Union Metrics that Matter: What Coverage and Membership Rates Reveal About Labor Risk

Labor is often the most complex—and least predictable—factor in site selection. While wage expectations and workforce availability are always top of mind, a more nuanced question is gaining traction: What role should organized labor play in our location strategy? Some companies view unions as a risk, while others see them as a cost of doing business. Some even treat union engagement as a strategic partnership—especially in industries with a workforce shortage.

To add to the complexity, there are many different ways of quantifying organized labor presence—from recent organizational filings, successful organization filings, right-to-work status, private vs. public union membership, and coverage rates—the list goes on and on.

One important, but commonly misunderstood nuance is the difference between union membership and union coverage (representation) rates:

• Union Membership Rate: The percentage of wage and salary workers who are members of unions.
• Union Coverage Rate: Includes both due-paying union members and workers who report no union affiliation, but whose jobs are covered by a union contract.

Why coverage rates matter

We generally place more emphasis on union coverage when analyzing private sector employment environments. That’s because coverage more directly reflects the number of workers an employer is legally obligated to represent under a collective bargaining agreement (CBA), regardless of whether those workers are dues-paying union members.

• Coverage determines who is subject to the contract. Whether the worker is a dues-paying member or not, if they are covered by a collective bargaining agreement, the employer must:
  • Pay negotiated wages and benefits
  • Follow union-negotiated rules on discipline, promotions, scheduling, layoffs, etc.
  • Engage in formal grievance procedures and arbitration if disputes arise
• Membership is voluntary, but coverage is binding
  • In right-to-work states, workers can opt out of union membership but still benefit from the union contract.
  • Employers cannot treat covered nonmembers differently from members—the CBA applies equally.

• For example, in states like Nevada or Florida, membership rates may hover around 5–6%, but coverage rates are notably higher. In New York, the 2024 private-sector union membership rate dropped from ~14% in 2014 to ~10%—but coverage rates remain elevated, signaling continued union presence and bargaining power.

Why membership rates matter

While union coverage indicates who is affected by a collective bargaining agreement, membership rates reflect voluntary participation in union activity—and they carry their own set of implications for employers.

• Gauge of Union Sentiment: A high membership rate often reflects a more engaged or militant union culture, increasing the likelihood of organizing campaigns, work stoppages, or public pressure campaigns.
• Predictor of Organizing Potential: Even in low-coverage states, a rising membership rate can signal growing interest in unionization—particularly in logistics, e-commerce, and advanced manufacturing.
• Indicator of Political Climate: States with high membership rates often correlate with stronger pro-labor legislation and regulatory environments, which can affect project permitting, workforce training, and compliance risk.

In Illinois, private-sector union membership is nearly 10%—and more importantly, that number has remained stable over the past decade, suggesting a durable, organized labor infrastructure that companies must be prepared to engage with on a long-term basis.

In contrast, low membership rates don’t always mean low risk. In some right-to-work states, union organizing may be active but not yet successful, or a single large facility might have an outsized impact on membership statistics.

Determining an approach for your company

In today’s labor market, union presence is no longer a static checkbox—it’s a dynamic factor that can shape everything from cost structure to operational risk and long-term talent strategy. Whether your company sees unions as a challenge, a partner, or simply a reality of doing business, understanding the difference between membership and coverage rates is a crucial step in making informed location decisions.

Site Selection Group helps companies navigate these complexities by tailoring site strategies that align with each client's operational goals, risk tolerance, and workforce preferences. From deep labor analytics to on-the-ground intelligence, we help you understand not just where labor is available—but where it’s aligned with your business.