New Research Highlights Role of Declining Unionization in Growing Income Inequality
It’s no secret that unions have become a much diminished economic and political force in the US over the past four decades. Between 1973 and 2007, union membership in the private sector fell from 34 percent to 8 percent among men in the US and from 16 to 6 percent among women.
A new study by economists Bruce Western and Jake Rosenfeld demonstrates that this substantial decline in unionization in the US has played a much bigger role in growing income inequality than previously thought. In fact, the researchers found that,
…deunionization explains a fifth of the inequality increase for women, and a third for men. The decline of organized labor among men contributes as much to rising wage inequality as the growing stratification of pay by education.
Previous research focused almost exclusively on the role of unions in lifting the wages of unionized workers, but Western and Rosenfeld found that the decline in unionization resulted in depressed wages for nonunion workers as well. One reason is that “nonunion employers may raise wages to avert the threat of union organization.”
Perhaps the bigger reason for the indirect effect, the researchers argue, was that:
In the early 1970s, when 1 in 3 male workers were organized, unions were often prominent voices for equity, not just for their members, but for all workers. Union decline marks an erosion of the moral economy and its underlying distributional norms. Wage inequality in the nonunion sector increased as a result.
What this research makes clear is that improving access and outcomes in education and ending tax breaks for the wealthy, while important, will not alone suffice for stemming the destructive rise of income inequality in the US. Policies that strengthen the bargaining power of workers will have to play a critical role.