Introduction and summary
Sectoral bargaining is a type of collective bargaining that provides union contract coverage for most or all workers in a particular sector. Depending on how sectoral bargaining is structured, it is sometimes known as broad-based, multiemployer, national, or industrywide bargaining. It typically operates in conjunction with workplace-level bargaining, setting sectorwide standards that workers can seek to bargain above at their worksite.
Sectoral bargaining increases the number of workers whose pay and benefits are set by union contracts compared with the worksite-only collective bargaining that is more common in the United States.1 It also reduces economic inequality, closes racial and gender pay gaps, and boosts economic productivity.2
Despite the significant benefits of sectoral bargaining, some union allies may worry that it could reduce the number of workers who join unions because it can create a free-rider problem, whereby similarly placed workers are covered by a union contract whether they are members or not. Yet, there is little evidence that union membership is hindered by sectoral bargaining. Rather, research demonstrates that sectoral bargaining can help support high union membership. As one academic study found, sectoral bargaining has a “significant, positive and robust impact on union growth.”3 This is especially true for workers in jobs that are “inherently hard to organize,” such as those with many small employers or heavily contracted, fissured industries.4 Indeed, the seven countries with the highest union membership in the OECD—Iceland, Sweden, Finland, Denmark, Norway, Belgium, and Italy—all have sectoral systems.5
This report explains the relationship between sectoral bargaining and union density. It first provides the theory for how sectoral bargaining can support high union membership and then offers evidence from the United States and countries around the world showing that sectoral bargaining typically produces higher union density than worksite-only bargaining. The report synthesizes evidence showing how countries that moved away from sectoral bargaining lost union members, while countries that moved toward sectoral bargaining increased union density. Cross-country comparisons demonstrate that sectoral bargaining and high membership often go together and find that exceptions to the rule, such as France, have unusual systems that hinder membership in a variety of ways. The report also provides case studies of successful organizing campaigns under sectoral systems.
The seven countries with the highest union membership in the OECD—Iceland, Sweden, Finland, Denmark, Norway, Belgium, and Italy—all have sectoral systems.
Ultimately, the report makes clear that sectoral bargaining policies can support high membership and thus should be considered in debates about how to best increase union membership in the United States. The degree to which sectoral bargaining supports union density depends on many factors, including how the bargaining is structured, the quality of grassroots organizing, and whether other pro-union policies are present. Therefore, to best promote union membership, policymakers in the United States should engage in a broad set of labor reforms, including the Protecting the Right to Organize Act, to strengthen workers’ rights6 as well as policies that increase union access to workers and support sectoral bargaining.
Why sectoral bargaining supports high union membership
It is intuitive that sectoral bargaining would increase the percentage of workers covered by union contracts—known as the collective bargaining coverage or union coverage rate—compared with worksite-only bargaining. Yet to some union advocates, it may seem puzzling that sectoral bargaining can also increase the share of workers who are members of unions—known as union density or the union membership rate.
Under sectoral bargaining systems, employers face similar labor costs whether their workers are unionized or not.
Under sectoral bargaining, all similarly placed workers are covered by a union contract whether they are members or not. This free-rider problem can reduce workers’ incentives to join unions to varying degrees, depending on the specifics of how each sectoral system works: Systems that legally extend all terms of union contracts to nonunion workers, such as in France, have a greater free-rider problem than systems that extend only, for example, wage standards or do not have government extension, such as in Italy and Denmark, respectively. But sectoral bargaining also creates forces that encourage union membership—and these forces are generally more powerful than the free-rider problem it fosters.
As a result, employers have less incentive to fight their workers’ efforts to unionize, which can make organizing workers easier. 7 Sectoral bargaining also creates a more level playing field that protects unionized workers and high union standards from being undercut by low-paying companies. Without sectoral bargaining, unionized workers are under constant threat that companies will find ways to do similar work at lower standards.
Sectoral bargaining also gives workers and their unions new organizing opportunities. Sectoral bargaining provides unions greater recruitment opportunities with workers that they already have a connection to because the number of people covered by sectoral agreements is greater than the number covered by worksite-only agreements. Furthermore, unions can take certain types of recruitment actions in sectoral systems that they cannot under workplace-only systems. For example, workers can seek to organize and take collective actions to ensure that nonunion employers comply with sectoral agreements.8
In addition, workers still have incentives to unionize in sectoral bargaining systems to have greater voice and power in negotiations. The incentive to organize to influence bargaining that occurs purely at the sectoral level may be more attenuated than in worksite-only systems, but sectoral systems typically also have worksite-level bargaining. Worksite bargaining in sectoral systems can address certain pay and benefit issues as well as shop-specific concerns that are more appropriately addressed at that level than at a sectoral table. Integrating sectoral and worksite-level bargaining creates strong incentives for workers to stay engaged and participate in the union. Indeed, worksite-level union activities are key to recruitment efforts in sectoral systems.9
Finally, sectoral systems often include additional policies that facilitate or encourage union membership and further overcome the free-rider problem, such as strong protections for worker rights, union access to worksites for recruitment, and the Ghent system, where unions help deliver governmental benefits to their members. These factors are critical to supporting high union membership.10
Evidence showing that sectoral bargaining supports high density
Multiple types of evidence indicate that sectoral bargaining usually leads to higher union membership than worksite-only bargaining. This evidence also points to some of the elements that the United States should include in any labor law reforms.
Countries with sectoral systems as diverse as Sweden, Britain, Australia, New Zealand, Belgium, Italy, and Demark have all maintained high union density and high collective bargaining coverage over relatively long periods of time, indicating that there are many ways to successfully design sectoral systems. There are exceptions to the rule of sectoral bargaining and high membership going together, such as France with its low union membership rates—but France has a peculiar sectoral system that disincentivizes union organizing. Successful sectoral systems typically find ways to help unions bring multiple employers to the bargaining table and spread union contracts broadly, as well as include policies that ensure workers have strong rights and provide them union access. These systems also incentivize workers to join and unions to recruit.
The three main ways to study the impact of sectoral bargaining on union density—before and after analysis of policy change in particular countries, cross-country comparisons, and case studies of organizing campaigns—all point in the same direction.
Single country studies examining the impact of changing between different types of bargaining systems demonstrate the importance of sectoral bargaining for union membership. Australia, New Zealand, and Britain all saw union density fall significantly after weakening their sectoral bargaining systems, and subsequent improvements to workplace bargaining failed to increase membership. Now, the labor movements in these countries are seeking to reinstate sectoral bargaining.
Cross-country comparisons, from simple correlations to rigorous academic studies, also find that sectoral bargaining systems generally lead to higher membership. Finally, case studies of union organizing under sectoral systems highlight how sectoral bargaining can support worker activism and encourage union membership. Sectoral systems can give workers a focal point for their activism, as well as make their success more likely, spurring their efforts to continue.
Before-and-after studies of single countries
Before-and-after studies from countries around the world highlight the importance of sectoral bargaining for supporting high union membership. For example, the decline in union density in Israel after 1987 coincided with the decentralization of collective bargaining, while the promotion of sectoral bargaining has been an important part of the revival of labor union membership in Uruguay since 2005.11 Indeed, Uruguay’s revival of its version of sectoral bargaining and wages councils helped “revitalized labor unions” and dramatically increase union membership.12
Though some researchers may question the applicability to the United States of these examples,13 the experiences of Australia, New Zealand, and Britain are particularly relevant because all share similar cultural, economic, and legal processes with the United States.
Previously, Australia, New Zealand, and Britain maintained high density under sectoral systems, but unions quickly lost membership when their labor laws were changed in ways that, among other things, weakened or eliminated their sectoral systems. There were many reasons unions in these countries lost members, but the weakening or elimination of sectoral bargaining was at least part of the story. Furthermore, each country subsequently attempted improvements to their workplace-level bargaining systems that failed to increase density. Labor union confederations in the three countries now believe that recreating sectoral bargaining systems is a key part of their revival. In short, all three countries demonstrate that sectoral bargaining can support high membership and suggest that reviving it is critical to increasing union membership.
Australia
From the early 1900s through the 1980s, Australia had a sectoral system that led to high union density and coverage—with density at 50 percent and coverage at 85 percent in 1980.14 Then, in the mid-1980s and especially in the 1990s, Australia began dismantling its sectoral labor system, causing coverage and density to steeply decline.15 Attempts over the years to modestly improve workplace bargaining did not increase union membership,16 and union density is now less than 14 percent.17 For years, the Australia Council of Trade Unions pushed for major legal changes to recreate a sectoral bargaining system,18 and in December 2022, it won smaller legal changes to the “Single Interest Bargaining Stream” to improve access to sectoral bargaining for workers in franchised sectors, which may increase coverage and density in covered sectors.19
New Zealand
New Zealand’s experience with sectoral bargaining is similar to Australia’s.
For much of the 20th century, New Zealand had a sectoral bargaining system that supported high union membership and high bargaining coverage—with union density around 65 percent and collective bargaining coverage almost 70 percent in the early 1980s.20 But in the late 1980s and early 1990s, New Zealand essentially eliminated sectoral bargaining and shifted to a primarily worksite-based bargaining system, leading to a steep and dramatic decline in both coverage and density; by the late 1990s, density had fallen to 22 percent.21 In 2000, New Zealand passed legislation to increase legal protections for unions and workplace-level bargaining, but these changes had little effect on union density.22 New Zealand’s most recent union membership figures were 18 percent.23
Over the course of many years, the New Zealand Council of Trade Unions sought to restore a sectoral bargaining system24 and ultimately succeeded in 2022 when New Zealand enacted fair pay agreements.25 While the law held great promise to increase density and coverage, it was overturned in 2023.26
Britain
In 1979, union density in Britain was 55 percent and collective bargaining coverage was 70 percent,27 with sectoral bargaining a part of this success. According to Keith Ewing, professor of public law at King’s College London, and John Hendy, chair of the Institute of Employment Rights, “The ‘system’ in place in the post-war era was one of sectoral bargaining underpinning establishment level negotiation.”28
However, Margaret Thatcher changed labor policies in many ways, including weakening sectoral bargaining,29 so that union density and coverage dropped precipitously.30 The weakening of sectoral bargaining was but one of many reasons for union decline. Still, labor union membership has continued to decline over recent decades31—in large part because legal reforms have not markedly altered Thatcher’s changes32 and pushed only modest reforms to improve worksite-level bargaining by, for example, making it easier to demonstrate majority support at a workplace.33 Today, union density is less than 24 percent.34 The British Trades Union Congress now supports reforms that would create sectoral fair pay agreements, akin to what New Zealand briefly enacted.35
Cross-country comparisons
Academic studies comparing union membership across countries find that sectoral bargaining supports high union density. These studies typically focus on the dominant level of bargaining in a country, as most countries have multiple levels of bargaining, with sectoral systems setting minimum standards for most workers and workplace bargaining providing a way to improve upon those standards.
Jelle Visser, a professor at the University of Amsterdam, studied union membership in European countries over several decades to find that greater bargaining centralization (with sectoral bargaining more centralized than worksite bargaining) has a “significant, positive and robust impact on union growth.”36 Visser’s data on union membership and collective bargaining coverage has been adopted by the OECD as its official database on the subject.37
A study of union membership in economically advanced countries since 1950 by Columbia University’s Bruce Western found that more centralized bargaining was one of three institutional conditions “essential for union growth.”38
Magnus B. Rasmussen, professor at the University of South Eastern Norway, studied 35 countries over recent decades, as well as a smaller sample of 12 advanced countries from 1911 to 2000, to find that sectoral bargaining is more “conducive to union growth,” than worksite-only bargaining.39 Rasmussen also found that workers in jobs that are “inherently hard to organize” are much more likely to be covered under sectoral systems than under workplace only bargaining. Research by the Organization for Economic Cooperation and Development (OECD) and International Labor Organization also indicates that people with “nonstandard employment” or who work for small firms are more likely to be unionized under sectoral bargaining.40
In short, the general thrust of cross-country academic studies finds that sectoral bargaining usually supports high union density, though there are some exceptions and nuances in the research.41
The basic results of the academic findings cited above can be seen in a simple comparison. As shown in Figure 1, sectoral bargaining is typically associated with higher union membership than workplace-level bargaining. The figure shows the union density and predominant bargaining type (from sectoral to intermediate to workplace) for OECD countries. Countries with the highest union densities—from one-third to more than 90 percent—all have sectoral systems, while the lowest membership levels of 12 percent or less are almost exclusively in countries where worksite-level bargaining is the primary bargaining level. The middle tier of union membership includes a mix of dominant bargaining types, with some sectoral systems, some workplace, and some intermediate.
In addition to the broad trends, the figure also highlights the position of a few countries.
As previously noted, Iceland, Sweden, Finland, Denmark, Norway, Belgium, and Italy have the highest densities in the OECD, and all have sectoral systems. Their sectoral systems are structured in different ways: Belgium and Italy have extension mechanisms to spread union contracts to other workers, while the Nordic countries rely more on direct negotiations between unions and employers to achieve a similar goal.42 This indicates that different types of sectoral systems can lead to high union density. It is also important to note that these countries have additional policies that support union membership: For example, all have strong workers’ rights and most have versions of the Ghent system.43
Canada, with more than 28 percent density, has the highest union membership rates of any country with predominantly workplace-level bargaining, indicating that workplace-level bargaining can achieve moderately high union membership levels. Still, it is worth noting that Quebec, the Canadian province with the most significant version of sectoral bargaining, has a higher membership rate (35 percent) than the national average and just about the highest rate of any province in the country.44 Furthermore, the relatively high overall membership rates in Canada are due in significant part to the public sector. Canada’s public sector has a significantly higher unionization rate (73 percent) than the public sector in the United States (33 percent), and the public sector is a larger share of the economy in Canada than it is in the United States (45 percent compared with 33 percent).45 Private sector membership in Canada is just 14 percent and has been declining for decades.46
Figure 1 also highlights that a few countries with sectoral systems, most notably France, have quite low union densities. As a result, some policymakers might worry that if the United States were to promote sectoral bargaining, its union membership would remain stuck at very low levels or even decline further. Yet, a closer look at the French system shows that it is designed in ways that hinder union membership, so it is not a model the United States should emulate to boost union density.
French union membership is low in part because, as in the United States, workers are afraid of employer retaliation due to weak enforcement of legal rights.47 But the primary reason density in France is low is that there are few incentives for unions to recruit members and for workers to join.48
In the French system, unions have little need to recruit members. Unions receive most of their funding from the government and employers rather than member dues, thus low membership does not significantly affect their finances.49 Furthermore, union bargaining power does not depend on membership: The bargaining system provides unions the ability to bargain based on the support they receive in special workplace elections for employee representatives, which means unions do not need many members to negotiate with employers.50 In addition, French workers receive virtually all rights and benefits of union contracts whether they are members or not. This creates a greater free rider problem than in other sectoral systems,51 as other types of sectoral systems extend only some elements of union contracts to nonmembers—such as wages, but not all benefits or on-the-job protections.52
As a French government report summarized:
Low union density in France is due to a number of factors: (i) the unions’ weight in collective bargaining does not depend on how many members they have, but on their workplace election results; (ii) union membership does not give workers many rights and benefits compared with a good number of our European neighbours; and (iii) the unions are not funded mainly by member dues, but essentially by government, employers and labour-management organisations.53
Without mass membership, the ability to motivate the more activist members to strike is particularly important in the French system. Not surprisingly, then, most union members in France are union leaders and activists rather than rank-and-file workers.54
In short, bargaining in France is designed to lead to low union membership. The French case indicates that while it is possible to create a sectoral system with low membership, doing so requires many choices that reduce incentives for recruitment and membership. As a result, France is an outlier in the cross-country academic research, which finds that sectoral systems generally lead to higher union density.
Case studies of organizing campaigns
Case studies of union organizing campaigns indicate that sectoral bargaining can facilitate worker organizing and membership and highlights the mechanisms through which this happens.
As the cases of Amazon workers in Italy and organizing campaigns in several U.S. cities and states show, the structures of sectoral bargaining systems can motivate workers and help them succeed. In these cases, workers organized around sectoral issues, rather than free riding. Workers struck or took other actions to pressure employers, and the sectoral systems helped workers achieve their goals and motivated further organizing. In these cases, there was also often an interplay between workplace and sectoral organizing, with efforts at both levels supporting the other.
Amazon workers organized in Italy
Organizing workers at Amazon, the large, multinational tech company, is notoriously difficult, yet Italian workers succeeded—agreeing to a “historic” first contract in 2021.55 Workers achieved this success in significant part because Italy’s sectoral bargaining system supported their activism.56 Indeed, the Italy case highlights how sectoral bargaining can support worker activism and union membership and sheds light on how Italy is able to maintain a union density rate of around one-third, including nearly 30 percent in the private sector.57
Amazon workers took several strike actions—including a massive systemwide strike in March 2021—in part to get Amazon to fully comply with national sectoral agreements for similar workers.58 Workers wanted Amazon to agree to every term of the sectoral agreements, not only the minimum wages of the sectoral agreement to which they were legally entitled. In other words, sectoral bargaining helped motivate Amazon workers to organize and take actions.
The sectoral system also anchored worker demands and helped them succeed. Indeed, the first bullet point in the historic September 2021 framework agreement references the sectoral agreements, and the second bullet highlights that Amazon will comply with them.59 Local unions also sought to get paid more than the minimums required in the sectoral agreements.60 Finally, because the Italian sectoral system required Amazon to pay the minimum wages of the sectoral agreement, it put additional reputational risk on Amazon for failing to comply, as well as made it less costly for the company to come to an agreement with the unions.61
Securing a contract with Amazon also benefitted union organizing and recruitment. Not only can success help motivate workers, but the contract provides tangible benefits to facilitate union recruitment, such as company-supported communication channels with workers.62
Workers organized around worker standards boards in U.S. states
Since 2018, six states and three local governments have enacted versions of worker standards boards—governmental bodies that include representatives of workers, employers, and the public to set sectoral standards—for a variety of industries, including home care, nursing homes, and fast food.63 Thousands of workers have mobilized as part of these sectoral efforts—not just to provide the political muscle necessary to pass the policies into law, but also to pressure the board to raise standards. For example, as part of a series of strikes and other labor actions in March 2024, Minnesota nursing home workers rallied to push their newly created board to create high workplace standards.64 Similarly, fast food workers in California mobilized at the first hearing of the state sectoral standards board in March 2024.65 These examples reinforce the idea that workers can mobilize and organize around sectoral issues.
Because most of these laws were passed recently—for example, Minnesota, Colorado, and California’s boards only became law in 202366 —it is still too early to tell whether mobilization efforts will lead to significantly increased union membership. Still, there are signs that sectoral processes may help foster unionization. Some fast-food workers are joining a minority union in California in part to push the state sectoral council to raise standards.67 In Nevada, whose law was passed in 2021 and was fully implemented in 2023, home-care workers unionized several employers as an outgrowth of their efforts around a sectoral standards board.68
To be sure, state-level worker standards boards are not exactly sectoral bargaining, as government plays a direct role in the negotiations. Indeed, because federal law largely preempts U.S. states from passing laws that directly support union organizing and collective bargaining,69 state worker standards boards are far from the model version of sectoral bargaining systems that could be enacted at the federal level. Still, workers have frequently taken actions and joined unions in part because of the sectoral structures they create.
In short, even under the strict legal limits of state worker standards boards, there is some evidence that sectoral standards can help support worker organizing.
Workers organized around sectoral minimum wages
A number of U.S. cities have passed laws creating minimum wages for particular sectors, such as the hotel industry. While these laws are even further removed from sectoral bargaining than worker standards boards, they can also help shed light on union organizing and the free-rider problem under sectoral systems because all covered workers receive wage increases regardless of whether they are union members.
The research is clear: Sectoral bargaining typically increases contract coverage in ways that do not hinder union membership.
The evidence suggests that sectoral minimum standards laws can help increase union membership, particularly when accompanied by workplace organizing. According to a review of sectoral minimum wages and similar policies by the Institute for Research on Labor and Employment at The University of California, Berkeley: “We do not see any evidence that mandated standards reduced the demand for workers to join a union.”70 Rather, the authors wrote that unions “continued to grow membership in locations covered by the policies in subsequent years.”71 Indeed, they found, for example, that union density for large hotels in Santa Monica, California, went from 0 percent to 70 percent under a sectoral minimum wage.72
The authors argued that sectoral minimum wage standards facilitated this increase. Sectoral standards helped “lower hotels’ resistance to bargaining demands,” creating conditions that aided worker organizing and success.73 Furthermore, the process of creating and enforcing the sectoral standards provided unions with additional organizing opportunities.
Finally, the authors emphasized the importance of workplace organizing operating in conjunction with sectoral minimum standards to build power for workers at multiple levels and make success—including higher workplace standards and increased union membership—more likely.
Conclusion
The research is clear: Sectoral bargaining typically increases contract coverage in ways that do not hinder union membership. Rather, sectoral bargaining can encourage worker engagement and make their efforts more likely to succeed, creating a virtuous circle that boosts union membership. Thus, sectoral bargaining can support high union membership.
Still, sectoral bargaining best fosters union membership when it operates in conjunction with grassroots organizing and other policies such as strong worker rights, union access to workers, and policies that incentivize membership. Therefore, policies to promote sectoral bargaining in the United States should be advanced together with other reforms.