Labor’s Decline and Wage Inequality

The decline in organized labor’s power and membership has played a larger role in fostering increased wage inequality in the United States than is generally thought, according to a study published in the American Sociological Review this month.

The study, “Unions, Norms and the Rise in U.S. Wage Inequality,” found that the decline in union power and density since 1973 explained a third of the increase in wage inequality among men since then, and a fifth of the increased inequality among women.

The study noted that from 1973 to 2007, union membership in the private sector dropped to 8 percent from 34 percent among men and to 6 percent from 16 percent among women. During that time, wage inequality in the private sector increased by more than 40 percent, the study found.

While many academics argue that increased inequality in educational attainment has played a major role in expanding wage inequality, the new study reaches a surprising conclusion, saying, “The decline of the U.S. labor movement has added as much to men’s wage inequality as has the relative increase in pay for college graduates.” The study adds that “union decline contributes just half as much as education to the overall rise in women’s wage inequality.”

The study was written by Bruce Western, a professor of sociology at Harvard University, and Jake Rosenfeld, a sociology professor at the University of Washington.

The two professors found that the decline of organized labor held down wages in union and nonunion workplaces alike. Many nonunion employers — especially decades ago, when unions represented more than 30 percent of the private sector work force — raised wages to help avert the threat of union organizing.

Moreover, the study argues that when unions were larger and had a far greater voice in politics and society, they played a more influential role in advocacy on wages across the economy, for instance, in pushing to raise the minimum wage.

“In the early 1970s, when one in three male workers were organized, unions were often prominent voices for equity, not just for their members, but for all workers,” the two professors wrote. “Union decline marks an erosion of the moral economy and its underlying distributional norms. Wage inequality in the nonunion sector increased as a result.”

The two professors note that the decline of unions is part of a common account of rising inequality that is often contrasted with a market explanation that includes technological change, immigration and foreign trade. They argue that the market explanation usually understates the role of organized labor’s decline on increased inequality.

The study notes that in the 1970s, some skilled-trades unions and construction unions helped to increased inequality through exclusionary practices that reinforced racial and ethnic inequalities. But the study said that, over all, unions in the United States had been an important force for reducing inequality — although not as much as unions in Europe, which have more influence in politics and society.

The authors found that the biggest factor in the decline in unions’ power and density was job growth outside traditional labor strongholds like manufacturing, construction and transportation. They added that another important reason for the decline of organized labor was that “employers in unionized industries intensified their opposition” to unionization efforts.

They noted that as unions have grown weaker, there has been less pressure on lawmakers to enact labor-friendly or worker-friendly measures. “As organized labor’s political power dissipates,” the authors wrote, “economic interests in the labor market are dispersed and policy makers have fewer incentives to strengthen unions or otherwise equalize economic rewards.”

New York Times, Thurs Aug 4 2011

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