equilibrium wage differentials. Economists therefore rely on advanced
statistical techniques to identify this union wage premium.
For 2018, the raw data show that average hourly wages are almost 20
percent greater for union workers than for non-union workers. After
controlling for the observable attributes of the workers and jobs,
however, the evidence suggests that the union wage premium in Canada
is between 10 and 15 percent—that is, unionized workers with a particular
set of skills in particular types of jobs get paid 10 to 15 percent more than
otherwise identical workers who are not members of unions.
On average, unionized workers earn between 10 and 15 percent higher wages than non-
unionized workers with similar skills and characteristics.Employment Effects of Unions
We said earlier that unions face an inherent conflict between the level of
wages they negotiate and the level of employment experienced by their
membership. This conflict simply reflects the firm’s profit-maximizing
behaviour as embodied in its negatively sloped demand curve for labour.
As the union pushes for higher wages, the firm naturally chooses to hire
fewer workers.
What continues to puzzle economists, however, is how the clear evidence
of a 10 to 15 percent union wage premium can be consistent with a
second empirical result—the absence of any clear negative effect on
employment in unionized industries. One possible explanation for the