put this into perspective, consider the substantial growth in the gap between pay and productivity between 1979 and 2025. A full-time, full-year worker at the 2025 median wage was paid about $53,400 per year—but would have earned about $76,400 had their pay kept pace with productivity growth (EPI 2026e). Through direct wage increases for union members and unionization’s spillover effects on nonunion workers, tripling union density would close roughly one-third of the productivity-pay gap, increasing annual pay to $61,100.

To contextualize the gain in another way, consider that the median annual cost of a mortgage in the U.S. is $18,252. An additional $7,700 per year would cover more than 40% of that cost.9

Perhaps more strikingly, consider that an extra $7,700 a year adds up to nearly $270,000 (in today’s dollars) over the course of a 35-year career—a life-changing increase for a working family. Adjusting the USDA’s latest estimate of the cost of raising a child to 2025 dollars yields a current cost of roughly $317,000 to raise a child from birth through age 17, including food, housing, transportation, health care, clothing, child care, education, and other expenses (USDA 2017). The additional $270,000 in career earnings that a typical worker would receive if union density were tripled would cover 85% of that cost.

Or, according to the College Board, the average annual cost of attending a four-year in-state public college, including room and board, is about $31,000 (Ma, Pender, and Hu 2025). Over four years, that comes to $124,000 per student—so the additional $270,000 in career earnings would more than cover the cost of sending two children to college.

Yet another way to show how transformational these effects would be for the U.S. economy and the economic security of typical families: Assuming the 14.5% wage boost we estimate from a tripling of union density applies to the bottom 80% of the U.S. workforce, this would raise these workers’ combined pay each year by $1.2 trillion.10 

Several useful reference points help illustrate the scale of this $1.2 trillion increase in workers’ annual pay. First, the increase would be nearly three times as large as the $430 billion U.S. families received in “COVID checks”—and unlike those one-time checks, these gains would be permanent and recurring.11 Second, the $1.2 trillion that tripling union density would shift to workers slightly exceeds the Pentagon’s 2025 budget—a redistribution of income on a scale comparable to the entirety of the U.S. military-industrial complex.12 Third and most revealingly, this increase would claw back a full third of the increase in income inequality since 1979. Between 1979 and 2022, the share of market income going to the richest 20% of households rose by 12.0 percentage points (with nearly all of that increase—10.1 percentage points—accruing to the richest 1%). A $1.2 trillion increase in the incomes of the bottom 80% of households would reverse a third of that shift, 4.0 of the 12.0 percentage points.13

Our estimates likely underestimate future gains

It’s worth noting that while our estimates show large wage gains to workers from tripling union density, they are likely being significantly held down by the fact that union density in the U.S. is starting from such a low level (10%). Our estimates therefore likely understate the wage gains workers will experience once the labor market reaches a higher level of union density. Fortin, Lemieux, and Lloyd (2021) find that the wage payoff to union density is much larger where density is already high, and this shows up clearly in our analysis as well: Below 15% union density, a one percentage point increase in density is associated with just a 0.2% increase in the median wage; above 15%, the median wage increases by 0.9%—a wage response more than four times as large (see Figure B).14

The economic intuition behind this 15% threshold is that a minimum scale of unionization is needed for collectively bargained wages to exert a strong influence on pay scales—both union and nonunion—throughout the broader economy. While every additional percentage point of unionization gives another 1% of workers the union pay premium, it has a more limited effect on wage-setting throughout the broader labor market until overall union density reaches around 15%.

Today’s typical state has a union density of about 10%, which means the wage gains from each additional percentage point of unionization—while still significant—are muted relative to the gains that occur once union density exceeds 15%. In essence, the policy assault on unions in recent decades has pushed density so low that we need a 50% increase—from 10% to 15% union density—just to start realizing the “normal” gains unions can bring to a high-road economy. Raising density from 10% to 30% would carry the labor market across that 15% threshold and well into the higher-density regime, where each additional percentage point increase in unionization delivers substantially larger gains for the median worker. This is why a transformational policy effort is needed: We must rebuild union density from the depressed levels created by decades of political neglect to the point where the full wage benefits of widespread collective bargaining can be realized.

Unions reduce racial wage gaps

Because unions increase wages for Black and Hispanic workers more than for white workers, unions reduce racial wage gaps. And this dynamic is not new—research shows that the union premium was already higher for Black workers than for white workers by the mid-20th century, meaning that the spread of unionization in that era was one of the country’s greatest forces for racial justice (Farber et al. 2021; Bivens et al. 2023). But with the decline in unionization over the past 45 years, racial wage gaps have widened and are now substantially worse than they were in 1979—damage that restoring union power would more than reverse. In 2025, the median Black or Hispanic worker earned 76.5% of the median white worker wage—a wage gap of 23.5%. Tripling union density would close more than one-third of that gap, reducing it to 14.6%.15

Unions boost benefits, not just pay

Unions also increase other forms of compensation, like health insurance benefits. In 2025, 95% of union workers had employer-sponsored health insurance, relative to 71% of nonunion workers. In addition, as discussed later, unions further reduce uninsured rates by advocating for increased public benefits like Medicaid. Figure C shows that nonelderly uninsurance rates are substantially lower in states with higher union density. To do this analysis, we divided the 50 U.S. states plus the District of Columbia into three equally sized groups based on their current (2023–2025) level of union density.16 Most low-union-density states have double-digit uninsured rates, but these rates typically fall to the single digits in medium- and high-union-density states. If union density tripled and all states were high-density states, the national nonelderly uninsured rate would fall by about a quarter, from 9.8% to 7.3%.

Figure C

Unions benefit communities

Unions don’t just improve workers’ pay and benefits—they give workers a voice in shaping the social fabric of their communities, lifting standards for union and nonunion workers alike. The data reveal a strong correlation between higher levels of unionization and a range of economic and personal well-being measures. When more workers are in unions, states have more equitable economic and social structures (McNicholas et al. 2025). Meanwhile, states with anti-union policies have lower union density and consistently worse outcomes across these measures.

Economic well-being

We first examine economic well-being—broadly defined as working people having the means to support themselves—using two indicators: the gap between productivity and pay, and unemployment insurance recipiency rates.

As discussed earlier, there has been a growing gap since 1979 between productivity—the value of the output generated by a worker in the U.S. economy in an hour of work, on average—and typical workers’ hourly compensation. Far from accidental, this divergence stems from deliberate policy choices in the U.S. beginning around 1980 that allowed the gains from economic growth to be increasingly captured by the highest earners, shareholders, and other capital owners—rather than being broadly shared across low-, middle-, and high-income households (Shierholz 2024).

The degree to which productivity gains have translated into higher pay for typical workers varies widely across states. Figure D shows that in states with smaller declines in unionization since 1979, a larger share of productivity gains translated into higher pay for typical workers. In other words, in places where unions remained stronger, it wasn’t just those with high incomes and wealth who benefited from economic growth—working people, both unionized and nonunionized, saw a bigger share of the gains.

Figure D

Unemployment insurance (UI) recipiency rates also offer insight into economic well-being. When a worker is laid off and their household income falls, unemployment insurance supports them and their family until they find another job. UI is a joint federal-state program that relies on state UI systems to effectively deliver benefits to unemployed workers. States differ in their rules and approaches under the federal UI framework, leading to wide variation in the share of unemployed workers receiving UI benefits (the UI recipiency rate).

Studies show a strong correlation between higher UI recipiency rates and high union density (Clegg et al. 2022); Figure E illustrates this strong positive relationship. In recent years, the average UI recipiency rate in high-union-density states was 36%, double the 18% rate in low-union-density states.

Unions fight to increase UI eligibility, ease of access, benefit levels, and benefit duration—to the benefit of all workers, union and nonunion (Hertel-Fernandez and Gould-Werth 2020). The strong correlation between union density and state UI recipiency rates suggests that expanding unionization by removing anti-union policies would result in higher UI recipiency rates.

Figure E

Personal health and well-being

Next we examine personal health and well-being—which we define as an individual’s physical and mental health—using one indicator, Medicaid expansion.

As we noted earlier, almost all union workers (95%) have access to health insurance, and uninsured rates are lower in high-union-density states. To show how unions influence health care coverage beyond explicitly bargained workplace plans, we examine whether a state has expanded Medicaid under the Affordable Care Act to broaden eligibility. The Medicaid public insurance program provides critical health coverage to families and individuals with low incomes. Research has found that Medicaid expansion has expanded access to health care; improved health outcomes, including fewer premature deaths; lowered uncompensated costs; bolstered financial security; and boosted economic mobility (CBPP 2020). While the Medicaid program has broad federal guidelines, it is administered by states—and a 2012 Supreme Court decision gave them the power to decide on eligibility and expansion. Since 2014, 40 states plus the District of Columbia have adopted Medicaid expansion; 10 states have not (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming).

Figure F shows a stark divide between high- and low-union-density states in terms of Medicaid expansion. All 17 high-union-density states have expanded Medicaid. Out of 17 medium-union-density states, 14 have adopted Medicaid expansion (Alabama, Kansas, and Wisconsin are the only medium-union-density states that have not adopted expansion). Just 10 out of 17 low-union-density states have adopted Medicaid expansion (Florida, Georgia, Mississippi, South Carolina, Tennessee, Texas, and Wyoming are the low-union-density states that have not adopted expansion).

There is a strong correlation between union density and Medicaid expansion. If states removed anti-union policies and became high-union-density states, they would be joining a group of states in which Medicaid expansion is currently universal, potentially helping to close the Medicaid coverage gap that currently leaves 1.5 million adults uninsured (Zhang 2026).

Figure F

Spending on public education

Union density also intersects with public education investment. Investment in public education helped make the U.S. the richest country in the world in the 20th century. The benefits of universal education are many—including a more productive workforce, and a more informed and engaged democratic society equipped to think critically. Unions play a key role in negotiating public spending on education. At the school district and state level, education unions advocate for increased funds for schools. 

We can measure the relationship between union density and public education investment by looking at states’ level of per-pupil spending. Adequate levels of per-pupil spending are crucial to maintaining quality education; low per-pupil spending limits the support students receive toward achieving their learning goals and makes it harder for districts to retain teachers and staff by offering competitive salaries or benefits. Increased per-pupil funding pays off for students. Research has consistently shown that increased funding for schools improves educational attainment, student achievement, and economic outcomes in adulthood (Jackson and Mackevicius 2023). In one study, researchers examined the impact of school finance reforms between 1972 and 2010 and found that a 10% increase in school spending for 12 years leads to increased high school graduation rates, 7% higher wages, and 10% higher family incomes in adulthood for children from districts that saw the spending increase (Jackson, Johnson, and Persico 2016).

Figure G shows that states with higher rates of unionization spend substantially more per pupil on education—demonstrating the impact of union advocacy on education investment and building a more educated society.

Figure G

Voting rights and democratic participation

Many states disproportionately disenfranchise people of color (Johnson and Feldman 2020), and the number of voter suppression laws enacted across the country is high and rising. These restrictions threaten democratic participation and the stability of our democracy.

Unions strengthen democracy by encouraging civic engagement and helping workers become informed voters. Unions communicate with their members about issues and candidates to make sure workers have the information they need when they go to the polls. And as democratic institutions where members elect leaders and ratify contracts, unions serve as “schools of democracy,” equipping workers with civic skills that carry over to public life (Andrias and Hertel-Fernandez 2026). More broadly, because many organizations that shape policy represent elite or corporate interests, unions are a countervailing force, bringing working people’s voices into legislative debates and building coalitions that can win against well-resourced opposition.

Research shows that these effects translate into greater political participation. Union members are more likely to vote than the general public, and voter turnout is higher in states with greater unionization (EPI 2021). Conversely, turnout is lower in states with “right-to-work” (RTW) laws, which weaken unions and in turn the civic engagement they foster. Feigenbaum, Hertel-Fernandez, and Williamson (2018) found that RTW laws reduced presidential election turnout by 2%, a substantial effect given the narrow margins that often decide presidential elections.

We build on this evidence by examining the relationship between union strength and laws that restrict voting. Figure H shows that there is a strong correlation between union density and voter suppression legislation. A large majority of low- and medium-union-density states passed at least one voter restriction bill between 2023 and 2025, while a large majority of high-union-density states passed none. Among high-union-density states, 14 out of 17 did not pass any voter restrictions during this period, while only eight of the medium-union-density states and three of the low-union-density states can claim this distinction.

These results are consistent with evidence that unions actively defend voting rights. Unions have long mobilized members to oppose voter suppression laws, educated communities about their rights, and turned out to vote despite increasing barriers (Bondy 2025). Unions have also expanded access to voting: Dean, McCallum, and Grumbach (2023) found that county-level union density was associated with greater access to ballot drop boxes—a highly secure way to increase access to voting—during the 2022 midterm elections. Together, these findings suggest that stronger unions not only increase voter participation but also help preserve and expand access to the ballot.

Figure H

State policy and union density

Increasing union density across all states—including those where anti-union policies have historically suppressed unionization—is essential to strengthening both the economy and democracy, improving all workers’ wages, and expanding access to public goods like health care, retirement, and education.

As the previous section made clear, residents of high- and low-union-density states face starkly different economic and social realities. These wide variations in union density across states—and highly variable economic outcomes—are strongly correlated with variations in state labor policies. For example, the union rights of millions of public-sector, agricultural, and domestic workers (including home health care and in-home child care providers) vary by state because workers in these occupations are excluded from coverage under federal law. And even for private-sector workers whose union rights are covered under federal law, collective bargaining rights are limited by anti-union “right-to-work” laws in many states. Research shows that anti-union state policies result in lower union density. Union density averages 6.2% in states with anti-union RTW laws compared with 15.8% in non-RTW states, and states that limit or prohibit public-sector collective bargaining have lower overall union density than other states (Sherer and Gould 2024; Sherer and Morrissey 2026).

Here, we consider what union density would be if states with certain anti-union laws adopted the policies of states that better protect workers’ rights to unionize and collectively bargain. We consider two policy changes: 1) requiring state and local governments to bargain with public-sector workers who choose to unionize; and 2) repealing so-called “right-to-work” laws that limit collective bargaining rights of private-sector workers. These are two of many policies that states can adopt to remove barriers to unionization, but we focus on them because of their clearly documented, large-scale impact on large numbers of workers across much of the country. At present, roughly half of U.S. states have RTW laws in effect and do not require public employers to bargain with unionized public employees. Modeling changes to these two policies lets us estimate what would happen to union density if we removed large state-by-state labor policy disparities and created a stable “floor” for collective bargaining for workers across all states. This provides an important starting point for considering how additional, stronger state labor policies might affect union density, worker wages, and democracy.

Public-sector workers face wide disparities in bargaining rights across states

Variations in collective bargaining rights for public-sector workers are rooted in history, notably in Southern states where systemic racism drove the enactment of anti-union policies (Childers 2023; Dixon 2007; Kaufman 2018; Stelzner, Hoyt, and Ramchurn 2019). By the 1980s, most states had enacted public-sector collective bargaining policies, though these statutes varied in strength and coverage (Freeman and Ichniowski 1988). In more recent decades, many states have repealed or harshly limited formerly robust public-sector collective bargaining statutes, while a few states have expanded them. A key distinction is whether state and local government employers have a legal duty to bargain with unionized employees over pay and working conditions, rather than being merely permitted to bargain—or outright banned from doing so.

Sherer and Morrissey (2026) classify state public-sector bargaining rules across five categories of workers: teachers, police officers, firefighters, other local government employees, and other state government employees. States vary widely in which categories they cover and how strongly, and that variation maps closely onto union density. In states with strong, uniform duty-to-bargain rules across all five categories, public-sector union density can be close to 50% or higher, while in states that ban bargaining across most categories, state and local density can fall as low as the single digits. Pay consequences track these differences. Across the country, public-sector employees earn less than their private-sector counterparts with similar experience and education. This public-sector pay gap is smaller when bargaining rights are strong: Sherer and Morrissey (2026) estimate that in states with robust duty-to-bargain rights, public-sector workers earn 14.3% less than private-sector workers; the gap widens to 19.6% in states where bargaining is only permitted, and to 22.5% in states where it is banned.

“Right-to-work” laws weaken union density and suppress wages for all workers

“Right-to-work” laws prohibit unions and employers from negotiating over union security—the contract terms under which workers covered by a union contract either join the union or pay an agency fee covering their share of representation costs. State RTW laws first emerged as part of anti-union industry campaigns to suppress multiracial worker organizing and maintain Jim Crow labor relations in Southern states following the passage of the National Labor Relations Act (Pierce 2017). By making union finances more unpredictable and leaving unions more vulnerable to ongoing employer interference, these laws weaken unions’ stability, suppress union density, and limit workers’ bargaining power. As a result, RTW laws generate negative outcomes for all workers—with or without a union. States with RTW laws have lower unionization rates and higher income inequality, and workers in RTW states on average have lower wages and benefits (Fortin, Lemieux, and Lloyd 2022). Sherer and Gould (2024) document that workers in RTW states earn 3.2% less than otherwise comparable workers in non-RTW states—about $1,670 per year for a full-time worker.

There are currently 27 states with RTW laws in place—including Colorado, which is not a traditional RTW state, but whose law has, since 1943, effectively imposed RTW conditions. By barring unionized workers from negotiating over union security unless they first win a second, state-administered election by a 75% supermajority of those voting or 50% plus one of all eligible workers—whichever is higher—Colorado’s anti-union policy has produced RTW-like outcomes, so we group it with RTW states.

Removing state anti-union policies would raise national union density from 9.9% to 14.4%

We estimate that these two policy changes—1) requiring state and local governments to bargain with public-sector workers who choose to unionize, and 2) repealing RTW—would substantially increase unionization in states that currently have more anti-union policies in place, as shown in Table 1.17 In the 24 states without a duty to bargain with public-sector employees, establishing that duty would raise public-sector union density from 16.7% to 46.7%. In the 27 RTW states, repealing RTW would increase private-sector density from 3.4% to 8.8%. Overall, removing these anti-union policies would increase union density in 27 states from 5.4% to 14.3%. Nationally, union density would rise from 9.9% to 14.4%.18 This is a conservative national estimate reflecting changes in union density only for the 27 states undergoing hypothetical policy changes and not including likely impacts on the 23 states and D.C. where stronger union policies are already in place. These states would likely also see some level of increased union density under this scenario, given that removal of anti-union state policies across the country would strengthen worker bargaining power and union organizing resources in all states.

Table 1

Removing state-level anti-union policies would increase median wages by up to $4,900 a year

Were the 27 RTW states to increase unionization to estimated levels, overall annualized median wages would rise by $1,600 to $4,900 for full-time, full-year workers, depending on the state. Table 1 shows that if Virginia’s density rose from 4.9% to 15.5% because of the removal of state-level anti-union policies, annual pay for full-time, full-year workers at the state median wage would increase by about $4,500. Removing these anti-union policies in Texas could cause a similar increase in density, raising annual pay by $3,400.

Of course, were workers in all states able to achieve 30% union density, the effects on median pay would be even larger. These impacts are shown in Figure I. The 23 percentage point increase in density in Alabama, for example, would increase annualized median pay there for full-time, full-year workers by about $8,500.

Figure I

Recent state policy changes show that anti-union laws lower union density

Recent “natural experiments” in states that have changed one or both of these labor policies also show the impact on union density. For example, in states that adopted new RTW laws since 2010, union density fell 3.8 percentage points between 2010 and 2023. By comparison, union density declined only 2 percentage points during this same period in non-RTW states (Sherer and Gould 2024).

Wisconsin is an example of a state that both repealed a previous duty to bargain with public employees (in 2011) and enacted a new RTW law (in 2015). Since adopting these anti-union policies, between 2011 and 2024, Wisconsin’s union density has fallen by half, from 14% to 7%. Over this same period, national union density declined just 2 percentage points, from 13% to 11%. With both a RTW law in place and no public-sector duty to bargain, Wisconsin’s union density is plummeting in comparison with national and regional trends (Dresser, Rogers, and Vasquez 2025). Other studies show that Wisconsin’s adoption of anti-labor policies and declining union density have generated a wide array of harmful outcomes for the state’s economy and democracy, including sharp decreases in public education spending, declining worker wages, widening public-sector pay gaps (including stark increases in gender pay gaps for teachers), and declining voter participation (Nack et al. 2019; García and Han 2021; Biasi and Sarsons 2022; Feigenbaum, Hertel-Fernandez, and Williamson 2018).

States have other policy options to enable workers to increase union density

Beyond these two policy changes, states have numerous other opportunities to increase union density by removing obstacles to unionization and ensuring more workers have full rights to collectively bargain (Sherer 2026). A few examples that have not yet been adopted in most states include:

• Creating pathways to collective bargaining for all workers in occupations not currently covered by federal labor law, including in-home child care and home health care workers, agricultural workers, and rideshare or delivery drivers treated as “independent contractors” by digital platform companies;
• Protecting workers’ freedom to refuse mandatory “captive audience” meetings on political or religious topics not related to work duties, including mandatory anti-union meetings employers typically hold when attempting to block workers from unionizing;
• Ensuring workers whose paychecks stop due to a strike or lockout are eligible to apply for unemployment insurance; and
• Establishing or expanding state agency capacities and public labor education programs that ensure workers can easily learn about their union rights.

We do not model the specific impacts of all possible state policy changes in this report. But our conservative, baseline estimate of increases in union density likely to result from removing two of the largest state obstacles to workers’ union rights—RTW laws in 27 states and the lack of a duty to bargain for public employees in 24 states—suggests that combining these changes with additional policy changes would likely lead to additional increases in union density across the country.

Federal policy and union density

Given the clear benefits of tripling union membership, it is critical that policymakers prioritize reforms that enable workers to organize and collectively bargain. It is tempting to search for a policy “silver bullet” to restore the promise of the National Labor Relations Act (NLRA), our primary labor law. But the reality is that policymakers must adopt comprehensive labor law reforms to eradicate the effects of decades of political neglect that has steadily undermined the effectiveness of U.S. labor law. As discussed above, these reforms must at a minimum reverse state anti-union policies, via state or ideally federal labor law reforms that end Jim Crow-era occupational exclusions, ensure equal union rights and pathways to collective bargaining for all workers in all states, and eliminate RTW laws.

Labor law reform has passed the House three times with bipartisan support

A consistent narrative maintains that such policy change is impossible, but that narrative relies on the mistaken notions that real reforms require more political power than the labor movement has and that our legislative process prevents labor law reform. It is true that winning policy fights takes significant political capital. But labor law reform must not be seen as solely a labor movement priority. It is central to any attempt to address affordability pressures and economic inequality. And in this moment, such reform is imperative to our democracy. While the Senate filibuster rules do prevent much legislative progress, they are not inevitable dictates but rather agreed-upon rules that, as history shows, can change. It is deeply destructive to our political system to convince working people that the system simply cannot be expected to serve their interests, which is what this flawed narrative around labor law reform reinforces. To be clear, policies favored by elites benefiting from the unequal status quo are far more likely to become law than even broadly popular ones. But these reforms have the potential to help rebalance this inequality.

In fact, in the last two decades, legislation to significantly reform labor law has passed the U.S. House of Representatives three times—with bipartisan support each time. Even in the current Congress, legislation aimed at restoring collective bargaining rights has managed to bypass Republican House leadership opposition via parliamentary procedure (discharge petition) and pass with bipartisan support.19 Of the on average 12,000 bills introduced in a given Congress, labor law reform measures have had more success than roughly 95% of bills—passing a chamber with bipartisan support. Of course, Senate rules around the filibuster requiring 60 votes to proceed on consideration of various measures have been a significant impediment to the Senate passing these reforms. However, since 2013, the Senate has used the “constitutional option” to change its own rules for procedures and has eliminated the 60-vote requirement to proceed on specific debates three times. That could be done here, too.

Record high union approval strengthens the case for labor law reform

Labor unions today have significantly higher public approval ratings than when major labor law reform was last considered, polling more than 20 points higher.20 Since 2021, approval for unions has remained high, with over 68% of people in the U.S. viewing unions favorably (Brenan 2025). This positive view of unions is shared across generations, with majorities of Boomers (59%), Gen X (58%), Millennials (61%), and Gen Z (63%) viewing unions favorably. Young adults (ages 18–35) have the highest favorability rate at 72% (Glass 2025).

Unions are viewed positively across party lines, with both Democrats (90%) and independents (69%) having high favorability rates for unions, and over 40% of Republicans approving of labor unions (Brenan 2025). Some conservative organizations recognize that unions are popular among workers: Research by American Compass (2025) finds that at least 46% of Republicans view unions somewhat favorably, with favorability increasing among young Republicans (60%).

Data from the American National Election Studies show that people in the U.S. favor unions over big business now more than ever—with the average rating for labor unions hitting a new high (60%), while big business hit a low (44%) (Sojourner and Reich 2025). Further, most people in the U.S. say the decline in union density is bad for the country (60%) and bad for working people (62%). Most young adults (69%), including young Republicans (52%) and young Democrats (82%), view the decline in union density as negative for working people (Van Green 2025).

Three bipartisan bills would pave the way toward restoring collective bargaining rights

As with many popular policies, high public opinion of unions has not translated into the enactment of labor law reform. Even though several bills that would reform aspects of our current labor law are being introduced and even passing with bipartisan support in the U.S. House of Representatives, the Senate has failed to act on the legislation. There are three main bills with bipartisan support that would help reform our current labor law system and each should be passed.21

• The Protecting the Right to Organize (PRO) Act would restore private-sector workers’ right to organize and bargain collectively. It would streamline the process of forming a union, create a roadmap to reaching a first collective bargaining agreement, establish civil monetary penalties for employers who violate labor law, among other reforms—such as expanding coverage to more workers, overriding state “right-to-work” laws, and banning “captive audience” meetings (McNicholas, Poydock, and Rhinehart 2021). Since its first introduction in 2019, the PRO Act has passed the House of Representatives twice with bipartisan support.
• The Public Service Freedom to Negotiate Act (PSFNA) would establish public-sector workers’ right to organize and bargain collectively. This would fill an important gap—there is currently no federal law that guarantees all public-sector workers at the federal, state, and local levels the right to organize and collectively bargain. As a result, more than half of U.S. states today lack comprehensive collective bargaining laws for state and local public-sector workers (Sherer 2026).
• The Protecting America’s Workforce Act (PAWA) would reverse President Trump’s executive order that revokes collective bargaining rights for federal workers. The bill would reestablish collective bargaining rights for more than 1 million federal workers. In December 2025, PAWA passed the House of Representatives by a 231-195 vote.

Beyond passing these important bills, policymakers should also consider additional policies to help workers access collective bargaining and union membership. We propose two concrete policies that complement the labor reforms above. While these two proposals alone will not result in tripling union membership, they could help more workers receive the benefits of collective bargaining, which serves as a corrective to the affordability crunch and the economic inequality that characterizes our economy.

Guaranteed annual raises for workers in first contract arbitration

When workers win a union and begin to collectively bargain with their employer, both parties have an obligation to bargain in “good faith.” However, given that the NLRA lacks meaningful penalties for violations, employers often engage in bad faith bargaining tactics with few consequences. In fact, it is well documented that many union-busting consultants view bargaining as a new phase of union-busting and advise employers to drag out bargaining for as long as possible. The goal is to avoid reaching a contract for a year or more, hoping that workers will then give up their union through decertification, which is permitted one year after the election. It is no coincidence that workers who have successfully formed a new union spend an average of 465 days bargaining for a first contract before reaching an agreement.

The Faster Labor Contracts Act, which overwhelmingly passed the U.S. House of Representatives last month, would discourage delay and promote good faith bargaining by establishing a mediation and binding arbitration process when employers refuse to bargain in good faith. Beyond guaranteeing workers first contract arbitration, we suggest the adoption of a mandatory cost-of-living adjustment (COLA) for workers whose first contract bargaining ends up in arbitration. This would establish an important guardrail for workers in the arbitration process, given that an arbitrator will ultimately impose a final contract on both parties. This provision would ensure that workers receive at least a COLA each year of their first contract. In other words, by voting for a union, workers would be voting for a guaranteed raise.22

For the average production, nonsupervisory worker, a 3% COLA would result in almost a $2,000 increase in annual earnings for a full-time, full-year worker. 23 Table 2 shows that, while these increases would vary widely by industry because pay varies widely by industry, workers in some of the lowest-paid industries would still see annual pay increases above $1,000.

Table 2

Default collective bargaining when CEO-to-worker pay ratios exceed 100:1

The outsized and ballooning gap in recent decades between CEO pay and the pay of typical workers is among the clearest signs that the economy’s rules have been rigged to allow the most powerful to claim oversized shares of income growth. This CEO-to-worker pay ratio rose nearly tenfold from 1978 to 2024, as the pay of CEOs rose over 1,000% while the pay of typical workers rose just 26%. The explosion of CEO pay was driven not by CEO’s rising productivity or skills, but by policy changes that boosted both the incentives and the ability of CEOs to raise their own pay.

When a firm’s CEO makes more than 100 times what the typical worker in their industry makes, effective corporate governance has clearly broken down—which threatens the ability of those outside the C-suite to receive their fair share of the firm’s income. The two main parties competing with executives to claim a share of a firm’s income are the shareholders and the firm’s workers. The best mechanism for ensuring that workers are able to bargain against CEOs and shareholders for their fair share of the income generated by the firm is collective bargaining.

We propose instituting default collective bargaining in any firm that meets or exceeds this 100:1 ratio. Securities and Exchange Commission (SEC) reporting already requires the annual disclosure of CEO pay (SEC 2007). We propose that these disclosures be reported not only to the SEC but also to the National Labor Relations Board. Comparing those disclosures with Bureau of Labor Statistics data on the pay of a typical worker economy-wide in various industries, the NLRB would determine which corporations meet the default collective bargaining ratio of 100:1.24 The NLRB would then publish a public notice and notify specific corporations and their workers that the default collective bargaining ratio had been met, triggering default collective bargaining at the firm. The NLRB would then direct an election for a bargaining representative to be held within 45 days of the notification.25

Nonsupervisory workers at these firms would then have the opportunity to select a bargaining representative of their choosing—whether a labor organization or other representative. The NLRB would conduct the election for and certify a bargaining representative, after which bargaining would start. For purposes of default collective bargaining, the presumption for the bargaining unit would be a wall-to-wall unit—a model where all nonsupervisory employees join a single bargaining unit—ensuring comprehensive coverage under the collective bargaining process and resulting contract. This standard would apply absent an employer or employee representative demonstrating extraordinary circumstances.26 The NLRB would then determine the appropriate bargaining unit, the same way the agency already accepts or rejects bargaining unit proposals. We propose that all such questions be resolved within 10 days of the NLRB’s notice of election for bargaining representative. This proposal would not apply to existing bargaining units, but in firms where unions are present, it would apply to any nonunionized nonsupervisory employees, as described below.

A threshold of 100:1 for the CEO-to-typical-worker pay ratio is reasonable and fair. A ratio this high clearly signals a fatal breakdown in the ability of the firm’s workers and shareholders to protect their income claims against executives looking to maximize their own incomes. A ratio this high will not affect most publicly traded companies but will be relevant to a large share of the U.S. workforce.

Comprehensive data on CEO pay are available only for a subset of firms: The Compustat Execucomp database tracks CEO pay for half of publicly owned companies (and most U.S. firms are not publicly owned). For the firms in the Compustat database, under half (41.7%) had a CEO-to-typical-worker pay ratio exceeding 100:1 in 2024. This proposal would provide the 30 million workers employed in firms that have higher ratios—representing about a fifth of total private-sector employment in the United States—with collective bargaining.

It is not a coincidence that the stratospheric rise in CEO pay was accompanied by an acceleration in the downward trend of unionization in the United States. The broader correlation between declining unionization and the rise of inequality is well established, and the highest-quality research documents that this relationship is clearly causal, with the decline of unions leading to a higher share of income claimed by households at the top of the income distribution (Farber et al. 2021).

To be clear, using a threshold CEO-to-worker pay ratio as a trigger for default collective bargaining will not alone solve the problem of excess CEO pay. We focus on this threshold as a policy trigger because it is a readily available and measurable indicator of the outsized control of executives over the distribution of the firm’s income. In the total absence of collective bargaining or any other strong corporate governance institutions, firm executives will shift income in a zero-sum fashion away from both the workers and the shareholders of a firm. If shareholders manage to assert some influence over CEO pay—e.g., through public pressure campaigns or say-on-pay mandates—one likely outcome will be CEOs looking to suppress the firm’s wages even further to make room for both their own outsized salaries and a return to shareholders that placates them. Only collective bargaining can protect the interests and earnings of workers in firms where executives pocket an outsized share of firms’ incomes.

If collective bargaining became widespread enough throughout the corporate sector, it would likely not only boost workers’ wages but also rein in excess executive pay broadly—actually helping shareholders at the same time. The research on this question is encouraging: Unions and collective bargaining have been found to significantly restrain excess CEO pay (Huang et al. 2017; Nanda, Nishikawa, and Prevost 2025; DiNardo, Hallock, and Pischke 2000). But even if expanded collective bargaining does not tamp down the CEO-to-worker pay ratio beneath our 100:1 threshold, it will at a minimum protect workers’ interests from excess executive power—without foreclosing any policy route shareholders take to restrain excess CEO pay.

Currently, a number of firms with at least some degree of unionization among their workforces have CEO-to-worker pay ratios that exceed 100:1. But this is not an argument against using this threshold as an indicator of dysfunctional corporate governance requiring a strong policy solution. For many of these firms, union coverage among their rank-and-file workforce is far from complete, so this proposal would help fill in glaring gaps. Most of these firms clearly do pay wages that are among the highest in their industries, which signals that the policy of default collective bargaining to protect workers’ interests in the face of dysfunctional corporate governance would largely work. Finally, one key empirical driver of high CEO pay is the simple size of the firm: The CEO-to- worker pay ratio rises steeply with the size of the firm, all else equal.27 The firms with CEO-to-worker pay ratios above 100:1 and some degree of unionization among their workforces are large firms; it would take a very strong effect of collective bargaining on CEO pay specifically to have kept pay ratios at these large firms well below average.

In our world with only 10% union density (and less than this in the private sector), it should hardly be a shock that collective bargaining by itself has not been able to stem what has been an irresistible tide toward high CEO pay. Even large increases in executive pay are not enormous when compared with overall returns to shareholders. Given the strong policy and economic barriers to shareholder activism in restraining CEO pay, it takes truly outrageous pay scales to mobilize enough organized opposition from shareholders. In those firms where it is relatively strong, collective bargaining has protected workers’ interests, and that is the primary goal we are looking to achieve with this policy. The fact that in these firms the CEOs have felt free to shift income to themselves at the expense of other stakeholders (like the shareholders of the firm) is not a sign that default collective bargaining is a bad solution for protecting workers’ interests—it is only a sign that the problem of excess CEO pay needs to be addressed from other angles as well.

Tripling union density is what workers want—and it is entirely achievable

Restoring union density to 1950s levels is not a nostalgic pipe dream. Federal and state policymakers have a clear roadmap for tripling union density. While no single reform discussed in this report is a silver bullet for the problems facing the country, taken together they would address one of the worst: the erosion of workers’ right to bargain for their fair share of the wealth they produce. These reforms are meaningful steps toward tripling union density, and toward an economy where productivity gains are shared broadly, not captured by corporate elites and the superrich.

The evidence in this report shows what is at stake. Tripling union density would deliver nearly $270,000 in extra earnings over the median worker’s career and shift $1.2 trillion annually to working people—reversing a third of the rise in inequality since 1979. Rebuilding union power would narrow racial wage gaps by more than a third, and removing state anti-union policies would help dismantle the legacy of Jim Crow-era campaigns aiming to suppress multiracial organizing. States with higher union density deliver better economic and personal well-being outcomes to their residents, and they have healthier democracies with fewer voting restrictions. At a time when the voting rights of all citizens are under attack, rebuilding union power is a democratic imperative.

Acknowledgments

The authors thank Hilary Wething for her contribution to this report’s section on public education spending. We also thank Matthew Wich, Summer Labor Fellow from the Institute for Social Concerns at the University of Notre Dame, for his support of the project.

Appendix

Methodology

How we measure union density

The Bureau of Labor Statistics provides data on both union membership—workers who are full-fledged union members—and union representation, which includes both union members and workers who are not members but are covered by a collective bargaining agreement. As a result, the share of workers represented by a union is higher than the share of union members. For example, in 2025, 11.2% of workers were represented by a union, but 10% were union members.

In this report, we measure union density as the share of workers who are members of a union. Throughout this report, the terms “union density” and “unionization” refer to those who are members of a union. When measuring union density by state, data are averaged over three years (2023 to 2025) to give a more accurate estimate of state unionization rates and avoid temporary single-year changes due to small sample sizes in some states.

Estimating wage effects of tripling union density

To assess how much higher wages would be after tripling union density, we use state-level annual data on wages and unionization from 1979 to 2019 and compare median wages with unionization rates across states and over time. Specifically, we regress the state median wage on the state union membership rate, controlling for permanent differences in state characteristics, national annual shocks (like recessions), and annual state characteristics like state unemployment rate, minimum wage level, and education, race, age, gender, broad industry, and managerial shares.

Using state-level data from the Current Population Survey Outgoing Rotation Group for 1979–2019, we regress the log median wage on union density with state and year fixed effects and additional covariates: the log minimum wage, unemployment rate, and shares of those with less than a high school degree and just a high school degree, age group shares, and shares of those who are white, Black, Hispanic, married, and shares of those in the public sector, manufacturing, construction, services, and a managerial occupation. Regressions are weighted by state employment levels averaged over 1979–2019. The coefficient on union membership is 0.724 with a standard error, accounting for clustering at the state level, of 0.191.

To calculate effects of increasing union density on racial wage gaps, we use the same wage regression as before, except where the dependent variable is the state annual racial wage gap.

The calculation yielding the $1.2 trillion estimate of the annual increase in workers’ pay from tripling union density is as follows. First, the share of total labor income claimed by the bottom 80% is calculated from data provided by the Congressional Budget Office’s (CBO 2026) Distribution of Household Income data (we focus on the bottom 80% because research has generally identified the positive effect of unions on boosting pay as applying mostly to union and nonunion workers in the bottom 80% of the U.S. workforce). In 1979 this share was 60.5%, but by 2019 it had fallen to 50.1%. We use 50% for our calculations. Then we multiply the 14.5% boost to pay stemming from a tripling of union density by this 50% of labor income to get an estimate (7.25%) of how much total labor compensation would rise in the event of a tripling of union density. In the first quarter of 2026, the National Income and Product Accounts (NIPA) Table 2.1 from the Bureau of Economic Analysis (2026a) reports that total labor compensation was $16.1 trillion. Multiplying this by the 7.25% pay boost from tripling union density yields $1.16 trillion in higher pay for the bottom 80%. We believe this is the appropriate estimate for approximating how much higher wages would be for most workers if union density tripled. While potential caveats merit consideration, none, in our view, hold much force. For example, the regressions used earlier in the paper use median wages, not median total labor compensation, as the dependent variable. However, a long research literature has highlighted that benefit premiums stemming from unionization are likely even larger than wage premiums (Knepper 2020). To the degree that tripling union density works by giving all workers more leverage and bargaining power in labor markets, it seems clear that some of this leverage will be used to obtain broader and more generous coverage of benefits, not just higher wages. Another objection could be that union effects (both direct and indirect effects) are higher in the middle of the wage distribution than in either the lower or upper parts of the distribution, and hence the full 14.5% wage boost would only apply to (say) the second and middle fifths of workers while workers in the lowest and fourth fifth would see smaller wage boosts. However, in work that has estimated both the overall average effect of unionization on nonunion wages and the effect by wage percentile, the overall average effect is roughly one-half the effect at the median, a result that would be consistent with applying the 14.5% premium to half of all labor income, as we do (Fortin, Lemieux, and Lloyd 2021). Other research has similarly found that union effects at the median are very close to overall average effects (Baker et al. 2026).

For our analysis of how wage effects differ across union density levels, we use the same regression of log median wages on union density described above, modified to let the slope differ below and above 15% density using a piecewise-linear specification interacting union density with an indicator for density of at least 15%, while retaining the same controls and state and year fixed effects, weighted by state employment. The difference in slopes is statistically significant at the 1% level.

The scatterplot in Figure B uses 50 state-year bins to show this nonlinearity directly. The binned scatterplot groups the state-year observations into 50 employment-weighted bins by union density and plots each bin’s average real log median wage against its average union density, after partialing out the same controls and state and year fixed effects used in the regression.

State union density groupings

We divided the 50 U.S. states plus the District of Columbia into three equally sized groups based on their current (2023–2025) level of union density.

These groupings are shown in Appendix Table 1. We refer to the 17 states with the highest union density as “high-union-density states” (with 11.9%–25.1% union membership rates); the next 17 states (including D.C.) are “medium-union-density states” (6.8%–11.6%); and the remaining 17 are “low-union-density states” (2.5%–6.1%).

Appendix Table 1

Estimating union density effects of establishing a public-sector duty to bargain and repealing “right-to-work” laws

To estimate the effect of these two policy changes—1) requiring state and local governments to bargain with public-sector workers who choose to unionize, and 2) repealing RTW—we use the CPS Outgoing Rotation Groups for 2023–2025 to compute union density rates in states with stronger union policies (i.e., states with public sector collective bargaining and/or without RTW). We do this separately by industry and major occupation group for the private sector and by level of government (federal, state, and local) for the public sector. We then apply those rates to the workforce of each state that lacks the corresponding policy, holding each state’s industry, occupation, and government-employment mix fixed. Nevada is an exception on the private-sector side: Although Nevada is a RTW state, its private-sector union density is already comparatively high, so we hold its private-sector density at its current level.

Notes

1. “Union membership” refers to workers who are full-fledged union members, while “union representation” includes both union members and workers covered by a collective bargaining agreement but not members. The share of workers represented by a union is thus higher than the share of union members. In 2025, for example, 11.2% were represented by a union and 10% were union members.

2. In 2025, for the fifth consecutive year in a row, approval of unions reached record high levels last seen in the late 1950s, when union membership was roughly triple what it is now.

3. The productivity-pay gap is a measure of how much income is generated in an average hour of work.

4. “Union wage premium” refers to the additional wages paid to union members compared with nonunion workers with similar characteristics.

5. For example, when the top marginal tax rate was 91%, as it was in the 1950s and early 1960s, executives kept far less of each additional dollar of pay than they do under today’s 37% top rate, which reduced the payoff to pursuing ever-larger compensation packages.

6. Relatedly, expanded unemployment benefits during the pandemic boosted workers’ bargaining power and compelled employers to make higher wage offers (Bivens and Banerjee 2023).

7. See appendix for details about our methodology.

8. The real median wage is the wage of the person in the middle of the overall wage distribution, including both union and nonunion workers.

9. The median monthly cost of a mortgage in the U.S. is $1,521 according to Census (2025). Over the course of a year, that is $18,252.

10. See appendix for details about the calculation of this figure.

11. In 2020 and 2021, Congress authorized Economic Impact Payments—better known as the “COVID checks.” Those three rounds of payments added roughly $430 billion to U.S. families’ personal income in those years and were widely viewed as an historically ambitious economic intervention. Data on how much these checks added to personal income can be found at Bureau of Economic Analysis (2026c).

12. Data on federal defense spending in 2025 is from Bureau of Economic Analysis (2026b).

13. Data on the income shares by percentile come from CBO (2026), which contains data through 2022. The calculation of how much the $1.2 trillion gain to wages would reverse the rise in income shares of the top quintile uses data from BEA (2026a).

14. See appendix for details on how we estimated these wage effects.

15. See appendix for details on how we calculated the effects of increasing union density on racial wage gaps.

16. See Appendix Table 1, which shows how we grouped states into low-, medium-, and high-union-density categories.

17. For details on the data and methodology used to produce these estimates, see appendix.

18. For this state-level analysis, we use 2023–2025 averages of union density across states, which is 9.9%, rather than the 10% for 2025 cited earlier in this report.

19. See passage of Protecting America’s Workforce Act and Faster Labor Contracts Act.

20. The last time a major labor law reform was considered was in 2009 with the Employee Free Choice Act.

21. The Protecting the Right to Organize Act has two Republican co-sponsors, the Public Service Freedom to Negotiate Act has six Republican co-sponsors, and the Protecting America’s Workforce Act has nine Republican co-sponsors.

22. One way to determine the exact COLA amount is to use nonseasonally adjusted values of the national Consumer Price Index for All Urban Consumers (CPI-U) published by the Bureau of Labor Statistics. These price index values are easily available, less subject to revision, and widely covered in the media. The simplest COLA adjustment would be to use the annual rate of inflation measured as the percent change between the two most recent annual averages of nonseasonally adjusted CPI-U values. See BLS (2023) for other considerations.

23. CBO estimated CPI in 2026 at 2.8%, 2027 at 2.4%, and then 2.3% after—however those estimates were done before the U.S. war in Iran that increased energy prices, so we estimate COLA at 3% for purposes of the proposal. To calculate full-time, full-year worker wages, we used 2025 average production, nonsupervisory wage rates (EPI 2026f).

24. We specifically would recommend calculating the CEO-to-typical-worker pay ratio using the methodology detailed in EPI (2025). 

25. In order to appear on the ballot, an individual or organization would have to demonstrate a record of collective bargaining over the preceding three years or obtain 100 signatures or 10% of the workforce, whichever is less.

26. The showing of extraordinary circumstances is referenced in the acute care hospital rule: 29 CFR § 103.30 (1989).

27. This correlation between simple firm size and CEO pay is yet another piece of evidence that CEO pay is not about the skills or acumen of individual CEOs, but is driven by noncompetitive market structures and labor markets for executives.

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A note about terminology

Topics covered in this FAQ often involve specialized uses of language, reflecting both legally defined concepts and/ or “terms of art” typically used by practitioners. For definitions of key terms, check out the glossary at the end of this report.

What is sectoral bargaining?

Sectoral bargaining is a form of collective bargaining in which one or more unions bargains with multiple employers to reach a legally binding agreement on common standards that then apply to all workplaces across a particular industry, sector, or region.

Sectoral bargaining has not traditionally been part of labor law frameworks in the U.S., but it is not a new concept and has historically been an effective model for setting wages and standards in various sectors across many European countries. The sectoral approach to collective bargaining offers a different approach from the traditional U.S. “firm/enterprise level” model of bargaining in which unionized workers in a single workplace bargain with their employer to set wages and working conditions.

What conditions are motivating growing interest in sectoral bargaining in the U.S.?

In recent years, interest has grown in the question of whether sectoral bargaining or sectoral approaches to setting wages and other standards might enable U.S. workers to combat declining union density and rebuild bargaining power necessary to raise wages and improve conditions across what has become a highly unequal economy. Calls for expanding sectoral strategies are typically motivated by recognition of two closely related trends:

• Growing numbers of workers who wish they had a union contract are facing obstacles to forming or joining a union under existing weak and outdated labor laws.
• Growing numbers of workers are experiencing low wages and poor working conditions in industries in which it is especially difficult to unionize—for example because they lack employee status, are highly dispersed and isolated, work for a franchise, are hired via temp or staffing agencies, or perform “gig work” assigned via a digital app.

The National Labor Relations Act (NLRA or Act)—the primary federal law establishing union rights in the private sector—has as its premise a lofty and admirable goal: “encouraging the practice and procedure of collective bargaining” between workers and their employers. Since the Act’s passage in 1935, millions of workers have won higher pay, better health care and retirement benefits, stronger health and safety protections on the job, and other important improvements through forming unions and using their collective strength to bargain with their employers. Historically, strong unions have helped ensure that income growth is distributed broadly and not just to the wealthiest households.

But the NLRA has been significantly weakened since its passage through a series of congressional and court actions, and today’s broken federal labor law is failing to live up to the NLRA’s originally stated goal. For example, data show a growing mismatch between the millions of workers who say they want a union and the relatively small number of workers who actually have one. Union membership in the U.S. ticked up slightly in 2025, breaking a decades-long trend of declining unionization. But today’s unionization rate of 11.2% is less than a third of what it was in the 1950s when union strength delivered broadly shared prosperity and a thriving middle class, and lower than in 1935 when the NLRA was first enacted.

One of the consequences of this decline in union strength in the U.S. is a corresponding decline in the ability of unions in a particular sector or industry to set broad wage and benefit standards covering a large percentage of workers in that sector or industry. When unions were stronger, they were able to align the structure of collective bargaining with the corporate structure in their industry and negotiate agreements with large employers that established wage standards for an entire industry. Union contracts established wages for unionized workers, and nonunion employers raised wages to stay competitive. In this manner, unions helped raise wages for all workers, both union and nonunion.

What does existing U.S. labor law say about sectoral bargaining? What kinds of sectoral bargaining are already possible under current labor laws?

U.S. labor law places some obstacles in front of workers and unions seeking to bargain broadly with multiple employers in their industry. Specifically, the National Labor Relations Act has long been interpreted as establishing a single worksite and a single employer as the default unit for bargaining. Workers and unions can try to win a broader bargaining unit, such as a multifacility bargaining unit of the same employer, but to do so, they need to persuade the National Labor Relations Board (NLRB) of the appropriateness of the larger unit and organize support from a majority of employees in the bigger unit. 

Likewise, under current law workers and unions can propose but cannot insist that employers in their industry bargain together on a multiemployer basis with the union or a group of unions. Basically, workers and unions are limited in taking this multiemployer approach, even though when achievable, it enables coordinated bargaining within a sector or industry and prevents employers from pitting workers and unions at different locations against one another.

Still, even within constraints posed by existing U.S. labor law, there are many examples (both historical and contemporary) of unions using collective power to win and maintain bargaining agreements that cover workers beyond an individual workplace. Unions have achieved this through national agreements, through multiemployer bargaining, and through campaigns that use both policy changes and bargaining power to set standards for workers beyond those directly covered by a contract. Examples of these successes include union contracts that cover grocery workers across all major grocery chains in some regions, and the long-standing practice in the construction trades of multiple unions bargaining national, regional or local multiemployer master agreements with employer associations.

What policy changes would be necessary to achieve wide-scale, comprehensive sectoral bargaining in the U.S.?

Engaging employers and unions in comprehensive sectoral bargaining to set standards covering major industries across the U.S. would require federal legislative reform because the National Labor Relations Act, as currently interpreted, is too narrow and restrictive to facilitate sectoral bargaining. 

More modest changes to federal law could empower workers and unions to designate larger, multiemployer bargaining units for the purposes of collective bargaining, unless the employer can demonstrate a compelling reason why a broader unit is not workable. This would enable larger groups of workers and unions to pursue more sectoral approaches to bargaining in their industries. 

Even without major federal labor law reform, promising intermediate pathways to raising sectoral standards could include union-strategic organizing initiatives to increase union density in key industries and geographies. Many unions—even within the constraints of existing labor laws—have successfully used combinations of collective bargaining, organizing, and policy power to raise standards for groups of workers far beyond those they directly represent (see examples above). Under existing labor laws, unions can build toward forms of sectoral bargaining through organizing critical masses of workers in a particular industry or region, pursuing multiemployer collective bargaining agreements, and/or pursuing policy changes that effectively extend the wages and benefits unionized workers have won to other employers across an industry or region.

In addition, state and local governments have some limited legal authority to enact sectoral bargaining policies for workers who currently lack employee status under the National Labor Relations Act. Examples of such policies include state sectoral bargaining frameworks recently enacted to cover rideshare drivers in Massachusetts (2024) and California (2026) and similar legislation awaiting the governor’s signature in Illinois (see Appendix Table 1 for details on these policies). State and local governments also have broad latitude to pursue sectoral standard setting via wage/standards boards that, if well designed, can engage unions representing workers in key industries in the standard-setting process (see Appendix Table 2 for details on these state and local policies).

Other policy approaches to strengthening sectoral standards include expanding prevailing wage laws that apply to all employers receiving public contracts to perform work in a given industry or enacting sectoral minimum wage policies that raise the wage floor in a given industry.

What’s the difference between sectoral bargaining and a sectoral wage board or standards board?

Sectoral bargaining involves negotiations between one or more unions and a group of employers in a particular sector or industry to establish wages, benefits, and other working standards in the sector or industry. Beyond setting guidelines for the process, the government is typically not involved directly in the bargaining, though government may play a role in approving or implementing resulting agreements. 

In contrast, the government is heavily involved in sectoral wage boards or standards boards. Historically, wage boards in the U.S. context have typically brought together representatives of workers and employers to make recommendations to a government agency or legislative body on wages and other standards for their particular industry. Policymakers then consider the recommendations and potentially adopt them as standards that apply to all employers in the particular sector or industry. In some cases, wage/standards boards have authority to set certain standards more directly.

Unlike sectoral bargaining, wage boards have an established federal policy history in the U.S. For example, following the passage of the Fair Labor Standards Act (FLSA) in 1938, the federal government established several “industry committees,” focused primarily on low-wage sectors like garment and textile manufacturing. For a short period these industry committees helped raise wage floors in many low-wage sectors (thereby improving conditions for union organizing among some groups of workers), until they were disbanded in the late 1940s as part of a political compromise to secure a federal minimum wage increase.

As detailed in Appendix Table 2, examples of new sectoral wage or standards boards created by state or local governments in the past decade reflect highly variable policy designs, but government roles are central in each of them. Because government plays such a key role in the adoption, implementation, and enforcement of sectoral standards developed by wage boards, this process is sometimes referred to as sectoral co-regulation, to more clearly distinguish it from traditional collective bargaining, which is a private negotiation process between employers and unions.

What roles do unions play in sectoral bargaining versus wage boards/standards boards? 

Sectoral bargaining is a form of collective bargaining. In sectoral bargaining, a union (or unions) representing workers from a given sector is at the bargaining table negotiating directly with a group of employers, and agreements reached by the parties cover all employers in the sector or industry. The sectoral agreement sets a uniform “floor” for standards across the industry, and the union then supplements these sectoral agreements via negotiations at the local workplace level in locations where workers are unionized. Unionized workers are directly represented in the bargaining process (at the sectoral and the local levels) and have the opportunity to shape bargaining priorities and outcomes via participation in the union’s internal democratic decision-making processes.

Union roles in sectoral co-regulation (by means of participation in a wage or workforce standards board) can vary, depending on how a particular board is designed, the political context in which a board operates, and the degree to which particular unions take initiative to engage with the board process and/or engage members in providing input to any union representatives serving on the board.

For example, one version of this process might be that a union representative appointed to a wage board (alongside other board members representing employers and government) takes part in the process of analyzing and recommending wage standards that the board then submits to a government agency for final review, approval, and implementation. Unlike the process of collective bargaining, union members are typically not directly involved in deciding who represents workers on a wage board or in approving the standards a wage board recommends.

Union representation on a wage board may be required as a matter of policy or left to the discretion of those with authority to appoint board members. In most cases, wage board members are appointed by a government official—typically a governor, a legislative leader, or labor agency leader—meaning the appointments are part of a political process and can change based on changes in elected or agency leadership. Wage boards generally specify a certain number of seats for worker and/or union representatives, and in most cases, some but not all unions in a sector or industry are represented on a given board. See Appendix Table 2 for recent examples of how state or local sectoral standards boards have been structured.

Does sectoral bargaining lead to increased union membership and more worker power? 

Where achievable, strong sectoral bargaining systems have some clear advantages over enterprise-level bargaining in rebalancing labor market power and potentially creating more favorable economic conditions for worker organizing. Sectoral agreements that set wages and workplace standards across an entire industry can curb the ability of individual employers to pit workers (as well as state and local governments) against each other in a race to the bottom on wages and standards. By removing wages and basic standards from competition, sectoral bargaining can in turn reduce anti-union hostility of employers who are otherwise inclined to take extreme steps to prevent workers from unionizing in order to suppress wages and benefits.

On other dimensions of worker power—including the ability of unions to build membership, engage workers in addressing concerns particular to their own workplaces, and maintain strong worker-led organizations capable of enforcing negotiated standards on the ground—firm/enterprise models of bargaining may have distinct advantages. Because negotiated sectoral standards apply whether or not a worker in the sector is a member of a union, under a sectoral agreement, large majorities of workers are likely to gain the financial benefits of coverage without contributing financially to the union and without opportunities to participate in union decision-making or organizing in their own workplace.

Because sectoral and enterprise/workplace approaches to collective bargaining differ in scope and scale and produce different (highly complementary) economic and institutional benefits, an ideal labor-policy framework would include mechanisms to facilitate both.

Significant worker organizing is likely a precondition for large-scale forms of sectoral bargaining to emerge as a successful policy option in the U.S. Sectoral bargaining requires the presence of a representative union to engage in the bargaining process with employers. Successful sectoral bargaining models require that unions possess and maintain some degree of political power, rooted in the ability to organize and represent a significant base of workers. When unions are unable to sustain organizational power and political influence, gains won via sectoral strategies can quickly be lost, and sectoral bargaining systems themselves can become fragile.

Does sectoral standard-setting via wage boards or standards boards lead to increased union membership and more worker power?

There is no inherently direct relationship between wage boards/standards boards and unions or the unionization process. So, the answer to this question depends on many factors, including how boards are designed, how much strength unions already have (or are able to build) in a particular sector or region, and how much capacity unions have to engage with a sectoral board and leverage new standards as part of union organizing initiatives (which are carried out independently outside of the board process). Available examples further illustrate that details of board design are critical to determining outcomes, including the degree to which effective sectoral standard-setting occurs, the degree to which unions are engaged in the standard-setting process, and whether the presence of sectoral standards can help decrease obstacles to union organizing.

While there is no automatic connection between establishment of a standards board and increased unionization, examples also suggest that well-designed standards boards can help create more favorable conditions for union organizing. The process of creating and participating in a wage/standards board can present opportunities for unions to increase communication with and the involvement of both existing members and nonunion workers in the affected sector who may be interested in unionizing. Likewise, in cases in which a board has authority to set and enforce a strong legally binding “floor” for wages and conditions across an industry, these standards can help decrease the incentive for low-road employers to engage in intense anti-union tactics to block worker organizing, since such employers can no longer maintain a competitive advantage based primarily on their ability to suppress wages and benefits. Unions’ roles in winning better wages and standards won via participation in an effective sectoral wage/standards board can in turn be publicized to nonunion workers and leveraged in union-organizing campaigns.

Whether a particular wage/standards board can achieve effective sectoral standard setting and contribute in this way to rebalancing labor market power depends on the details of its design and the engagement of strong unions in the standard-setting process. Newly established state and local boards reflect a wide array of approaches to policy design (see Appendix Table 2 for examples), including variations in how workers or unions are represented on boards and the scope of each board’s authority. For example, early evidence suggests that some new state boards, like Minnesota’s Nursing Home Workforce Standards Board, are achieving greater effectiveness due to certain policy design elements, such as an ability to hire dedicated staff, a clear process for state adoption of new standards, and mechanisms for worker-led enforcement of new standards (such as “know your rights” training).

Based on available state and local examples, factors most associated with a standards board leading to increased union density likely include:

• strong policy design that requires union representation on the board and gives the board clear authority and necessary resources to set, implement, and enforce standards
• presence of already strong unions, capable of effectively representing worker interests on the board and ensuring that the board carries out its intended mission
• the presence of strong unions in the industry with significant organizing capacity and commitment to a strategic organizing program focused on unionizing more workers in the industry

How is sectoral bargaining approached under new state laws covering rideshare drivers?

So far, the only sectoral bargaining policies in place in the U.S. are recently enacted state laws covering rideshare drivers in Massachusetts (2024) and California (2026). A similar law passed by the Illinois legislature is, as of publication, awaiting the governor’s signature. These laws create a state-administered system for facilitating sectoral bargaining between rideshare companies and a designated bargaining representative (union) for a single bargaining unit that includes all rideshare drivers in the state. The three new laws have some variations, but all include the following key features:

• requirements for all rideshare companies (Uber, Lyft, etc.) to regularly submit lists of drivers and their contact information to the state
• process for a certain threshold of rideshare drivers (5%–10%, depending on the policy) to indicate interest (i.e., by signing union cards) in having a particular organization (union) serve as a designated bargaining representative, thereby obligating the state to share driver contact lists with the union
• process for a certain threshold of drivers (25%–50%, depending on the policy) to petition (i.e., by signing union cards) the state for certification of their union, thereby obligating rideshare companies to then collectively bargain with the certified union
• rules and procedures for parties to follow in negotiations, including requirements for parties to submit negotiated agreements to the state for approval; if approved, the terms of the negotiated agreement then apply to all drivers in the state and to any company engaging rideshare drivers in the state

These laws are too new to have been fully tested, and the California and Illinois laws have not yet taken effect. In Massachusetts, the App Drivers Union (SEIU 34BJ/IAM) was certified as the exclusive union for all rideshare drivers in the state in May 2026, obligating rideshare companies to begin bargaining. See Appendix Table 1 for additional details on new state rideshare collective bargaining laws.

Appendix Table 1

What state or local governments maintain wage boards or standards boards, and how are unions involved in these structures?

A few states have maintained laws allowing for industry-specific wage boards since the early 20th century, and these statutes have attracted renewed interest in recent years. For example, in 2015 the New York Labor Commissioner used their authority under the state’s long-standing wage board statute to convene a wage board for the fast food industry, resulting in a new $15 minimum wage covering fast food workers statewide.

The state of California operated a sectoral wage and standards board for decades through its Industrial Welfare Commission (IWC, established in 1913), until the commission was defunded by the legislature in 2004 over concerns that it was being used by employer interests to undermine updated state wage and hour laws. The IWC was briefly revived with a new infusion of state funding in 2024 and issued new wage orders covering several sectors in 2025. When in operation, the IWC consists of a five-member board, including two labor representatives, two employer representatives, and one public representative (all appointed by the governor). The IWC has authority to issue orders governing wages, hours, and working conditions and must prioritize consideration of industries in which more than 10% of the workforce is at or below the federal poverty level.

In the past decade, renewed interest in sectoral standard setting has sparked additional state and local policy experimentation with wage and standards boards. New policies in a dozen state or local jurisdictions present a range of models for board structures that include some form of representation from workers (or unions), employers, and government officials who are tasked with studying, recommending, or in rare cases, directly setting wages and standards that affect conditions of workers in specified low-wage sectors.

Formal roles for unions in recently created state or local standards boards vary, as do the levels of authority each board has to recommend or set standards. Many boards were created with direct input from unions or emerged as legislative proposals in contexts in which unions were already organizing affected workers. New state and local experiments to date suggest that wage and standards boards are most likely to help increase worker power when boards have clear authority to set standards and where unions are actively organizing in the affected sector as new standards are issued. Implementation challenges faced by some new boards, such as California’s fast food council, also illustrate that strong commitment from government leaders is a necessary condition for a wage or standards board to function effectively, especially in the face of heavy industry opposition.

For more details on these policies, see Appendix Table 2. Additionally, legislation has been introduced to create new standards boards for nail salon workers in New York and long-term care workers in Oregon; Oregon also passed legislation in 2025 to study conditions of farmworkers, as a step toward considering a farmworker standards board.

Appendix Table 2

Glossary of key terms

Bargaining unit: The defined group of workers who are included (represented by a single union or bargaining representative) in the collective bargaining process and covered by any resulting contract agreements with an employer. If a union and employer do not agree on who should be included in a particular bargaining unit, the National Labor Relations Board (NLRB) determines the composition of the unit. A bargaining unit may include all or some of the workers in a given workplace; it can be very small and narrowly defined, or very broad, depending on what a group of unionizing workers prefers, what the employer will agree to, and whether workers can persuade the NLRB to recognize a “community of interest” among workers in the proposed bargaining unit. When workers attempt to form a new union, employers often file legal objections to workers’ preferred bargaining unit and use such disputes to delay the union representation and first-contract bargaining process.

Collective bargaining and collective bargaining agreement: Collective bargaining is a process by which a group of workers, through a designated bargaining representative(s), such as a union, negotiates with their employer(s) over wages, hours, and terms and conditions of employment. Though not required under U.S. labor law, collective bargaining can involve more than one union, and it can involve more than one employer, if the parties involved agree to this arrangement. Collective bargaining is a private process between the parties (although sometimes a federal or private mediator will be involved in assisting the parties in reaching an agreement). Agreements reached by the parties through their negotiations are memorialized in a “collective bargaining agreement,” which is a formal, legally binding contract between the parties.

Enterprise bargaining: Collective bargaining between workers, through their designated representative (union) and their employer, covering workers at a single facility. Enterprise bargaining is the default approach to bargaining under the National Labor Relations Act.

Multiemployer bargaining: Collective bargaining between one or more unions and a group of employers (typically operating through an employer association for their industry or a designated employer representative). Agreements reached by the parties in bargaining apply to all employers who have agreed to the multiemployer arrangement, but not to other employers (although they can agree later to be added to the agreement). Multiemployer bargaining is a voluntary arrangement—workers and unions cannot force an employer to bargain in this manner, as the NLRA does not legally require it. Multiemployer bargaining is, however, possible under current labor law and already commonplace in industries like construction, entertainment, and professional sports. Multiemployer bargaining can take place at the national, regional, or local level, depending on the structure of a particular industry and the preferences of the parties.

National agreement or master agreement: Unions and larger employers sometimes bargain a national agreement (sometimes referred to as a “master agreement”) that covers all unionized facilities of the employer, resulting in a collective bargaining agreement broader than the typical enterprise-level agreement. National agreements are effective at establishing uniform wage and benefit standards across an employer’s operations. These agreements are often supplemented at the local level by local agreements addressing particular issues at that location. Examples would include contracts negotiated between the United Auto Workers union and each of the “Big Three” automakers (Ford, GM, and Stellantis), between the Teamsters union and UPS, or between postal unions and the U.S. Postal Service.

Prevailing wage laws: Prevailing wage laws set a uniform minimum wage that employers must pay to workers on a project. Typically, prevailing wage laws apply to employers on government-funded projects to ensure that public investments support the creation of good jobs and do not drive down wages in the industry. Prevailing wage laws exist at the federal, state, and local levels and are a well-established means of setting strong wage standards across an industry that cover both unionized and nonunion workers.

Sectoral bargaining: Collective bargaining between one or more unions and a representative group of employers in a sector or industry to set wage and benefit standards for the sector or industry. Agreements reached by the parties apply to all employers in the sector or industry. There is currently no mechanism for sectoral bargaining in the National Labor Relations Act, but it is common in many European countries.

Sectoral co-regulation: Regulatory systems, such as wage boards or workforce standards boards, designed to facilitate setting of labor standards at the sectoral level with the participation of worker representatives and employers alongside public officials.

Tripartite: Tripartite refers to a process through which representatives of three parties— workers, employers, and the government—work to address an issue. Tripartite processes are a common feature of labor relations in many European countries. With the exception of a few state and local wage or standards boards, tripartite processes are rare in the U.S., and there is no formal mechanism for them to operate in the labor relations system under U.S. labor law. 

Wage board or standards board: Wage boards (sometimes also called worker(s) boards, labor standards boards, industry standards boards, industry councils, or workforce standards boards) are established by legislative or executive branch action in order to study, recommend, and/or set minimum standards for wages (and sometimes other working conditions) in a particular industry. Typically, such boards have a “tripartite” structure, meaning they include representatives of workers, employers, and government agencies as participating members. The structural design and effectiveness of such boards, including the degree of authority they have to set or implement standards, can vary widely (see Appendix Table 2 above for examples). Standard setting via a wage board process differs from traditional collective bargaining in that the government is involved in appointing members of the board and in approving and implementing any board recommendations on standards (unlike collective bargaining, which is a private process between unions and employers). Any standards resulting from a wage board process apply to all employers in the industry, whereas agreements reached through traditional collective bargaining apply only to the employer(s) involved in and are covered by the collective bargaining agreement. Because wage boards are essentially a government process with participation by workers and employers, they are sometimes referred to as “sectoral co-regulation.”

Works council: A works council is a committee of elected worker representatives that advocates for workers’ interests with their employer at the workplace level. Works councils are common in the labor relations systems of many European countries as an enterprise-level complement to industry or sectoral bargaining conducted by labor unions. This labor relations structure differs from the U.S. system, and works councils are generally not allowed under U.S. labor law, which prohibits employer domination, interference, or support of labor organizations (including works councils).