The Working Musician report reveals that, after years of training, more than half of professional musicians earn less than £20,000 per year and 60% have worked for free over the past year.
The union said the statistics were "ominous for the future of music in the UK", while the report highlighted "the spiralling costs associated with education, training and sustaining a musician's career".
John Smith, union general secretary, said: "So many MU members are battling against a tide of arts cuts and reduced income due to piracy. Small but significant investment by Government could make all the difference in the struggle to survive.
"What's also interesting is that, of the musicians surveyed who receive royalty payments, more than half said that they represented an important additional source of income for them."
He added: "This finally puts paid to the argument that ordinary musicians do not benefit from copyright."