High Inequality Tied to Shrinking Union Membership
October 17, 2012 8:46 am
As election day approaches, Michigan labor advocates are avidly campaigning for the passage of Proposal 2, the Protect Our Jobs Act. The act doesn’t force anyone to join a union, it simply protects collective bargaining rights against the attacks of activist governors like Scott Walker and John Kasich.
Those governors sought (or succeeded in) positioning the removal of collective bargaining rights as a necessary step to balance ailing budgets. But what are the real economic effects of collective bargaining? A new study by the Economic Policy Institute presents strong evidence linking a decline in unionized workers with rising inequality.
The reports central claim is as follows:
This divergence between pay and productivity and the corresponding failure of middle-class incomes to grow is strongly related to the erosion of collective bargaining. And collective bargaining has eroded more in Michigan than in the rest of the nation, helping to explain Michigan’s more disappointing outcomes.
The study finds:
…The divergence between the growth of productivity and the wages of the typical worker simply reflects collapsed wage standards and workers’ inability to obtain their fair share of a growing economic pie. The erosion of collective bargaining is a major driver of this phenomenon, as it leads to weaker labor standards for all workers. Weaker wage growth and the greater increase in income inequality in Michigan reflect the greater erosion of collective bargaining there than in the nation. In Michigan the share of the workforce covered by a collective bargaining agreement fell from roughly a third in 1983 to about 18 percent in 2011, while in the nation the erosion was from about 23 percent to 13 percent. (Emphasis added). Collective bargaining coverage fell more in Michigan within the private sector, including in construction and in manufacturing, than overall, but it fell in public employment as well.
As unionized workers decreased in the rust belt, inequality increased dramatically:
…The states with the largest erosion of collective bargaining (Michigan, Ohio, and Pennsylvania) are all in the top tier of states for growth of income inequality…
The following video uses a widely accepted measure of inequality, the GINI coefficient, to trace rising inequality against rapid deunionization from 1979 to 2009.
The exhaustive report presents in-depth statistical analysis demonstrating that unions not only provide higher wages for minorities, women and workers lacking college degrees, but also promote smaller disparities in wage gaps between occupations.
Harley Shaiken, labor professor at the University of California Berkeley, spoke to the Detroit News on the value of Michigan as a case study on the shrinking middle class, inequality and unions:
Michigan is the place where the expansion of the middle class took root most profoundly, and where we’re now seeing it decline most dramatically.
In Michigan, collective bargaining was the rising tide that was responsible for raising all ships. Protect Our Jobs attempts to stop the further erosion of the middle class.
Image from here