News & Events Study: Deunionization A Leading Factor Behind Increasing Income Inequality

Study: Deunionization A Leading Factor Behind Increasing Income Inequality

By Guest Blogger on Aug 1, 2011 at 10:50 am

Deunionization is worsening the income inequality gap, accounting for nearly a third and a fifth of wage inequality among men and women, respectively. According to a study by Bruce Western of Harvard University, data proves “the role of unions as an equalizing force in the labor market“:

“From 1973 to 2007, wage inequality in the private sector increased by more than 40 percent among men, and by about 50 percent among women. […] deunionization—the decline in the percentage of the labor force that is unionized—and educational stratification each explain about 33 percent of the rise in within-group wage inequality among men. Among women, deunionization explains about 20 percent of the increase in wage inequality, whereas education explains more than 40 percent.

Part of the reason for this gender discrepancy is that men have experienced a much larger decline in private sector union membership—from 34 percent in 1973 to 8 percent in 2007—than women (who went from 16 percent to 6 percent during the same period).”

Even nonunion workers benefit from stronger unions as employers raise wages and increase employee benefits. The study also attributes the changing normative perception of pay equity to the decline of unions, arguing that “unions helped institutionalize norms of equity.”

Tellingly, the decreasing rate of unionization clearly parallels the squeeze on middle-class incomes. See the trend in this chart:

Since the union movement began to stumble in the 1970s, the link between worker productivity and wages has been severed, leading employees to work harder for less and less money. In between 1980 and 2008, “nationwide worker productivity grew by 75.0 percent, while workers’ inflation-adjusted average wages increased by only 22.6 percent.” Today unionized workers make about $2.50 more per hour than their nonunionized counterparts.

But whereas unions may contribute to increased wages and benefits, a harsh legal environment and negative public perception are keeping unionization rates low.

Sarah Bufkin