Expert Commentary

Unions, norms and the rise in American wage inequality

2011 study by University of Washington and Harvard University in the American Sociological Review on union membership trends and impacts on the labor market.

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In the early 1970s, roughly one third of the male workforce in America was unionized. This number has declined steadily, and as of 2012 about 11.3% of workers overall (14.4 million people) were union members, according to the Bureau of Labor Statistics. The power of unions to bargain collectively with management often kept wages relatively higher in certain sectors over time and exerted pressures on the labor market more broadly. Of course, other factors such as technological change and globalization have had a significant impact on wages and jobs in certain sectors, as well.

A 2011 study by Bruce Western of Harvard University and Jake Rosenfeld of the University of Washington published in the American Sociological Review, “Unions, Norms and the Rise in American Wage Inequality,” used data from the 1973-1981 Current Population Survey (CPS), and the annual Merged Outgoing Rotation Group files of the CPS from 1983 to 2007, to measure the impact broadly of declining union membership on wage inequality.

The study’s findings include:

  • Over the period 1973 to 2007, membership in private sector unions declined from 34% to 8% for men and from 16% to 6% for women. Inequality in hourly wages increased by more than 40% over that period.
  • The decline of organized labor since 1973 explains one third of the increase in wage inequality among men and one fifth of the increased inequality among women, which is “an effect comparable to the growing stratification of wages by education.” Put more concretely, “the decline of the American labor movement has added as much to men’s wage inequality as the relative increase in pay for college graduates.”

The researchers conclude that “unions offered an alternative to an unbridled market logic, and this institutional alternative employed over a third of all male private sector workers. The social experience of organized labor bled into the nonunion sectors, contributing to greater equality overall. As unions declined, not only did the logic of the market encroach on what had been the union sector, the logic of the market deepened in the nonunion sector too, contributing to the rise in wage inequality.”

Keywords: economy, campaign issue, labor unions

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