How Unions Could Bring the Middle-Class Back from the Brink
August 30, 2012 9:22 am
Earlier this week, the Pew Research Center reported on the state of the middle-class between 2001-2010. Unsurprisingly, the report demonstrated that the net worth, medium household income and quality of life of the middle-class lost ground over the last ten years. Yesterday, the Economic Policy Institute released a study entitled Unions, Inequality and Faltering Middle-Class Wages, a preview of a forthcoming book. The study draws a strong correlation between de-unionization and the faltering middle-class.
The E.P.I. study covers the years between 1978-2011, a period in which overall unionization rates fell from 26.3% to 13.1% (see the chart above). The data elucidates the enormous benefits of union membership on wages and benefits, as well as the greater advantages to workers with lesser levels of education and minority workers.
The report’s key findings are as follows:
- The union wage premium—the percentage-higher wage earned by those covered by a collective bargaining contract—is 13.6 percent overall (17.3 percent for men and 9.1 percent for women).
- Unionized workers are 28.2 percent more likely to be covered by employer-provided health insurance and 53.9 percent more likely to have employer-provided pensions.
- The decline of unions has affected middle-wage men more than any other group and explains about three-fourths of the expanded wage gap between white- and blue-collar men and over a fifth of the expanded wage gap between high school– and college-educated men from 1978 to 2011.
- An expanded analysis that includes the direct and norm-setting impact of unions shows that deunionization can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.
The report also lists dramatically higher union premium rates (the wage difference between union and non-union occupations) for black and latino workers, stating:
Sizable differences exist in union wage premiums across demographic groups, with blacks and Hispanics having union premiums of 17.3 percent and 23.1 percent, respectively, far higher than the 10.9 percent union premium for whites. Consequently, unions raise the wages of minorities more than of whites…, helping to close racial/ethnic wage gaps.
In addition, union premiums are higher for high school-educated workers than college-educated workers — serving to close the earnings gap between levels of education. Massive de-unionization has lessened the positive impact of this trend considerably. According to the report, unions narrowed the earnings gap between high school and college graduates by 7.3% in 1978. In 2010, Unions were responsible for only a two percent reduction in the gap.
The report speaks to the effects of regional union density on non-union employers –referring both to the “union threat” trend of non-union employers offering better wages and benefits in high-union density areas in order to fend off unionization, as well as a more general “institution of norms and practices” that are beneficial to workers.
Unions, Inequality and Faltering Middle-Class Wages makes a strong case for unions as our greatest hope to stave off growing class inequality. For a robust middle-class, we need stronger unions. End of story.