Decline Of Unions Linked To Increase In Income Inequality

In what seems to be an obvious conclusion to progressives, Economic Policy Institute authors Ross Eisenbrey and Colin Gordon make a strong case that rising income inequality in the United States is linked to the decline in union membership. It

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In what seems to be an obvious conclusion to progressives, Economic Policy Institute authors Ross Eisenbrey and Colin Gordon make a strong case that rising income inequality in the United States is linked to the decline in union membership. It seems clear that the sector of society dedicated to fighting on behalf of working families and the middle class, if weakened, would cause a decrease in wages for workers and an increase in profits for the upper one percent. By extension, it seems obvious that the anti-labor policies pursued by conservatives are a direct attack on the middle class and working families:

The passage in 1935 of the National Labor Relations Act, which protected and encouraged unions, sparked a wave of unionization that led to three decades of shared prosperity and what some call the Great Compression: when the share of national income taken by the very rich was cut by one-third. The “countervailing power” of labor unions (not just at the bargaining table but in local, state, and national politics) gave them the ability to raise wages and working standards for members and non-members alike. Both median compensation and labor productivity roughly doubled into the early 1970s. Labor unions both sustained prosperity, and ensured that it was shared; union bargaining power has been shown to moderate the compensation of executives at unionized firms.

However, over the next 30 years—an era highlighted by the filibuster of labor law reform in 1978, the Reagan administration’s crushing of the PATCO strike, and the passage of anti-worker trade deals with Mexico and China—labor’s bargaining power collapsed. The consequences are driven home by the figure below, which juxtaposes the historical trajectory of union density and the income share claimed by the richest 10 percent of Americans. Union membership has fallen and income inequality has worsened—reaching levels not seen since the 1920s.

About Kenneth Quinnell

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