Do unions make wages more equal?

There are many factors that contribute to today’s wage inequality, including automation, globalization and the shift from a manufacturing to a service and technology economy, which has spawned high-paid, high-skilled tech jobs while eroding middle-class jobs. 

Some researchers point to one additional factor: the decline of unions. A 2018 study from Princeton University found that the erosion of America’s labor unions contributed to at least 10% of the widening gap between rich and poor. At labor’s peak in the 1950s, wealth inequality was at its lowest point in the previous century. But union membership and bargaining power declined over the next 70 years. A 2011 study suggested the disappearance of unions widened the economic divide between low-wage and high-wage earners by 33% for men and 20% for women. 

Would increasing the share of union participation in the private workforce shrink today’s wealth gap? The Princeton study theorizes that it would by lifting those at the bottom up: “When unions expand, whether at the national level or the state level, they tend to draw in unskilled workers and raise their relative wages, with significant impacts on inequality.”

Businesses, however, worry that greater union power will impede profits and growth, restricting job opportunities for workers. Research does support that concern, with one study finding unionization slowed job growth in California companies by 4%. 

In March 2020, California’s Future of Work Commission sided with the former theory, proposing unionization to combat wealth inequality. It found unionization is a more effective way to reduce poverty than even earning a college degree. “While the probability of low-wage employment is reduced by 33% if a worker has a college degree, it is reduced by 39% if a worker is a member of a union,” commissioners wrote. 

-Jesse Bedayn