Researchers have long demonstrated the connection between being represented by a union and earning higher wages. The erosion of collective bargaining, correspondingly, has therefore increased wage inequality.Ĭollective bargaining increases and equalizes wages for union workers and nonunion workers in unionized occupations and sectors Unions disproportionately benefit those with low and moderate wages, those with lower levels of education, and nonwhites, and this has been the case since the birth of the modern labor movement in the New Deal.Deunionization has this result because it depressed the wages of middle-wage earners but had little impact on high-wage earners at the 90th percentile. Deunionization widened the 90/50 wage gap (the gap between earners at the 90th percentile of the wage distribution and the 50th percentile, measured in logs) by 7.7 points and therefore explains 33.1% of the 23.2 point growth of the wage gap between high- and middle-wage earners over the 1979–2017 period. Declining unionization widened inequality between high-wage earners and middle-wage earners.This impact is due to both the direct effect on wages of union workers and the spillover effect on wages of nonunion workers. These losses from deunionization are the equivalent of annual losses for a full-time, full-year median worker and median male worker, respectively, of $3,250 and $5,171. Deunionization lowered the male median hourly wage by $2.49, an 11.6% (0.29% annual) decline, over the 1979–2017 period. The erosion of collective bargaining lowered the median hourly wage by $1.56, a 7.9% decline (0.2% annually), from 1979 to 2017. For the “typical” or median worker, declining unionization translates to a loss of $1.56 per hour worked, the equivalent of $3,250 for a full-time, full-year worker.Recent research on trends in wages over the last four decades has demonstrated that: 3 Rebuilding collective bargaining is a necessary component of any policy agenda to reestablish robust wage growth for the vast majority of workers in the United States, and broader unionization would lessen racial inequities and benefit women at least as much as men. Thus men had more to lose from the subsequent attack on unions and collective bargaining. The erosion of collective bargaining has been especially harmful to men’s wages because men were far more likely than women to be unionized in 1979 (when 31.5% of men were covered by collective bargaining versus 18.8% of women). 2 The share of workers covered by a collective bargaining agreement fell from 27.0% in 1979 to just 11.6% in 2019 (Hirsch and Macpherson 2020).
1 Indeed, the only factor more responsible for weak wage growth for the typical worker is the excessive unemployment perpetrated by central bank policymakers’ high interest rate policies and fiscal austerity. A major factor depressing wage growth for middle earners and driving the growth of wage inequality over the last four decades has been the erosion of collective bargaining.