The Causes of Wealth Inequality (20): Weak or Declining Unionization, Ctd.

Not all countries where income levels are very unequal are also countries where labor unions are weak or in decline; but some are, notably the U.S. For that reason, and because labor unions are generally regarded as forces advocating for a more equitable wage distribution, it’s tempting to see a causal link between declining unionization and increasing income inequality.

There’s a study out which estimates that approximately a fifth of the increase in hourly wage inequality among women in the U.S., and about a third among men, is explained by declining union membership.

Deunionization also increases inequality in sectors where unions have always been weak or absent, because companies in those sectors tended to follow wage levels in unionized sectors as a means to compete with union employers or to discourage unionization. Unions also influenced general government policy – e.g. minimum wage laws – which benefited non-unionized sectors. And, finally, with unions no longer making the general moral case for equality, voices against equality have gained the upper hand.

I know it’s only a correlation and hence no evidence of causation, but the correlation is indeed striking.

More posts in this series here.

The Causes of Wealth Inequality (8): Weak Unionization

Among the rich countries that are very unequal are also some which have very weak labor unions. It’s tempting to see a causal link in this correlation, since the purpose of a labor union is – among other things – to negotiate a better income of its members. Declining labor union membership and influence should then translate in declining wages (at least relatively speaking) and more income inequality. If most workers are members of labor union, most low incomes benefit from the influence of labor unions. It’s even likely that non-members also profit from wage increases negotiated by labor unions, since employers don’t like to differentiate between the wages for identical jobs.

[W]eak unions are a key cause of US inequality. The argument goes that weak unions have little political presence in policy debates, which tend to be dominated by business. The result is that policy debates in the US are systematically skewed in favor of business (which tends to favor policies that advantage, or at least do not hurt) rich people, with little in the way of countervailing voice, let alone power. …

In analyzing sources in [news] stories … the fundamental pattern is the same. Those in government, and especially Obama administration staffers, dominated the conversation. Representatives of business and industry came next, followed by academics and independent observers. … fully 61% of stories included a government representative of some kind, including those from state and local government. … Representatives of business, those identified as clearly speaking on behalf of the company or corporation, were the next most prominent sources, figuring in about 40% of the stories. … ordinary citizens and workers were well down the rung of sources. … One subset of the American workforce was virtually shut out of the coverage entirely. … Representatives of organized labor unions were sources in a mere 2% of all the economy stories studied. …

This measure is not the only index of strength in policy debate, obviously, but it is an important one. And on it, business representatives were twenty times as visible in public debate as union representatives. That’s a whopping disparity. (source)