How Unions Are Contributing to Rising Business Costs

Business expenses have risen significantly over the past six years. Supply chain disruptions that began during the 2020 global pandemic continue to affect the supply chain. More recently, both public and private unions have added further challenges to controlling business costs.

There is no question that labor unions, notably in the construction and industrial sectors, played a vital role in improving safety issues and working conditions during the late 19th century and into the early 20th century.

Northeastern steel workers, along with West Virginia coal miners, are prime examples of two groups that sought union representation when working conditions became untenable. Through strikes and strong negotiations, labor leaders secured stability and improved working conditions for thousands of employees. 

However, union membership has declined significantly over the past several decades. Improved working conditions and increased earnings opportunities are key factors. Federal and state agencies, such as the Occupational Safety and Health Administration (OSHA), require businesses to maintain safe workplaces.

Today, market conditions determine hourly and salaried pay scales. Positions requiring extensive training or specialized knowledge typically offer higher wages. Roles with fewer qualified applicants also command higher pay than those with larger applicant pools.

The question I ask myself is: How can we, as business leaders, improve working conditions to the point where unions are not needed anymore and not even talked about as an option?

Breaking down union support

Support for organized labor often aligns with economic and political perspectives. Blue-collar or frontline workers make up the largest share of private sector union membership. Public unions, including those representing teachers and postal workers, are also common. Public sector and government unions have a higher membership percentage than private sector unions.

According to 2025 data, 16.5 million U.S. workers are represented by a union. Since 2024, unions have added approximately 463,000 new members, accounting for about 11.2% of the workforce. This marks a 16-year high, reversing previous declines. Experts attribute this growth to increased interest among younger and minority workers.

It is uncertain whether the recent increase in union membership will continue over the next decade. Based on historical trends, I expect union membership will either decline slightly or remain steady in the coming years.

For starters, employers are offering higher wages to attract talent at every level. Remote work, which grew substantially during the coronavirus years, has declined in the past few years as employers wanted workers to return to traditional office settings. However, many jobs, especially in IT and creative services, can be performed anywhere.

Employers desiring to attract talented employees are offering more remote opportunities, making positions more attractive. Therefore, improved working conditions, a hallmark of early union success, will decrease the need for unions, especially in white-collar roles.

A history of organized labor in America

Organized labor in the U.S. can be traced back to 1794 when the Federal Society of Journeymen Cordwainers formed in Philadelphia. An 1842 court ruling in Massachusetts affirmed the right of workers to organize. 

The formation of groups such as the American Federation of Labor (AFL) in 1886 marked the emergence of a powerful force. The union merged with the Congress of Industrial Organizations (CIO) in 1955, giving rise to such figures as Jimmy Hoffa and dozens of other labor leaders. 

Union membership peaked in the 1950s, comprising about 35% of the American workforce. Since then, overall union membership has steadily declined. In 1983, the membership rolls indicated only around 20% of workers were unionized. By the early 2000s, the percentage dropped to just under 12%. However, public sector union membership has remained higher, with around 38% of employees represented by organized labor at the end of 2025.

Obstacles to union growth

If the AFL-CIO and other labor groups had their way, nearly every U.S. employee would be unionized. However, the prevalence of right-to-work laws, the decline in manufacturing jobs and opposition from large businesses present significant obstacles to union growth.

The rise of the gig economy has also influenced labor trends. Over the past two decades, companies have found that some roles can be performed remotely, and many employees appreciate the increased flexibility.

This shift has enabled companies to move labor costs from full-time employees to contract or part-time roles. As a result, unions face greater challenges in identifying new growth opportunities.

Where new union growth could occur

As a small business owner in the transcription industry, I do not consider union organization a direct concern for my company. However, I am concerned that union growth in other sectors could increase the costs of goods and services we frequently use.

Recently, several Starbucks baristas in Nashville, TN, chose to skip their shifts one Friday to support union representation. If you already find the price of a Grande drip coffee or flavored iced latte high, consider how much more it could cost if all baristas were unionized.

Currently, about 4% of Starbucks employees are union members. When employees in Buffalo, New York, unionized and sought $17 per hour, many experienced reduced hours, which affected their eligibility for company health insurance. 

According to National Labor Relations Board (NLRB) statistics, the Service Employees International Union (SEIU) has won 125 union elections at Starbucks locations nationwide, totaling 667 locations and approximately 14,500 workers. However, Starbucks corporate remains resistant to unions and has not signed a collective bargaining agreement.

Unions are also targeting rideshare companies such as Uber and Lyft. According to the Los Angeles Times, drivers for these companies are closer to unionizing in California after state regulators recently certified their right to do so, concluding a decade-long process.

With support from the California Gig Workers Union and the SEIU, the state Assembly approved legislation last year granting rideshare drivers the right to unionize. Previously, gig workers could not unionize because they were not classified as employees. If implemented, drivers would pursue collective bargaining for higher pay and improved working conditions. However, it is unclear how working conditions could be enhanced, given that drivers use their own vehicles and set their own schedules and service areas.

Recently, the Stanford University football team voted to become the first Division I NCAA program to join the College Football Players Association (CFBPA). However, there is no immediate reason to be concerned that season ticket prices will increase as a result.

When Name, Image and Likeness (NIL) compensation became available to college athletes, I anticipated that organized labor would be eager to expand membership. However, several challenges remain.

Currently, college athletes are not considered employees of their schools or athletic conferences. A few years ago, the Northwestern football team attempted to organize, but the NLRB found no basis to grant union representation.

College sports insiders predict that the CFBPA will focus on organizing other teams in the Atlantic Coast Conference (ACC), with the goal of securing employee status for college athletes. Personally, I do not support unionization for college athletes, though I believe schools or conferences should provide health coverage regardless of employment status.

Tackling operating expenses

Entrepreneurs and business owners face numerous rising costs. While most do not encounter union-related challenges, maintaining good working conditions and employee morale remains essential for attracting and retaining productive staff.

I hope that by fostering a workplace where employees and candidates feel safe, engaged and valued, we can manage labor costs effectively while improving our bottom line.

There is no question that unions played a vital role in improving pay and working conditions for millions of workers. If your company or industry is concerned about unionization and the added costs it could bring, here are a few suggestions:

• Offer competitive pay and benefits.
• Create an environment where workers feel valued, safe and productive.
• Communicate the company’s goals and objectives clearly to employees. Informed employees feel that their work matters. 

Business expenses have risen significantly over the past six years. Supply chain disruptions that began during the 2020 global pandemic continue to affect the supply chain. More recently, both public and private unions have added further challenges to controlling business costs.

There is no question that labor unions, notably in the construction and industrial sectors, played a vital role in improving safety issues and working conditions during the late 19th century and into the early 20th century.

Northeastern steel workers, along with West Virginia coal miners, are prime examples of two groups that sought union representation when working conditions became untenable. Through strikes and strong negotiations, labor leaders secured stability and improved working conditions for thousands of employees.