A labor union is a group of individuals working together to achieve shared job-related goals, such as higher pay, shorter working hours, more job security, greater benefits, or better working conditions.¹ Labor relations is the process of dealing with employees who are represented by a union.

Labor unions grew in popularity in the United States in the nineteenth and early twentieth centuries. The labor movement was born with the Industrial Revolution, which also gave birth to a factory-based production system that carried with it enormous economic benefits. Job specialization and mass production allowed businesses to create ever-greater quantities of goods at ever-lower costs.

But there was also a dark side to this era. Workers became more dependent on their factory jobs. Eager for greater profits, some owners treated their workers like other raw materials, as resources to be deployed with little or no regard for the individual worker’s well-being. Many businesses forced employees to work long hours—60-hour weeks were common, and some workers were routinely forced to work 12 to 16 hours a day. With no minimum-wage laws or other controls, pay was also minimal and safety standards virtually nonexistent. Workers had no job security and received few (if any) benefits. Many companies, especially textile mills, employed large numbers of children at poverty wages. If people complained, nothing prevented employers from firing and replacing them at will.

Unions appeared and ultimately prospered because they constituted a solution to the worker’s most serious problem. By uniting the workers, unions forced management to listen to the complaints of all their workers rather than to just the few who were brave (or foolish) enough to speak out. The power of unions, then, comes from collective action. Collective bargaining is the process by which union leaders and managers negotiate common terms and conditions of employment for the workers represented by unions. Although collective bargaining does not often occur in small businesses, many midsize and larger businesses must engage in the process.