Commentary | Unions and Labor Standards

Union declines hurt all workers


Union declines hurt all workers 

By  Lawrence Mishel and  Ross Eisenbrey 
The U.S. economy is sicker than it seems at first glance. Fortunately, there’s a remedy, though it might seem surprising: more union members and stronger unions.
The economy today suffers from an unhealthy imbalance. It is growing at a strong rate but providing less and less to average Americans. Since the recession ended four years ago, the economy has grown 12.9 percent, yet weekly earnings for production workers have actually fallen 1.2 percent since the last quarter of 2001, after accounting for inflation, and the median usual weekly earnings of all workers have fallen by 3.6 percent.
How can it be that a growing economy, with record profits and constantly improving productivity, provides diminishing returns to average working people? Incontestably, the loss of union power is part of the problem. With union membership declining, workers are less able to demand and win a fair share of the economic pie.
The “union effect” on pay is dramatic: unionized workers earn 20 percent more in wages and 28 percent more in total compensation than non-union workers. The beneficial effects of unions sometimes extend even to non-union employees because their employers tend to improve pay in order to compete for workers. For example, a high school graduate whose workplace is not unionized but whose industry is 25 percent unionized is paid 5 percent more than similar employees in less unionized industries.
Unionized workers are also much likelier to receive paid leave, health insurance, or an employer-provided pension plan. The pensions they get are more generous than those given to non-union workers — employers contribute 28 percent more to union plans. They get 26 percent more vacation time and more paid holidays, pay smaller health care deductibles, and are far likelier than non-union employees to receive employer-provided health care after they retire.
Unions reduce wage inequality because they raise wages more for low- and middle-wage workers than for higher wage workers, more for blue-collar than white-collar workers, and more for the 70 percent of workers who don’t have a college degree than for the 30 percent who do. Until 1977, unions represented more than 30 percent of the entire U.S. workforce.
In 1978, union density fell below 30 percent for the first time since before World War II, and with minor exceptions, union membership as a share of the U.S. labor force has declined steadily ever since, to 12 percent today. Wage inequality began to grow at the same time.

Since 1979, the annual wages of the worst-paid 20 percent of the workforce grew by only 1 percent, or $124, while those in the upper 10 percent saw their annual wage grow nearly a third, or $19,000. Those in the middle haven’t done so well either as their wages rose about 10 percent over these 25 years. Declining and weaker unionization is one of the major reasons for this unequal pattern of growth.
As globalization, employer attacks, and changing labor laws make it harder and harder for unions to organize, the union wage premium is shrinking and the spillover effect for non-union employees is diminishing, too. Unions now represent only 8 percent of the private sector workforce — about one worker in 12. Few industries or occupations have the 25 percent unionization rate needed to help raise the compensation of non-union workers.
Inflation-adjusted wages are not falling because employers can’t afford to pay better. Corporate profits are soaring, but in many industries, the gains are not being shared with the employees who produced them. Without a strong union presence there is no mechanism to spread the wealth that we are producing more fairly. Faced with threats of offshoring and outsourcing, average employees have little bargaining power and no one to represent them.
On December 10, International Human Rights Day will be celebrated around the world. In the United States, where we think of ourselves as leaders and promoters of human rights, the time has come to take another look at our own society and economy. The right to organize unions and bargain collectively is a fundamental human right. If we protected it better here at home, American workers’ wages and fringe benefits would have a far better chance of keeping up and sharing in the rewards of higher productivity and a growing economy.

Lawrence Mishel is president and  Ross Eisenbrey is vice president of the Economic Policy Institute in Washington, D.C.