What is a 'Labor Union'

A labor union is an organization intended to represent the collective interests of workers in negotiations with employers over wages, hours, benefits and working conditions. Labor unions are often industry-specific and tend to be more common in manufacturing, mining, construction, transportation and the public sector. However, while beneficial to its members, labor union representation in the United States has declined significantly in the private sector over time.

BREAKING DOWN 'Labor Union'

Labor unions protect the rights of workers in specific industries. A union works like a democracy in that it holds elections for its members that seek to appoint officers who are charged with the duty of making decisions for union participants. A union is structured as a locally-based group of employees who obtain a charter from a national organization. Dues are paid by the employees to the national union, and in return, the labor union acts as an advocate on the employees behalf.

An Example of a Labor Union

Almost all unions are structured the same way and carry out duties in the same manner. The National Education Association of the United States (NEA), for example, is a labor union of professionals that represents teachers and other education professionals in the workplace. NEA is the largest labor union in the United States and boasts a group of nearly 3 million members. The union's aim is to advocate for education professionals and to unite its members to fulfill the promise of public education.

NEA works with local and state schooling systems to set adequate wages for its members, among other things. When negotiating salaries on behalf of its teachers, NEA first starts with what's called a bargaining unit. This unit is a group of members whose duty is to deal with a specific employer. The bargaining unit, as its name implies, works with an employer to negotiate and ensure that its members are properly compensated and represented.

The employer, in this case, a school district, is required by law to actively bargain with the union in good faith. However, the employer is not required to agree to specific terms. Multiple negotiation rounds are conducted between the bargaining party and the employer, after which, a collective bargaining agreement (CBA) is agreed on and signed. The CBA outlines pay scales, and also includes other terms of employment, such as vacation and sick days, benefits, working hours and working conditions.

After the CBA is signed, an employer cannot change the agreement without a union representative's approval. However, CBAs eventually expire, after which a new bargaining agreement must be negotiated and signed.

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