The correct answer to this open question is the following.
The effect that the prosperity of the 1920s had on labor unions was that the membership of labor unions declined. It was not a good period for a labor union in America.
The economic prosperity that favored the United States during the so-called "Roaring 1920s" made citizens buy many things -mostly on credit- and as people had jobs and income, the labor unions were not as important for them. People and government favored the creation of more business instead of understanding the situation of many workers in corporate America. Everything changed after the US stock market crash of October 29, 1929, the day that started the Great Depression.