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As union membership declines, inequality rises

To a remarkable extent, the level of inequality—which fell during the New Deal but has risen dramatically since the late 1970s—corresponds to the rise and fall of unionization in the United States. This week’s Economic Snapshot juxtaposes the historical trajectory of union membership and the income share claimed by the richest 10 percent of Americans. It finds that as union membership has fallen to around 1920s levels, inequality has worsened.

Informing the dialogue



From Rolling Stone to Wall Street Journal, and from CNNMoney to PBS’s “Nightly Business Report,” journalists everywhere are turning to EPI to make sense of the latest economic news and determine what it all means for American families. In addition to using EPI’s research to show how the decline of unions affects the entire country, media outlets—including ABC News, CBS MoneyWatch, Huffington Post, and Politifact—looked to EPI for insight into the state of the labor market. EPI labor economist Heidi Shierholz put May’s jobs report into perspective for CNNMoney’s Chris Isidore, MSNBC.com’s Eve Tahmincioglu, and Tom Hudson of PBS’s “Nightly Business Report.” Finally, Howard Gold of the Wall Street Journal’s MarketWatch and Huffington Post’s Bonnie Kavoussi cited EPI’s data to explain how drastically tax rates have fallen for the nation’s top earners in the last decade.

  • Rolling Stone’s Daniel Adler noted that the decline of union membership has negative effects on all workers:

EPI finds that inequality has corresponded to the rise and fall of unionization in the United States “to a remarkable extent.” For instance, the passage of the National Labor Relations Act in 1935 led to both a massive increase in unionization and a massive decrease in inequality, because “the ‘countervailing power’ of labor unions … gave them the ability to raise wages and working standards for members and non-members alike.” This correlation between unionization and relative equality has been consistent since. If you think massive and growing inequality is a problem for our democracy, then here’s one more reason to lament Tuesday’s result.

  • CBS MoneyWatch: “The current median wage for employed high school graduates working full time is $9.50, $2 above the federal minimum wage. That means those working full time earn barely enough to keep them out of poverty. By comparison, college graduates make an average hourly wage of $16.81 per hour, which amounts to an annual salary of roughly $35,000, according to the Economic Policy Institute, a nonpartisan think-tank.”
  • From MSNBC.com: “And since the recession began in 2008, the number of people who were part time because they couldn’t find a full-time position skyrocketed by 1.4 million individuals, or 117 percent, according to research by Heidi Shierholz, economist for the Economic Policy Institute. ‘It’s probably more a story of job opportunities,’ she said. ‘Desperate workers have to settle with what they can find.’”
  • From Wall Street Journal’s MarketWatch: A 2008 study by the liberal Center for American Progress and Economic Policy Institute showed that private investment, GDP, wages, household income, employment and federal revenue all grew faster — sometimes much faster — during the high-tax Clinton years than they did during the low-tax Reagan and Bush eras.”
  • And Huffington Post: “Perhaps even more outrageous, more than 10,000 wealthy households paid no federal income taxes at all, according to a recent IRS study. But it’s not just those wealthy households that got a lucky break. Tax rates have fallen the most for the richest Americans since the mid-1990s. Tax rates for the top 0.01 percent plunged 9.4 percent between 1995 and 2007, while tax rates for the 20th to 99th percentiles fell just 2.9 percent, according to the Economic Policy Institute.”

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