What Is Collective Bargaining? 

Collective bargaining is the process of negotiating the terms of employment between an employer and a group of workers. The terms of employment are likely to include items such as conditions of employment, working conditions, and other workplace rules, as well as base pay, overtime pay, work hours, shift length, work holidays, sick leave, vacation time, retirement benefits, and health care benefits.

Key Takeaways

  • Collective bargaining is the process of negotiating the terms of employment between an employer and a group of workers, such as pay and working conditions. 
  • The process takes place between company management and a labor union. 
  • Roughly 10.3% of U.S. workers are union members, where 33.6% of public sector workers are unionized, versus 6.2% for the private sector. 
  • The median weekly pay for union workers is higher than nonunion workers as of 2019, coming in at $1,095 versus $892, respectively. 

How Collective Bargaining Works

In the U.S., collective bargaining takes place between labor union leaders and the management of the company that employs the union's workers. The result of collective bargaining is called a collective bargaining agreement, and it establishes rules of employment for a set number of years. Union members pay for the cost of this representation in the form of union dues. The collective bargaining process may involve antagonistic labor strikes or employee lockouts if the two sides are having trouble reaching an agreement.

In the U.S., there are unions in both the private sector and the public sector. The Bureau of Labor Statistics (BLS) reports that as of 2019, 10.3% of U.S. workers were members of labor unions. Unionization is much more prevalent in the public sector, with 33.6% of these workers unionized, compared to only 6.2% of workers in the private sector. Categories of workers that belong to unions include grocery store employees, airline employees, professional athletes, teachers, auto workers, postal workers, actors, farmworkers, steelworkers, and many more.

Median weekly wages remain higher for unionized workers than for workers not in unions, at $1,095 versus $892. Moreover, unionization rates vary significantly between states. In 2019, nearly 23.5% of workers in New York belonged to unions, while barely 2.2% of South Carolina workers were unionized.

Criticisms of Collective Bargaining

Collective bargaining has been fraught with controversy throughout the 21st century, particularly in the case of public-sector workers. Because tax revenues fund wages for public-sector employees, collective bargaining opponents allege that the practice leads to excessive pay that places an undue burden on taxpayers. Supporters of public-sector collective bargaining counter that any worries about runaway pay are unfounded and that public-sector employees covered by collective bargaining agreements earn, at most, 5% more than their nonunion peers.

In the past, Governors Chris Christie of New Jersey and Scott Walker of Wisconsin both fought high-profile battles with public-sector unions. Christie drew fire from the New Jersey Education Association (NJEA) for restructuring teacher pensions as part of his efforts to rein in state spending. Walker's initiative to limit teachers' collective bargaining rights in Wisconsin proved so controversial that its opponents succeeded in collecting enough signatures to force a recall election against Walker in June 2012. The governor prevailed in the election.