Union Decline Leads to Rise in Wage Inequality: News of the Day

Aug 1, 2011 Issues: Labor, Worker Rights, Wages and Benefits

Deunionization is worsening the income gap, accounting for nearly a third and a fifth of wage inequality among men and women, respectively, according to a recent study from Harvard University. The authors conclude from the data that “the role of unions [act] 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).

Nonunion workers also benefit from stronger unions as employers increase wages and employee benefits. The study also argues that “unions helped institutionalize norms of equity.” As such the decline of unions has resulted in changing normative perceptions of pay equity.

The decreasing rate of unionization also clearly parallels the squeeze on middle-class incomes. See this chart from the Center for American Progress below: