Are Shrinking Unions Making Workers Poorer?
Growing income inequality is a fact, but its cause is unclear.
Here's what we know: Union membership has been nearly cut in half over the past thirty years. During that time, income inequality grew, with the top one percent of wealthiest Americans seeing especially big gains in their pre- and post-tax income. And although the economy has grown, wages have not: The portion of GDP going toward workers' pay has shrunk by almost six percentage points over the last decade.
The causal chain is so tempting: As unions get smaller, collective bargaining gets weaker, worker wages go down, and evil profiteers cackle. But is it clear that the decreasing power of unions has made it harder for employees to afford everyday life? This idea was discussed at a recent Atlantic working summit on "secure livelihoods," which focused on systemic causes of persistent income inequality; what does the research say?
As is so often true, it's difficult to determine exactly how the decrease in union power has affected the income and quality of life of workers. In a 2011 article in The American Sociological Review, Bruce Western and Jake Rosenfeld argue that the decline of organized labor can account for about one-third of the rise in income inequality for men and one-fifth for women -- even for people who never belonged to unions. In regions of the U.S. where more people belong to unions, they argue, there is a smaller difference between how much money high-paid and low-paid workers make. Over time, as union membership has dropped, the gap between rich and poor has grown for everyone, union and non-union alike. Western and Rosenfeld attribute this to the soft power of organized labor: If union strikes loom as a credible threat, all employers in an area are more likely to provide robust benefits and pay.
But other factors muddy the issue. Some experts argue that growing workforce automation, the global reach of the economy, and the need for high-skill labor has diminished the power of collective bargaining and cut into workers' wages. If there's cheap labor available in Bangladesh, why would an American company pay workers significantly more to do the same work? In the face of a cheap global labor pool, unions have less ammunition against employers, and U.S. workers also get paid less, regardless.
For the growing number of jobs that do require strong technical skills, there don't seem to be enough people who can do the work, argued David Autor, Lawrence Katz, and Melissa Kearney in 2008. They specifically target the argument that weaker unions mean weaker wages -- they say the gap between the very middle of the middle class and the top ten percent of wage earners is closely linked to the gap in skills between those two groups. In other words, weaker unions aren't to blame for workers' economic woes; workers just don't have the right skills to compete in a high-tech economy.
Still, the fact remains that full-time workers who belong to unions make more money than those who don't: On average, union members make about $200 more per week than their counterparts. This figure is influenced by lots of factors, including differences in average salary in regions with low levels of unionization. But even bearing that in mind, research shows that in "right to work" states, where employees cannot be required to pay union dues as a condition of their employment, workers get paid less than the rest of the country. That was true even when business grew in "right to work" states, indicating that weakening unions might help business owners, but it doesn't do much for workers. (This Washington Post article gives a great overview of the economic effects of "right to work" legislation).
It seems that unions have become too weak or too irrelevant to buoy workers in a competitive global economy.