In America, according to an estimate from Nobel Prize-winning economist Joseph Stiglitz, the top 1 percent of earners take home 25 percent of the nation’s income and control 40 percent of the wealth. Meanwhile, working-class wages have fallen over the past 40 years.
Membership in labor unions peaked in 1954 with 34.8 percent of workers, according to the Congressional Research Service, and has fallen since.
In 2015, 11.1 percent of American workers were members of a union, according to U.S. Department of Labor statistics. And that year median wages for union members were about 26 percent higher.
Why has union membership fallen?
One reason is that America’s workforce has largely shifted from low-skill manufacturing jobs — which are largely homogenous and easy to organize — to jobs involving high-skilled tasks that require a college education, and which are often more individualized. Moreover, with globalization and the outsourcing of jobs, American workers and the U.S. economy have been forced to compete against other countries where labor is often cheaper. Unions, by offering members higher wages, push up the cost of production and make it harder for American firms to compete. Add factory automation and the “demand for unskilled labor fell relative to the demand for skilled labor,” researchers at the Center for Economic Studies of the Census Bureau explained in a 2012 report. The Bureau defines unskilled workers “as clerical workers, laborers, operatives, and sales personnel, while skilled ones are taken to be craftsmen, managers, and professionals”
Dierk Herzer of Helmut-Schmidt-University in Hamburg, Germany examined the relationship between union membership and income inequality. He looks at two figures: The income share of the top 10 percent of earners in each U.S. state over the years 1964-2012, to measure inequality, and the rate of union membership in each state.
His findings were that in every state, the top 10 percent of earners gained control over a larger share of the wealth at the same time union membership declined. He saw a causal relationship between the density of union membership and income inequality over the long run. A 1 percent increase in union membership reduces the income share to the top 10 percent by 0.000514 percentage points. Given the average annual decline in union membership, that translates into the wealthiest 10 percent receiving an increase in income share of 0.00016 percent per year. The overall decline in union membership is responsible for about 5 percent of the increase in the income share of the top 10 percent. There is no evidence that income inequality led workers to leave unions. Moreover, a decrease in inequality does not boost union membership (even if it does hurt the wealth of the top 10 percent).
New York State had the highest union membership rate in the country at 24.7 percent; South Carolina had the lowest at 2.1 percent. Men were more likely to be members than women (11.5 percent compared to 10.6 percent). Public-sector workers were five-times more likely to be union members than private-sector workers.
Black workers were more likely to be members than White, Asian or Hispanic workers finds a recent report from the Center for Economic and Policy Research (CEPR). Black immigrants are more likely than native Blacks to be unionized. In 2015, Black immigrant workers had a unionization rate of 16.9 percent compared to 13.8 percent for native Blacks. Unionization rates for Black workers have declined across all sectors, but the decline has been especially steep for manufacturing (from 42.3 percent in 1983 to 13.3 percent in 2015).
The report, “Black Workers, Unions, and Inequality”, finds that Black union workers experience higher wages and better access to health insurance and retirement benefits than their non-union peers. Black union workers on average earn $24.24 per hour, compared to $17.78 for non-union Black workers. Black union workers on average earn 16.4 percent higher wages than similar non-union Black workers. Black union workers are also 17.4 percentage points more likely to have employer-provided health insurance 71.4 percent of Black union workers have employer-provided health insurance, compared to 47.7 percent of non-union Black workers. And 18.3 percentage points more likely to have an employer-sponsored retirement plan. 61.6 percent of Black union members have employer-sponsored retirement plans, compared to 38.2 percent of non-union Black workers. Black union workers in low-wage occupations have wages that are 18.9 percent higher than their non-union counterparts.
Despite the clear benefits of being a member of a union, decades of anti-union policy decisions have resulted in a tenuous environment for collective bargaining. Over the past three decades, the Black unionization rate has dropped 56 percent while the overall unionization rate has fallen 48 percent. The deunionization that has occurred over the past thirty years has occurred alongside and contributed to a rise in U.S. wage inequality.
Cherrie Bucknor, author of the report added that “unionization for Black workers is critical to narrowing the wage gap between Black and white workers. When talking about growing wage inequality, you can’t exclude unions and the role they play in that discussion.”