You are misunderstanding the point. Consider. The question under consideration is how the employer puts together this initial offer. If he already has 100 employees that make $10/hour, the initial offer for new employees will probably close to $10/hour why? Because who would do the job for $5/hour when so many other people already get twice that much? And how much effort can the company really put into saying no, when they already do it for 100 other people? Even if new hires don't get a full $10 rate, they'd be much closer to that than $5. In this way, the terms of new contracts are influenced by the contracts that already exist. Because unions are responsible for so many of the employees at any given workplace (provided that workplace has a legally recognized union), they constitute a significant number of the previously existing contracts. Consequently, they exert a sizable influence on the terms given to new hires regardless of whether those new hires join as part of the union or not. This happens not because of some special property of unions, but simply because humans compare amongst themselves, and there are so many union workers that the union terms become a major point of comparison.