Union and Non-Union Careers: The Money Comparison

Why this matters

Techs argue union versus non-union mostly on hourly rate, and the hourly rate is the least informative number in the comparison. A union scale comes with a fringe package paid into funds you never see on your check, dues that come off it, and a work pattern that can mean fewer hours a year. A non-union job often pays a similar or lower hourly wage with a thinner benefit package, and in residential service it usually comes with steadier hours, which can put more cash in the account over a year. The two only compare honestly as total compensation per year, and the number that decides it is not either wage. It is how many hours you actually work.

This is general information, not personal financial or legal advice. Locals and shops differ a lot; run the comparison on the real papers.

What a union package is made of

A collective bargaining agreement (CBA), the contract between the local and the signatory contractors, sets four things a tech should read:

• Scale. The hourly wage for each classification: journeyman, foreman, and apprentice steps set as a percentage of journeyman scale that rises each period. See related: The Apprentice Pay Ladder.
• Fringes. An hourly amount per hour worked that the contractor pays into funds on your behalf, not into your check. Typically a health and welfare fund, a defined-benefit pension fund, often a defined-contribution annuity fund, a training fund for the apprenticeship school, and sometimes a vacation or holiday fund.
• Dues. An initiation fee to join, monthly dues, and in many locals working dues (also called a working assessment) of a few percent of gross wages, deducted every check.
• Work rules. Overtime triggers (many CBAs pay time and a half after 8 hours a day and double time on Sundays and holidays, which is richer than the federal weekly 40-hour rule), shift premiums, show-up pay, travel and subsistence on distant jobs.

The health fund runs on hours. Most union health plans use an hour bank: you stay eligible for a coverage period by working a set number of hours in a prior period. Fall short during a slow stretch and coverage lapses unless you self-pay, often at a high monthly rate. This is the single most important fine print for a tech's family, and it ties the value of the health fringe to the same hours that drive your wages.

The pension is a promise from a shared fund. A multiemployer defined-benefit plan pays a monthly benefit at retirement based on a formula, usually tied to hours worked or contributions credited. It is governed by ERISA, the federal pension law, and insured by the Pension Benefit Guaranty Corporation at a much lower guarantee level than single-employer pensions. Vesting commonly takes five years. A fund's health matters: plans certified in critical status can reduce future accruals and certain adjustable benefits, and the 2021 American Rescue Plan Act's special financial assistance stabilized many of the most troubled funds. Ask the local for the fund's annual funding notice, which federal law requires the plan to send every year, and look for the funded percentage and zone status.

Moving between locals. Reciprocity agreements between funds generally send your contributions home when you work in another local's area. Check before traveling for work.

What a non-union package is made of

A non-union residential service shop pays an hourly rate, flat rate or commission (see related: How Flat-Rate Pay Works From the Tech's Side), overtime at time and a half over 40 hours a week under the FLSA, which the U.S. Department of Labor enforces (plus daily overtime in a few states, California being the best known), and whatever benefits the owner chooses: a health plan with an employee premium share, a 401(k) with or without a match, PTO, sometimes a take-home truck, tools and a phone. Nothing is negotiated collectively and employment is generally at will. The upside is variance: a strong flat-rate or commission tech can out-earn scale; a weak shop's package can be thin.

The comparison, built per hour

Put both offers on the same footing: a year's money that comes to you, in cash or in funds held for you. Leave out the training fund (it buys your schooling, not your future) and count health at what the employer pays.

Illustrative figures, in units where union journeyman scale is 1.00 per hour:

Per union hour worked, money to the tech is 1.00 of wage minus 0.04 of dues, plus 0.25 health, 0.15 pension and 0.10 annuity: 1.46 per hour.

The non-union year is fixed by its hours: 2,000 times 0.95 is 1,900 of wages, plus 12 percent of that (228) for health, plus a 4 percent match (76), for 2,204 a year.

One rule, two techs

The rule that falls out of that: the union year beats the non-union year once union hours times 1.46 exceeds 2,204, which is at about 1,510 hours a year (2,204 divided by 1.46). A full non-union year here is 2,000 paid hours, so the union side wins only if the tech works roughly three-quarters of a full year or more.

Tech A: steady union work, 1,700 hours. Wages 1,700; dues 68; health 425; pension 255; annuity 170. Total 1,700 minus 68 plus 425, 255 and 170 equals 2,482, about 12.6 percent above the non-union 2,204. Cash in hand is the other story: 1,632 after dues against the non-union tech's 1,900, so the non-union tech carries about 16 percent more cash every week (1,900 divided by 1,632). The union tech is ahead because 850 of his 2,482 sits in health and retirement funds.

Tech B: a slow year, 1,350 hours. Wages 1,350; dues 54; health 337.5; pension 202.5; annuity 135. Total 1,971, about 10.6 percent below the non-union year, and cash after dues is 1,296, about a third less than the non-union tech's 1,900 (1,296 divided by 1,900 is 0.68). Worse, if his local's hour bank requires more hours than he worked, his family's coverage lapses for a period and he self-pays, so the 337.5 counted for health overstates what he actually got.

Same local, same scale, same package. The only input that changed was hours, and it flipped the answer.

The long run: where the union package pulls away, and where it does not

Over a career the gap that matters is retirement. Tech A's year puts 425 units into pension and annuity funds (255 plus 170). The non-union tech's year puts 152 into a 401(k), and 76 of that came out of his own pay. Across 30 years of steady union work that is roughly 12,750 units of retirement funding against 4,560 non-union, about 2.8 times as much, before any growth.

Three things narrow it:

• The non-union tech can save the cash difference. He took home 268 more per year than Tech A (1,900 minus 1,632). Saved into the 401(k) or an IRA every year, that closes most of the retirement gap. Few people actually do it, which is the honest case for money that is put away before you can spend it.
• A defined-benefit promise is not cash in an account. What the pension pays depends on the plan formula, your vested years and the fund's health. A plan in critical status may accrue less per hour than the contribution rate suggests. Ask the fund for your benefit statement, not just the contribution rate.
• Hours across a career. Union work in construction-heavy locals runs in cycles: busy years at 1,800 hours, slow ones at 1,200, time on the out-of-work list (the hiring hall's dispatch list, often called "the books") between projects. Residential service, which is mostly non-union, tends to run steadier through the year, though seasonal in trades like HVAC and pool.

What changes the answer

• The trade and the market. Union density is high in commercial and industrial pipefitting, electrical and sheet metal in some metro areas, and low in residential service almost everywhere. A residential service tech often has no union option locally, and a union career may mean moving into commercial work.
• The state. Under section 14(b) of the National Labor Relations Act, states may pass right-to-work laws that bar contracts requiring workers to pay dues as a condition of employment. About half the states have them; Michigan repealed its law effective 2024. In a right-to-work state you can work under a CBA without paying dues, and the local usually has less bargaining leverage. Check your own state.
• Your earning profile. A top-producing flat-rate tech may earn well past scale, and a union rate caps the upside. A tech who values predictable raises and a negotiated grievance process over upside may weigh it the other way.
• Family health needs. If your family depends on continuous coverage, the hour bank is a risk to price in. If a spouse's plan covers the family, the union health fringe is worth less to you.
• Apprenticeship. A union apprenticeship through a joint apprenticeship training committee is paid, structured and free of tuition, which is real value in the first five years that a per-hour comparison of journeyman packages does not capture.

How to run it on real papers

Ask the local for the current CBA wage sheet showing scale and every fringe line, the dues schedule, the hour-bank rule for health eligibility, the pension fund's annual funding notice, and an honest answer to "How many hours did journeymen in my classification average last year, and in a slow year?" Ask the non-union shop for its health premium share by tier, the 401(k) match formula and vesting schedule, and average overtime hours. Then put both through the per-hour method above, using your own number of hours, not either side's best year.

If a CBA term or a pension document is unclear, the local's business agent and the fund office can explain it, and for a pension question that will decide whether you leave a job, a fee-only financial planner who reads multiemployer plan documents is worth one paid hour.

References

• National Labor Relations Act, including section 14(b) (state right-to-work laws)
• U.S. Department of Labor, Employee Benefits Security Administration, multiemployer pension plan annual funding notices
• Pension Benefit Guaranty Corporation, multiemployer program guarantee
• U.S. Department of Labor, Fair Labor Standards Act overtime
• See related: The Apprentice Pay Ladder, How Flat-Rate Pay Works From the Tech's Side, The Retirement Match and Why to Take It, Evaluating a Job Offer Beyond the Hourly Rate