Labor Union: Definition, History, and Examples

What Is a Labor Union?

A labor union is an organization of workers in a trade, industry, or company that is created to represent the workers in negotiations with management over issues of pay, benefits, and working conditions. The labor union representatives negotiate with employers in a process known as collective bargaining. The process results in a tentative agreement that requires a vote of the full membership to be finalized.

Unions have a long history in the United States. The first union was established by Philadelphia shoemakers in 1794. The Federation of Organized Trades and Labor Unions was formed in 1881, followed five years later by the American Federation of Labor (AFL).

How a Labor Union Works

Labor unions generally have a democratic structure, holding elections to choose officers to make decisions that are beneficial to the members. Employees pay dues to the union. In return, the labor union acts as an advocate on the employees’ behalf.

Labor unions are often industry-specific and tend to be most common today among public sector (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 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.

Example of a Labor Union

The National Education Association (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.

History of Labor Unions

Labor unions have played a critical role in the workforce of the United States. In the industrial space, labor unions fought 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.

Refusal to admit Black people, women, and immigrant groups were common in labor unions in the 19th and early 20th century, and excluded groups formed their own unions. Today, labor union membership is very diverse, including more women and Black and Latinx workers than ever before, though Asian workers are underrepresented.

The right to form unions was established in 1935 by the National Labor Relations Act, also known as the Wagner Act. 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.

In recent years, legislation and court decisions have weakened the ability of unions to organize. Today, right-to-work laws 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.

Labor Unions Today

Union membership in the U.S. reached its peak in the 1950s when nearly a third of the workforce was represented by unions. 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.

In a report released in late 2023, the U.S. Department of the Treasury draws a strong correlation between declining union representation and the growing income equality between middle-class Americans and the top-paid tier.

Today, only about 10% of American workers are represented by 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.

Criticisms of Labor Unions

Some business owners, industry associations, and think tanks support right-to-work laws on the grounds that requiring union membership to obtain a job reduces competition in the free-market economy. 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. The result is that many disciplinary actions taken against abusive police officers have been overturned.

Some in the labor movement 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)." 

Political Role of Labor Unions

Labor unions play a significant role in politics, endorsing candidates in local and national elections and representing their members’ interests in occupational safety issues. 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 expresses support for the labor movement in its platform and wins many labor 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.

The Bottom Line

A labor union is an organization formed by workers to negotiate for better pay, safer working conditions, and better benefits. A labor union chooses representatives to negotiate on its members' behalf with the employer. Labor unions have a long and storied history of fighting for employee rights and protections in the U.S.