Organized labor hasn't been this scarce in the U.S. since FDR was president. Is that the real source of the middle class' woes? Is the problem worth trying to fix? This is your turn to tell us.
It hasn't been a good week for unions in America. Actually, it hasn't been a good half-century for them, either.
Six days ago in Wisconsin, Gov. Scott Walker won reelection after he championed bold steps to curb the power of organized labor. Meanwhile, in California, voters in San Diego and San Jose approved plans to cut benefits for new hires and old workers in public unions. These votes didn't announce a new trend. They reminded us of a very old one.
With the 30 year-decline of manufacturing employment, union membership has fallen to its lowest rate since the 1930s. At the same time, the middle class' share of total income has slipped below 50% ... and kept falling. A graph (like the one below) can only prove correlation, not causation. But some economists suggest that the erosion of union membership is one of the most important factors in explaining the demise of the middle class.
The red ski slope line is lamentable. But was it inevitable? According to a new study I reported on last week, "The Rise and Fall of U.S. Unions," by Emin M. Dinlersoz and Jeremy Greenwood, technological innovation both gave life to our unions and helped to destroy them. Here's how that worked: In the early 20th century, manufacturing technology turned workers into specialized cogs. Union membership accelerated among the unskilled workers, who were suddenly crucial and irreplaceable actors in the assembly line economy. But in the next technology revolution, unskilled workers lost their monopoly to overseas laborers and machines, and IT gave preference to skilled workers. As a result, many unions lost their effectiveness and appeal, and financial returns flowed away from this middle class. Once again, all cliches about correlation and causation aside, this graph suggests a strong relationship between union membership (blue) and income inequality (green-dotted).