Was it worth it? The impact of the German minimum wage on union membership of employees

Abstract

This contribution scrutinises how introducing a statutory minimum wage of EUR 8.50 per hour, in January 2015, impacted German employees’ decision with regard to union membership. Based on representative data from the Labour Market and Social Security panel, the study applies a logistic difference-in-differences propensity score matching approach on entries into and withdrawals from unions in the German Trade Union Confederation (Deutscher Gewerkschaftsbund, DGB). The results show no separate effect on withdrawals from or entries into unions after the minimum wage introduction for those employees who benefited financially from it, but a significant increase of entries overall. Thus, unions’ campaign for a minimum wage strengthened their position in total but did not reverse the segmentation of union membership patterns.

Why Do Labor Unions Advocate for Minimum Wage Increases?

“…Bellman et al (2021) find that the minimum wage resulted in a non-trivial increase in the rate at which firms 6 exit collective agreements, though a modest effect on overall participation in collective bargaining. Ress and Spohr (2022) find no effect of Germany's introduction of the minimum wage on membership among the minimum wage's direct financial beneficiaries. Relative to this recent work, our analysis differs with respect to both context and the econometric tools we are able to deploy.…”

Does Policy Advocacy Generate Good Pr? Evidence from Labor Unions and Minimum Wages

“…In this paper, we analyze the "good PR" motivation for policy advocacy through an analysis of news coverage of the minimum wage and of organized labor. Using a dataset we create, we establish that the quantity of articles about the minimum wage exhibits short-lived 1 Notably, a realignment of labor unions in greater support of minimum wages has emerged in a number of industrialized economies, as observed by Ress and Spohr (2022) and described in far greater detail by Müller and Schulten (2020). 2 The AFL-CIO's website, for example, includes "restoring the minimum wage to a living wage" in its statement of policy priorities for improving pay and benefits.…”