Microeconomics question? :)?

Question

How is it possible for the average annual earnings of nonunionized workers to exceed those of unionized workers even though unionized workers' hourly wages are more than $2 higher?

Answer 1

This is hardly a microeconomics question, but the answer is simple anyway.  Non-unionized workers do not pay union dues.  Even when the hourly wages are higher, from the employer's point of view, union members are obliged to pay some portion of each paycheck directly to the union, not to mention they must pay periodic flat fees to the union.

Keep in mind it's not as if this money is being thrown down the toilet; unions provide many services to their members, including legal and political representation.  Nevertheless, the fees and dues that members must pay to their unions typically drops their average annual earnings below those of non-unionized laborers.

Hope that helps.

EDIT: In regards to David's response, it depends on the industry and the job.  Sure someone making $12 an hour won't be spending $2/hour on union fees and dues, but in other industries where wages can be up above $20/hour the fees could easily hit a rough equivalent to $2/hour.  

Collective action such as strikes and protests do not typically happen that often in most unions, although when they do happen they are fairly well-publicized.  Sure they can have an effect on that $2/hour wage difference, but I still would assert that the majority of the discrepancy comes from the reasons I listed above.

Answer 2

Union dues will reduce income, but not I would think by $2 an hour. I should think the answer to this is more in the way of the costs and benefits of collective action. Non unionized members benefit from the collective bargaining of unionized workers in the same organization, but they do not bear the cost of strikes, overtime boycotts, etc.