Fight for a Union

Over the last three decades working as a janitor in a downtown office building, Urszula Domaradzki has consistently made at least twice the local minimum wage, has health benefits and receives paid leave. Today, her hourly pay is $16.35 and she works a full 40 hours a week. Douglas Hunter, who works in maintenance at a local McDonald’s, makes $9.25 and rarely gets scheduled for more than 23 hours per week and hasn’t gotten a raise in three years.

Both are single parents in Chicago working in jobs that don’t require a four-year college degree, but one big factor differentiating the two is bargaining power. Domaradzki is a member of Service Employees International Union Local 1, while Hunter is part of a nationwide movement asking for a $15 hourly wage and the right to unionize.

The Congressional Research Service says that after taking into account for individual, job and labor market conditions, workers in labor unions make 10 to 30 percent more than non-unionized workers. Unions, researchers with the service wrote in a 2004 paper, “may be a means of reducing earnings inequality,” and greater equity could increase aggregate demand and reduce unemployment.

However, David Card, a labor economist and professor at the University of California-Berkeley, co-authored a 2003 paper showing that the unionization rate and the union wage differential – the pay advantage that comes with union membership – have fallen substantially since the early 1980s in the U.S., the U.K. and Canada – all industrialized countries where bargaining power is now considered “highly decentralized.”

“For men, this has resulted in a steady erosion of the equalizing effect of unions that explains a significant fraction of the growth in wage inequality in the U.S. and U.K.,” the authors wrote. Union participation, they said, does not reduce wage inequality among women.

Gary Casteel, secretary-treasurer of the United Auto Workers union and head of its transnational department, says the bargaining power of unionized workers helps give them a collective voice to negotiate wages and benefits that nonunion workers don’t have. “When people are dependent on what the boss is willing to give you versus what they can sit down and bargain for and retain through written contract, the situation that exists kind of speaks for itself,” Casteel says.

But despite the collectively bargained benefits it can provide, union membership – long heralded as a way to secure reliable middle-class pay and perks – has fallen to its lowest level since the Great Depression of the 1930s, as the gap between the very rich and everyone else, referred to as income inequality, also has widened. In the years since the financial crisis that lasted from December 2007 to June 2009, wage growth has been virtually nonexistent and the bargaining power of workers has been limited, as many have pointed out. Wage distribution in the U.S. has swung in favor of the wealthy over the last several years. The richest 1 percent got 10.8 percent of all pretax income in 1982, while the bottom 90 percent got 64.7 percent, according to research cited by Pew. In 2012, according to preliminary estimates, the top 1 percent received 22.5 percent of pretax income, while the bottom 90 percent got 49.6 percent. A 2011 working paper from the National Bureau of Economic Research linked lower tax rates for senior-level management with rising income inequality. Increased bargaining power for that group also results in decreased bargaining power for everyone else – and thus higher pay for the already-rich. Stefanie Stantcheva, a Harvard University economics fellow who co-authored the paper with economists Thomas Piketty and Emmanuel Saez, describes a behavior called "rent-seeking" that refers to CEOs and top management making more than they technically deserve when weighed against what they produce.

"Workers' bargaining power has declined over the last 40 years and because of that, economic growth has largely gone to the top of the income distribution,” says Marshall Steinbaum, a research economist at the Center for Equitable Growth.

According to the Bureau of Labor Statistics, 11.3 percent of wage and salary workers were members of unions in 2013, down from 20.1 percent in 1983. While the unionization rate in the public sector has held fairly steady over that 30-year period, it’s plunged in the private sector to 6.7 percent in 2013 from 16.8 percent three decades prior, according to the Pew Research Center. As a percent of all employed workers, union membership is the lowest since the sub-10 percent levels of the 1930s before pro-union legislation as part of the New Deal helped boost union ranks, according to the Congressional Research Service.

Corporations work to trim costs – and union membership has shrunk – is the increase in “perma-temp” workers, meaning those employed by a temporary agency who work alongside permanent employees but don’t receive the same pay or benefits. United Auto Workers estimates there are about 4,500 workers at Nissan’s site in Canton, Mississippi, but that only about 2,700 are regular employees and the rest are provided by a temp agency. Regular workers make a little under $24 an hour, while temp workers make between $13 and $17 per hour. The numbers are similar, the union estimates, for those at Nissan's site in Smyrna, Tennessee, where just 2,000 of 6,500 workers are actually employed by Nissan.

“They kind of dangle the carrot out there that one of these days, you're going to become full-time, but it never happens,” Casteel says. “Even in places where they say they have a pathway to full employment, if you clear all these thresholds and jump over all these hurdles, it usually weeds out like 99 percent of the people.”

When they are strong, unions "fight for key middle-class interests both in the workplace and in the political arena,” says a recent report from the Center for American Progress, a left-leaning Washington think tank. Similarly, Mary Kay Henry, international president of the SEIU, called the fall of unions a “coordinated assault” that “has led to the attack on workers' organization and the decline of the middle class.”

Card says he’s “quite pessimistic” about membership picking up in a substantial way anytime soon. “Social attitudes in the U.S. are such that I find it impossible to imagine that people would have a more collective view of things,” Card says. “It doesn’t really fit with American self-perception. People come here and think everything is about self-achievement.”

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