Union Or Association – What Is The Difference And Why Does It Matter?

From the right-wing pundits you will find attack after attack on unions, coming up with multiple examples of “union thugs” and “union problems” to back themselves up. However, when doing the homework on the worst offenses, many times the problem groups are not unions at all, but another kind of organization called a “Trade Association” or “Professional Association.”

One way to differentiate Unions and Associations is through the tax code. Unions are part of what the IRS labels a “Labor Organization” in section 501c5 of the tax code and have these features:

  • An association of workers
  • Who have combined to protect or promote the interests of the members
  • By bargaining collectively with their employers
  • To secure better working conditions, wages, and similar benefits.

By comparison, there is the Professional or Trade Association, which falls under section 501c6 of the tax code and has these characteristics:

  • It must be an association of persons having some common business Organization interest and its purpose must be to promote this common business interest;
  • It must be a membership organization and have a meaningful extent of membership support;
  • It must not be organized for profit;
  • No part of its net earnings may inure to the benefit of any private shareholder or individual;
  • Its activities must be directed to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons;
  • Its primary activity does not consist of performing particular services for individual persons;
  • Its purpose must not be to engage in a regular business of a kind ordinarily carried on for profit, even if the business is operated on a cooperative basis or produces only sufficient income to be self-sustaining.

So what are the trademarks of a Union? The most common features of a Trade or Labor Union are:

  • negotiate agreements with employers on pay and conditions
  • discuss major changes to the workplace such as large scale redundancy
  • discuss with their members any concerns with employers
  • accompany their members in disciplinary and grievance meetings
  • provide their members with legal and financial advice
  • provide education facilities and certain consumer benefits such as discounted insurance

Then, to compare, the most common features of a Trade or Professional Association are:

  • promote a particular trade, profession or industry
  • creation and administration of standards and/or regulations for an industry
  • be an advocate in the business or political arena
  • offer legal support for trial as expert witnesses
  • offer of educational and advancement study opportunities for members of the association

Now, a trade association can take on roles of a union, and vice-versa. But, the difference is above. They offer similar, but not identical structures. While the Union serves to promote the workers, the Association serves to promote the industry itself. This distinction makes all the difference. While an Association can offer negotiation for labor costs and wages, it does this from its role, for the industry and not for the workers themselves. While a Union can offer expert witnesses for trial and advocate in the political arena, it does so only in support of the workers.

Many associations exist which serve the role of a Union in various fields, from sports to medicine to education. As well, there are trade union federations, that is, a national association made up of Unions. The largest of these is the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). By trade unions joining together as a federation or confederation, they gain many of the advantages of professional associations, with the most obvious advantage being able to engage in direct political advocacy.

Several associations are commonly called Unions in the media, such as the National Education Association (NEA). While the NEA has adopted many roles traditionally held by Unions, such as contract negotiations, it is first and foremost a trade association. Chartered by the federal government in 1906, the NEA only began adopting union roles in the 1960’s in response to multiple states demands for the services normally handled by Unions. This was further pushed when the NEA partnered with the American Federation of Teachers, a Union Federation. Several states NEA affiliates have merged with AFT unions as well, notably in Florida, Minnessotta, Montana and New York, further muddling the issue due to these hybrid entities. The NEA affiliates with Union components have joined Union Federations at times, such as the AFL-CIO.

Unions enable employers to save overhead through the Unions ability to share insurance and pension costs, training programs, and quality inspections. When employers work with Unions, this results in a significant reduction in the cost to run a business, a major factor in being competitive in the increasingly worldwide marketplace. The increased cost of the workers themselves results in more business as consumption increases.

Associations do offer services for the workers in the field in which they cover, but not to the same extent as the Union can. Unlike the more democratic Unions, Associations tend to elect to committee or council. The NEA, for instance, has its members elect only to what is called the Representative Assembly (RA). The senior NEA leadership is selected not from its membership, but by the RA, many times outside management to serve in the same manner as a corporations board of directors. By comparison, Unions such as the AFL-CIO and Teamsters use a more direct election process, with the AFL-CIO doing proportional electors and the Teamsters having direct elections. As a result of this direct link between worker and leadership, the Unions tend to more closely represent the workers they represent.

Many on the right will argue against unions, arguing that union wages take away from the wages of the ununionized, or that they disrupt commerce, even that the cost of the union labor makes a business unprofitable. This is of course blatantly false. For example, despite the oft-pointed to Milton Friedman and his claims in “Free to Choose” that the percentage of wage to GDP is 85% with the result that unionized labor takes money away from ununionized, in truth, today it is 44%, but even in 1979 when he made his claim, the percentage was only 49%. He used bad math based on numbers given to him not from the Bureau of Labor Statistics, but from the Heritage Foundation think tank founded in 1973. In the computer industry we call thisĀ “Garbage In, Garbage Out.” The erosion of union labor, if his claim were to be true, would result in the percentage of wage to GDP to stay constant.

Instead, the erosion mirrors the reduction in this percent. As union jobs dissapeared, rather than the money being redistributed to the ununionized, the money simply fled the labor pool entirely. From 1980 to today, the percentage of union membership dropped from roughly 20% in 1979 to just over 11%. This would fit perfectly with the identical drop in wages. At 50% of wages, the union percentage of that would cover roughly 10%. Drop that portion to 11%, and it would drop to just under 41%, exactly as we have witnessed. And remember that even at this point, in 1979, the percent had dropped from its 1969 peak of 53%.

Trade Associations have been on the rise, claiming to be an alternative to unions. In the field of education alone, over a dozen national associations are now in active service across the country, with countless more local and state organizations. The Association is more fractured, and specialized, than the Union, as it should be. They each serve a role in the labor market.

No system is perfect, and neither are Unions nor Associations. Both have their problems, but both have their advantages. But without unionized labor, it is clear that this country is sliding backwards. The replacement of Unions with Associations is not sufficient to stem the slide backwards into economic doldrums. MBA’s are now taught that Unions are their enemies, not their allies. A Union is a reflection of the workers it represents. In effect, these executives are taught that their very workers are the enemy.

And we wonder why it is that our country is in such dire straights.

  1. Corporate Profits Just Hit An All-Time High, Wages Just Hit An All-Time Low – Business Insider
  2. National Education Association
  3. Internal Revenue Service Section 501(c)5
  4. Internal Revenue Service Section 501(c)6
  5. American Federation of Labor and Congress of Industrial Organizations
  6. Free to Choose – Milton Friedman
  7. Bureau of Labor Statistics
  8. History of Trade Unionism – Sidney & Beatrice Webb
  9. Teamster History