Economic inequality rose dramatically beginning in the 1970s. At the same time, the percentage of private-sector workers in unions went into steady decline. Some scholars have argued that the two trends were both products of market forces that rewarded highly skilled and highly educated workers, but the decline of organized labor didn’t itself contribute significantly to inequality. Sociologists Bruce Western and Jake Rosenfeld, though, made the case in a 2011 analysis that declining labor power contributed to rising economic inequality not only for union members but for all workers between 1973 and 2007.
The shifts in both economic inequality and union membership over those years were dramatic: Men’s wage inequality increased by 40 percent and women’s by nearly 50 percent. Private-sector union membership dropped from 34 percent for men in 1973 to 8 percent in 2007 and from 16 to 6 percent for women over the same period.
Strong unions can theoretically reduce inequality in multiple ways. They can reduce the gap between more- and less-educated workers by raising wages for the latter. They can increase pay within a heavily unionized industry as even nonunion employers seek to keep pace or avert union organizing efforts. And they can advocate for public policy such as, for instance, a higher minimum wage. Western and Rosenfeld argue that unions have more broadly contributed to a “moral economy,” promoting “norms of equity that claimed the fairness of a standard rate for low-pay workers and the injustice of unchecked earnings for managers and owners.”
Analyzing data from the Current Population Survey, Western and Rosenfeld find that declining union membership accounts for a fifth of the 40 percent increase in men’s wage inequality if only individual union membership is taken into account. Looking more broadly at the effect of unions on nonunion pay, the effect goes up, with the decline in union membership explaining a third of the total increase in wage inequality for men. For women, declining individual union membership doesn’t increase wage inequality, but the link between union strength and nonunion wages accounts for a fifth of the rise in inequality.
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People who point to education as a factor in growing wage inequality aren’t wrong: Education explains a substantial fraction of the shift. But overall, “the decline of the US labor movement has added as much to men’s wage inequality as has the relative increase in pay for college graduates.” For women, union decline has had half the effect on wage inequality as education. Education, then, doesn’t replace lower rates of unionization as an explanation for inequality. The two coexist.
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“These results,” Western and Rosenfeld write, “suggest unions are a normative presence that help sustain the labor market as a social institution, in which norms of equity shape the allocation of wages outside the union sector.” Between 1973 and 2007, those norms of equity broke down and, without the “alternative to an unbridled market logic” unions had provided, economic inequality soared.
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