Farewell to America's Middle Class: Unions Are Basically Dead

The U.S. is one of the only rich countries that has reached the (incorrect) conclusion that organizing workers is counterproductive.

Toby Melville / Reuters

For a group of presidential candidates who claim to be interested in the plight of the American worker, it was surprising that no one onstage for the first Democratic debate two weeks ago didn't once say the world "union." Well, technically, that's not correct—Anderson Cooper pointed out that Bernie Sanders honeymooned in the Soviet Union—but the point remains.*

A raft of research—some new, some old—suggests that it’s a shame that unions were absent in Democrats’ most publicized recent conversation. Some of that research is coming from unlikely places; the International Monetary Fund, for instance, recommended reviving unions as a way for democracies to grow their economies and boost productivity.

In the U.S., where less than 9 percent of private-sector workers are organized, they could use a revival. The U.S. has one of the lowest unionization rates in the world, far behind Germany and Canada, and closer to Mexico and South Korea.

The U.S.’s low unionization rates come with consequences for its workers. It leads rich nations in low-wage jobs—more than 20 percent of jobs pay less than two-thirds of the median wage. And the U.S. ranks in the bottom third of countries in terms of its work-life balance. Americans work about 1,790 hours per year on average, but workers in most wealthier nations work less than 1,600. 11.8 percent of American adults work long hours; less than 1 percent of Dutch workers put in more than 50 hours a week.

Reviving unions could be a way to counter these trends. The IMF concluded that countries with higher rates of union coverage enjoy lower rates of inequality and lower rates of poverty. Its researchers reasoned that because globalization and technology affect just about every nation, differences in unionization rates and labor regulations are more likely to explain differences in inequality across nations. The White House and the American Sociological Review, a mainstream academic journal, both came to similar conclusions about the links between declining unions and rising inequality.

In all this research, the causal link identified was pretty much the same: Unions reduce inequality by bringing up the wages of middle-income and the lowest-paid workers. And workers in unions aren’t just getting better wages—they’re also getting better compensation in general. Unionized workers are 28 percent more likely to be covered by employer-provided health insurance and 54 percent more likely to have a pension.

Who covers these raises? Managers’ and executives’ wages tend to be slightly lower at businesses with unionized workforces. Sometimes, though, no one’s taking pay cuts—unions have also been shown to boost workers’ productivity, bringing in more money for the firm overall. Unions appear to raise productivity for an interesting reason: Employers of unionized workers tend to spend more on updating their machines and computers and training their workers. They’re more incentivized to do so when an hour of work is relatively more expensive, and this raises productivity overall. This boost also goes toward explaining why unions have no discernible detrimental effect on unemployment.

And that’s only what happens at a single company. When unions represent their workers, they often push for things—higher taxes on the wealthiest, Social-Security benefits increases, and better public education, to name a few—that benefit even non-unionized workers. It’s been shown that poorer kids have a better chance of being upwardly mobile if their parents are in unions or they live in areas with high union-membership rates. So it’s no wonder that in the relative absence of unions, there is more income inequality.

If unions are so good, then why aren’t workers flocking to them? Many employers resist anything that would give workers more leverage, and they construct barriers (some of them illegal). The Atlantic has reported on stories of workers at Walmart who claim they’re afraid to organize because attempting to would prompt headquarters to shut down the store they work at. One leaked PowerPoint slideshow from Walmart intimated that unions were greedy organizations eager to cheat workers out of their money. Unionizing in the face of efforts like these is incredibly unappealing to workers who may already feel on the precipice of losing their jobs for a host of other reasons.

There are, of course, things the government could do to reverse these trends. It could be a requirement that seats on boards of directors be reserved for union members, producing a situation like Germany’s, where it’s common for unions’ presences to be felt on corporate boards. However, it is unlikely that the concerted political efforts to dismantle unions will for some reason reverse course and move in the direction of rebuilding them. The Supreme Court, for example, will rule next year on a case, Friedrichs v. California Teachers Association, that could severely weaken public-sector unions’ collective-bargaining abilities.

Because unions tend to benefit workers so much, corporate executives seem to have it in their heads that those benefits must, by definition, amount to drawbacks for companies. This antagonistic mindset might be one of the things preventing businesses from realizing that they, too, might be better off with organized labor.

* This article originally stated that Bernie Sanders mentioned the watchdog group Citizens Union. Actually, he mentioned Citizens United, the Supreme Court ruling. We regret the error.