What is a 'Labor Union'

A labor union, also called a trade union, is an organization that represents the collective interests of workers. The labor union helps workers unite to negotiate with employers over wages, hours, benefits and other 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 as it holds elections to appoint officers. The union officers are charged with the duty of making decisions beneficial for union participants. The structure of a union is as a locally based group of employees who obtain a charter from a national-level organization. Employees pay dues to the national union, and in return, the labor union acts as an advocate on the employees' behalf.

The National Labor Relations Act, also known as the Wagner Act, guarantees private sector employees the right to form labor unions. The act also gives unionized employees the right to strike and to jointly bargain for working conditions.

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 formed in 1955 after the two groups merged and has nearly 20 million members. The CtW spun off from the AFL-CIO in 2005. Labor unions exist in many nations around the globe, including Sweden, Germany, France, and the United Kingdom. Many large unions will actively lobby legislators, on both a local and federal level, to achieve goals they see as beneficial to their membership. 

An Example of a Labor Union

Nearly all unions are structured the same way and carry out duties in the same manner. The National Education Association (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, boasting nearly 3 million members. The union's aim is to advocate for education professionals and unite its members to fulfill the promise of public education.

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

U.S. law requires the employer, in this case, a school district, to actively bargain with the union in good faith. However, the employer is not required to agree to any specific terms. Multiple negotiation rounds are conducted between the bargaining party and the employer, after which a collective bargaining agreement (CBA) is 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 the expiration of a collective bargaining agreement, the labor union must negotiate and both parties must sign a new agreement.

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