# Understanding Labor Unions: Definition, History, and Modern Examples

![Labor Union: An organization formed by workers in a particular trade, industry, or company to improve pay, benefits, and working conditions.](https://www.investopedia.com/thmb/8zSDmePkqrs4GruURD-Znr9jon0=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Labor-union_final-9c471e2612264e2dbe615fec1fef17db.png)

*— Investopedia / Michela Buttignol*

## What Is a Labor Union?

A labor union is a collective organization of workers formed to negotiate with employers over pay, benefits, and working conditions. Historically [signficant in the United States](https://www.investopedia.com/financial-edge/0113/the-history-of-unions-in-the-united-states.aspx), labor unions represent diverse industries and have played a vital role in improving labor rights since the 1700s. Despite a decline in membership, unions like the NEA continue to advocate for workers today. This article delves into the definition, history, and examples of labor unions, exploring their impact and modern-day relevance.  

### Key Takeaways

*   Labor unions represent workers in negotiations with employers over pay, benefits, and working conditions.
*   The National Education Association (NEA) is the largest labor union in the U.S., with nearly 3 million members.
*   Right-to-work laws in 27 states prevent contracts requiring workers to join a union to gain or keep a job.
*   Union membership in the U.S. has declined to about 10% of workers, versus a peak of nearly 33% in the 1950s.
*   Labor unions played a crucial historical role in advocating for safer working conditions and better pay.

## Understanding the Functionality of Labor Unions

[Labor unions](https://www.investopedia.com/articles/economics/09/unions-workers.asp) usually have a democratic structure, electing officers to make decisions for the members. Employees pay dues to the union, which then advocates on their behalf.

Labor unions are often industry-specific, mainly among government employees and those in transportation and utilities.

To form a union, a locally based group of employees obtains a charter from a national-level labor organization. Two large organizations oversee most of the labor unions in the U.S.—the Change to Win Federation (CtW) and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). The AFL-CIO was formed in 1955 after the two groups merged. The CtW spun off from the AFL-CIO in 2005.

Nearly [all unions](https://www.investopedia.com/financial-edge/0113/most-successful-unions.aspx) are structured and work in similar ways. U.S. law requires an employer to actively bargain with a union in good faith; however, the employer is not required to agree to any specific terms. Multiple negotiation rounds are conducted between the union’s bargaining unit—a group of members whose duty is to assure that its members are properly compensated and represented—and the employer.

A collective bargaining agreement (CBA) is eventually agreed upon and signed. The CBA outlines pay scales and includes other terms of employment, such as vacation and sick days, benefits, working hours, and working conditions.

After signing the CBA, an employer cannot change the agreement without a union representative’s approval; however, CBAs eventually expire, at which time the labor union and management must negotiate and sign a new agreement.

> **Important**
>
> Despite being a boon to workers, labor unions have seen membership decrease significantly since their heyday in the mid-20th century.

## Spotlight on a Prominent Labor Union: The NEA

The [National Education Association](https://www.investopedia.com/nea-life-insurance-review-5196442) (NEA) represents teachers and other education professionals and is the largest labor union in the United States, with nearly 3 million members.

It represents public school teachers, substitute teachers, higher education faculty members, education support workers, administrators, retired teachers, and students working to become teachers.

The NEA works with local and state educational systems to set adequate wages and working conditions for its members, among other activities.

## The Evolution of Labor Unions Throughout History

Labor unions have played a critical role in the workforce of the United States. In the industrial space, [labor unions fought](https://www.investopedia.com/financial-edge/0113/are-labor-unions-effective.aspx) for safer conditions, better working hours, and better pay. Labor unions also worked to stop child labor.

The history of labor unions in the U.S. pre-date the country; the first strike occurred in 1768 when New York journeyman tailors protested against a wage reduction. As a result, the Federal Society of Journeyman Cordwainers was created in 1794 in Philadelphia, and is considered to be the beginning of trade union organization.

In the 19th and early 20th century, labor unions often excluded Black people, women, and immigrants, leading these groups to form their own unions. Today, labor union membership is diverse, with more women, Black, and Latino workers; Asian workers are still underrepresented.

The Wagner Act of 1935 established the right to form unions. It gave unionized employees the right to strike and bargain jointly for working conditions. The act encouraged collective bargaining, stopped unfair tactics by employers, and set up enforcement in a new independent agency, the National Labor Relations Board.

### 14.4 million

The number of U.S. wage and salary workers who were members of unions in 2023.

In recent years, legislation and court decisions have weakened the ability of unions to organize. Today, [right-to-work laws](https://www.investopedia.com/terms/r/righttowork-law.asp) in 27 states prohibit contracts that require workers to join a labor union to get or keep a job.

Public employees cannot be required to pay dues to a union to support its collective-bargaining activities on their behalf, according to a 2018 U.S. Supreme Court decision in _Janus v. American Federation of State, County, and Municipal Employees_.

In March 2021, the United States House of Representatives passed the Protecting the Right to Organize Act (PRO Act). The pro-union legislation aims to make it easier to form unions and overrides right-to-work laws. As of September 2022, the legislation has been stalled by the Senate, with most Republicans opposing the act and referring it to the Committee on Health, Education, Labor, and Pensions.

## Current Landscape of Labor Unions

In the 1950s, union membership peaked with nearly a third of the U.S. workforce represented. Unions have been in a steady decline ever since for a number of reasons, not least of which is the collapse of domestic manufacturing that provided many blue-collar jobs.

A 2023 Treasury report links declining union membership to increasing income inequality between the middle class and top earners.

Now, only about 10% of American workers belong to unions. Government and public sector jobs including teachers, police, and firefighters, are most likely to be unionized, accounting for about a third of union members.  

Industries with relatively high rates of unionization include utilities, transportation and warehousing, educational services, and the entertainment industries.  

## Examining the Critiques of Labor Unions

Some business owners and [think tanks](https://www.investopedia.com/terms/e/economic-think-tank.asp) support right-to-work laws, saying mandatory union membership limits free-market competition. Some labor union contracts—such as those of the teacher and police unions—have been criticized for making it too difficult to fire incompetent and even violent employees.

For example, according to a 2019 study of 656 police union contracts across the country, 73% included an appeals process in which final decisions on firing and disciplining officers were in the hands of arbitrators selected in part by the local police union. As a result, many disciplinary actions against abusive officers have been overturned.

Some in the [labor movement](https://www.investopedia.com/terms/i/international-labour-organization.asp) have called for the expulsion of police unions on the grounds that they protect violent officers. The AFL-CIO’s recommendations in 2020 on police reform said the best way to address police brutality was to engage police affiliates, not isolate them.

At times, labor unions have been found complicit in organized criminal activity. The U.S. Department of Justice reports: "As of 2020, the United States had obtained relief in 24 civil RICO cases involving labor organizations affiliated with the International Brotherhood of Teamsters (IBT), the Laborers International Union of North America (LIUNA), the former Hotel Employees and Restaurant Employees International Union (HEREIU), and the International Longshoreman's Association (ILA)." 

## The Influence of Labor Unions in Politics

Labor unions significantly impact politics by endorsing candidates and advocating for workplace safety. The 2018 Supreme Court decision banning mandatory dues for public workers protected by unions undermined the unions' ability to fund political advocacy.

The Democratic Party supports labor movements and often wins union endorsements. Some unions, including law enforcement groups, tend to support Republican candidates.

Traditionally, the Republican Party has viewed unions as a threat to freedom in the workplace and opposes legislation that makes it easier for unions to organize, such as the PRO Act.

## What Do Labor Unions Do?

Labor unions represent their members, collectively and individually.

Negotiators for labor unions meet with negotiators for management to agree on pay, benefits, and working conditions for the workers they represent. The talks result in a contract that must receive the approval of the membership.

From day to day, labor unions may represent individual workers who have grievances against their employers or who face firing or disciplinary action.

They also have a role in ensuring that the terms of the contract between employees and employers are followed, usually through rank-and-file members who hold positions in the union.

## What Are Examples of Labor Unions?

Trade unions represent workers who do a particular type of job. The American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) is a trade union. Industrial unions represent workers in a particular industry, such as the National Education Association (NEA). NEA is the largest labor union in the U.S.

## How Many U.S. Workers Belong to Labor Unions?

In 2023, about 14.4 million workers in the U.S. were members of labor unions. That is about 10% of the working population.

## The Bottom Line

Labor unions serve as a collective voice for workers, negotiating with employers to secure fair wages, improved benefits, and safer work environments through collective bargaining. They have a rich history in the United States, advocating for labor rights since the late 18th century, and continue to play a critical role in representing diverse union memberships in today’s workforce. Despite facing significant membership declines and legislative challenges in recent decades, unions remain a vital component in shaping labor policies and protecting workers' interests.

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