Rising Business Costs and the Resurgence of Unions
How labor unions are impacting business expenses and workforce dynamics.
1Historical context of unions
Labor unions emerged in the late 19th century to address unsafe working conditions, particularly in industries like steel and coal mining. The American Federation of Labor (AFL), formed in 1886, became a powerful force that merged with the CIO in 1955. Union membership peaked in the 1950s at 35% of the workforce but declined to under 12% by the early 2000s. Recent years have seen a reversal, with union membership reaching an 11.2% share in 2025.
2Recent union growth trends
Union membership has grown by 463,000 since 2024, reaching 16.5 million workers - a 16-year high. This resurgence is driven by younger and minority workers. Public sector unions maintain higher membership (38%) compared to private sector. The Service Employees International Union (SEIU) has won 125 elections at Starbucks locations, representing 14,500 workers. In California, rideshare drivers are nearing unionization after a decade-long process.
3Impact on business costs
Unions are contributing to rising business expenses alongside persistent supply chain disruptions. Starbucks unionized employees in Buffalo sought $17/hour wages, leading to reduced hours that affected health insurance eligibility. If widespread, unionization could significantly increase costs in service industries. The gig economy presents challenges for unions as companies shift labor costs to contract roles, making traditional organizing difficult.
4Sector-specific developments
Construction and industrial sectors have historically strong union presence. Recently, the Stanford football team became the first NCAA Division I program to unionize. While college athletes aren't currently classified as employees, the College Football Players Association aims to change this, starting with ACC teams. Rideshare companies like Uber and Lyft face unionization efforts in California following regulatory changes.
5Employer responses
Businesses are countering union growth by offering higher wages and remote work options, particularly in IT and creative fields. These improved conditions reduce union appeal in white-collar roles. However, companies like Starbucks resist collective bargaining despite union wins. Right-to-work laws, manufacturing decline, and corporate opposition remain significant barriers to further union expansion.
6Historical comparison
Union membership has fluctuated dramatically - from 35% in the 1950s to 20% in 1983 and under 12% in early 2000s. The current 11.2% represents a notable increase from recent lows. Public sector unionization has remained consistently higher than private sector. The AFL-CIO's goal of universal unionization faces challenges from changing work structures and employer resistance.
7Future projections
Experts debate whether the current union growth will sustain. Some predict stabilization or slight decline as employers improve conditions voluntarily. The gig economy's growth complicates traditional union models. In industries like coffee shops and rideshares, union success could lead to significant price increases. College athlete unionization remains uncertain due to employment classification hurdles.
8Small business impacts
While most small businesses don't face direct unionization threats, they feel ripple effects through increased costs of unionized suppliers and services. A transcription business owner cited concerns about rising goods prices from unionized sectors. The 4% unionization rate at Starbucks shows potential for growth that could affect consumer prices across service industries.
9Strategic considerations
Business leaders must balance competitive wages with cost control. Proactively improving workplace conditions can reduce union appeal. Monitoring sectors with active union campaigns (like food service and transportation) helps anticipate cost increases. The key challenge is maintaining operational flexibility while addressing legitimate worker concerns that drive union interest.
Original article: Entrepreneur – Latest — Rising Business Costs and the Resurgence of Unions