The decline of organized labor in the United States has contributed significantly to wage stagnation and rising inequality, according to a new report released Tuesday by the Economic Policy Institute (EPI).

The decline of organized labor in the United States has contributed significantly to wage stagnation and rising inequality, according to a new report released Tuesday by the Economic Policy Institute (EPI).

“Rebuilding our system of collective bargaining is an important tool available for fueling wage growth for both low- and middle-wage workers and ending the era of persistent wage stagnation.”
—Economic Policy Institute

The analysis finds that as the share of private-sector workers in a union has fallen precipitously—from one in three in the 1950s to about one in 20 today—wage inequality has risen as a result. In particular, EPI states that the labor movement’s decline has contributed to wage losses among workers who don’t even belong to a union, which “translates into millions of lost dollars to American workers.”

“Union decline has exacerbated wage inequality in the United States by dampening the pay of non-union workers as well as by eroding the share of workers directly benefiting from unionization,” reads the EPI report. “Rebuilding our system of collective bargaining is an important tool available for fueling wage growth for both low- and middle-wage workers and ending the era of persistent wage stagnation.”

The paper notes that several culprits have been blamed for the fact that pay for private-sector workers has “barely budged over the past three and a half decades”—including globalization, technological change, and the slowdown in Americans’ educational attainment.

“Each of these accounts describes important developments contributing to pay stagnation and pay decline for certain groups of workers,” EPI acknowledges. “Yet these explanations ignore a vital contributing factor: the near disappearance of a worker institution that once claimed over one-third of private-sector employees as members.”

That is, unions.

In fact, the think tank found that if union membership rates were as high today as they were in 1979, men who aren’t in a union would make five percent, or about $2,700 more, per year. For less educated men, the decline is even more impactful; non-union men without a bachelor’s degree would have made $3,016 more in 2013―an 8 percent increase―under 1979 levels of union membership.

(The report notes that the impact for women is “not as substantial because women were not as unionized as men were in 1979″—but nor is it inconsequential: For 32.9 million full-time non-union women working in the private sector, annual pay would be roughly $24.0 billion more per year if unions had remained as strong as they were in 1979.)

“In the year of a presidential election characterized by populist discontent, the report’s findings are fresh ammunition for progressives who maintain that strengthening unions, rather than, say, closing our borders to immigrants, is the key to restoring broad wage growth and stemming income inequality,” reporter Daniel Marens wrote at the Huffington Post.

“Many American workers can see those unions as either minor bit players in today’s economy or good for union members alone to the detriment of society at large,” study co-author Jake Rosenfeld, a sociologist at Washington University in St. Louis, told the HuffPo. “This is a study that says that’s wrong: unions are good for members and non-members alike.”

Indeed, as Hamilton Nolan wrote in his analysis of the EPI report at Deadspin: “Don’t get mad at foreigners. Unionize. It’s the only battle in the class war that lies entirely within your power to win.”

Key findings from the EPI report

 

  • For nonunion private-sector men, weekly wages would be an estimated 5 percent ($52) higher in 2013 if private-sector union density (the share of workers in similar industries and regions who are union members) remained at its 1979 level. For a year-round worker, this translates to an annual wage loss of $2,704. For the 40.2 million nonunion private-sector men the loss is equivalent to $2.1 billion fewer dollars in weekly paychecks, which represents an annual wage loss of $109 billion.
  • For nonunion private-sector men without a bachelor’s degree or more education (non–college graduates), weekly wages would be an estimated 8 percent ($58) higher in 2013 if union density remained at its 1979 levels. For a year-round worker, this translates to an annual wage loss of $3,016. As a benchmark, consider that the wage loss from increased trade with low-wage nations (Bivens 2013) among non–college graduates is estimated to be 5 percent.
  • For nonunion private-sector men with a high school diploma or less education, weekly wages would be an estimated 9 percent ($61) higher if union density remained at its 1979 levels. For a year-round worker, this translates to an annual wage loss of about $3,172.
  • The effects of union decline on the wages of nonunion women are not as substantial because women were not as unionized as men were in 1979. Weekly wages would be approximately 2 to 3 percent higher if union density remained at its 1979 levels for all nonunion women; nonunion, non–college graduate women, and nonunion women with a high school diploma or less education. However the cumulate effects are still sizable. For 32.9 million full-time nonunion women working in the private sector, weekly pay would be a total of $461 million more (and roughly $24.0 billion more per year) in 2013 if unions had remained as strong as they were in 1979.
  • The degree of nonunion wage decline reflects how much unionization has declined since 1979 among private-sector men (by two-thirds, from 34 to 10 percent), among women (by more than one-half, from 16 to 6 percent), and especially among non–college degree men (by more than two-thirds, from 38 to 11 percent).
  • As unions have receded from the private sector, their effects on the wages of nonmembers (per percent of unionization) have declined. In recent years, these effects have fallen to between one-half and two-thirds of their late-1970s levels.
  • Union decline has exacerbated wage inequality in the United States by dampening the pay of nonunion workers as well as by eroding the share of workers directly benefitting from unionization. Earlier research (Western and Rosenfeld 2011) shows that union erosion can explain about one-third of the growth of wage inequality among men and about one-fifth of the growth of wage inequality among women from 1972 to 2007. At least for middle-wage men, the impact of the erosion of unions on the wages of both union and nonunion workers is likely the largest single factor underlying wage stagnation and wage inequality.

Click to Read the EPI Report

 

Source: How the Decline in Union Membership Is Hurting All of Us: Report | Common Dreams | Breaking News & Views for the Progressive Community

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