Shrinking unions
cost nonunion workers $133 billion annually in lost wages
Economic Policy
Institute
In
the new report, Union decline lowers wages of nonunion workers: The overlooked reason why wages are
stuck and inequality is growing, Washington
University sociologist Jake Rosenfeld and co-authors find that the dramatic
decline in union density since 1979 has resulted in far lower wages for
nonunion workers, an impact larger than the 5 percent effect of globalization
on their wages found in recent research.
Specifically,
nonunion men lacking a college degree would have earned 8 percent, or $3,016
annually, more in 2013 if unions had remained as strong as they were in 1979.
Between 1979 and
2013, the share of private sector workers in a union has fallen from about 34
percent to 11 percent among men, and from 16 percent to 6 percent among women.
The
authors note that unions keep wages high for nonunion workers for several
reasons: union agreements set wage standards and a strong union presence
prompts managers to keep wages high in order to prevent workers from organizing
or their employees from leaving.
“Working class
men have felt the decline in unionization the hardest,” said Rosenfeld. “Their
paychecks are noticeably smaller than if unions had remained as strong as they
were almost 40 years ago. Rebuilding collective bargaining is one of the tools
we have to reinvigorate wage growth, for low and middle-wage workers.”
Rosenfeld, along
with co-authors Jennifer Laird and Patrick Denice, find that the effects of
union decline on the wages of nonunion women are not as substantial because
women were not as heavily represented in unionized private sector jobs.
The
authors note, however, that any substantial growth in collective bargaining
would be expected to have as much or more impact on women as men. Specifically,
the authors find that women’s wages would be 2 to 3 percent higher if unions
had stayed at their 1979 levels.
Their
study also reveals that private sector nonunion men of all education levels
would earn 5 percent ($52) higher weekly wages in 2013 if private-sector union
density (the share of workers in similar industries and regions who are union
members) remained at its 1979 level, an increase of $2,704 in annual paychecks
for full-time employees.
This is the
first study providing a broad estimate of the wage decline for nonunion workers
as the result of the erosion of unions.
This decline in
unions has eroded wages for nonunion workers at every level of education and
experience, costing billions in lost wages. For the 32.9 million full-time
nonunion private sector women and 40.2 million full-time private sector men,
there is a $133 billion loss in annual wages because of weakened unions.
Given
dramatically weakened unions, their effect on nonunion wages has declined over
time: these effects have fallen to between one-half and two-thirds of their
late-1970s levels.
Union decline
has exacerbated wage inequality in the United States by dampening the pay
of nonunion workers as well as by eroding the share of workers directly
benefiting from unionization:
Union erosion can explain a third of the growth of wage inequality among men and one-fifth of the rise of wage inequality among women. At least for middle-wage men, the impact of the erosion of unions on the wages of both union and nonunion workers is likely the largest single factor underlying wage stagnation and wage inequality.
“Unions have
functioned to raise the wages of all workers, union and nonunion,” said
Lawrence Mishel, EPI President. “The erosion of collective bargaining has clearly
taken a huge toll on nonunion wages in the United States, and is a major factor
in the wage stagnation of the last four decades.”
Download
PDF copy of the full report