A trade union, called a labor union in the United States and often simply a union, is an organization of workers that negotiates with employers on its members' behalf over wages, hours, benefits and working conditions. This process is called collective bargaining. Unions also represent individual members in disputes and disciplinary cases, lobby governments on employment law, and in some countries run training, pension and insurance schemes.
Unions are a central institution of the labor market. Economists study them as a counterweight to employer power, as a source of wage-setting rigidity, and as political actors. They are distinct from employers' associations, which bargain on the employer side, and from professional bodies that set standards without negotiating pay. International labor standards on the right to organize are set by the International Labour Organization (ILO), notably its Conventions 87 (1948) on freedom of association and 98 (1949) on collective bargaining.
Trade unions in plain terms
A single worker asking a large company for a raise has little leverage: the company can usually replace one person. A union pools that leverage. Hundreds or thousands of workers agree to negotiate as one group, so the employer has to deal with all of them together, much as a tenants' association can get a landlord's attention in a way one tenant cannot.
The deal that comes out of the talks, a collective agreement, then applies to everyone it covers. If talks fail, the group's ultimate tool is to stop work together, which is a strike. Most negotiations end without one, because both sides know a strike is costly.
History
Unions grew out of craft guilds and workers' mutual-aid societies during the Industrial Revolution. In Britain, the Combination Acts of 1799 and 1800 banned workers' associations until their repeal in 1824, and the Trade Union Act 1871 gave unions legal recognition. In the United States the National Labor Relations Act of 1935 (the Wagner Act) protected the right to organize and bargain, while the Taft-Hartley Act of 1947 placed limits on union activity and allowed states to pass "right-to-work" laws. Union membership in most rich countries peaked between the 1950s and the late 1970s, a period associated with the Great Compression of pay, and has declined since alongside the shift from manufacturing to services, globalization and legal changes.
How unions work
Unions differ in structure and scope:
- Craft unions organize workers with a particular skill, such as electricians, across employers.
- Industrial unions organize all workers in an industry, whatever their job.
- General unions recruit across many sectors, and public-sector unions represent government employees.
- National federations, such as the AFL-CIO in the United States and the Trades Union Congress (TUC) in the United Kingdom, coordinate member unions and lobby governments.
Bargaining can happen at company, sector or national level. In much of continental Europe, sector agreements are extended to cover non-members, so bargaining coverage is far higher than membership. In Germany, workers also elect works councils and sit on supervisory boards under codetermination law. In Denmark, Sweden and Finland, union-run unemployment insurance funds (the "Ghent system") help explain high membership.
Membership today
Union density, the share of employees who are members, varies widely. The US Bureau of Labor Statistics reported a union membership rate of 10.0% in 2025, with 5.9% in the private sector and 32.9% in the public sector; its report was published in February 2026, later than usual because of the autumn 2025 government shutdown. In the United Kingdom, government statistics put density at 22.0% of employees in 2024, the lowest since the series began in 1995, with about 6.4 million members. Nordic countries have much higher rates. In many developing countries, including Pakistan and India, unions are concentrated in the public sector and large firms, while most workers in the informal economy are outside collective bargaining.
Economic effects and debate
Research consistently finds that union members earn more than comparable non-members, and that the gap is larger for lower-paid workers. Because unions compress pay differences, their decline is one factor economists link to rising economic inequality in the United States and United Kingdom since the 1980s, along with skill-biased technological change.
Views on the wider effects differ:
- Supporters argue that unions offset employer power, especially where a monopsony would otherwise hold wages down, improve safety, give workers a voice that reduces turnover, and can raise productivity.
- Critics, including many free-market economists, argue that unions act like a cartel in the labor market, raising pay for insiders at the cost of jobs for outsiders, reducing labor market flexibility and contributing to unemployment. Some link the strikes and pay claims of the 1970s to a wage-price spiral.
- Public-sector unions draw separate debate, because the "employer" is a government that is also lobbied by the union, a concern raised in public choice theory.
Unions have also become involved in new forms of work, including drives to organize platform drivers in the gig economy, campaigns against the zero-hours contract and debates over the minimum wage. Union pension funds are significant shareholders in some markets and use their votes on corporate issues.