Fact Sheet | Unions and Labor Standards

The Benefits of Collective Bargaining: An Antidote to Wage Decline and Inequality

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Wages have been stagnant for a generation despite sizable increases in overall productivity, incomes, and wealth. For instance, our nation’s output of goods and services per hour worked (productivity, net of depreciation) grew 64 percent from 1979 to 2014, while the inflation-adjusted hourly wage of the typical worker rose by just 6 percent.1 The single largest factor suppressing wage growth for middle-wage workers has been the erosion of collective bargaining.

  • The decline of collective bargaining has affected nonunion workers in industries or occupations that previously had extensive collective bargaining because their employers no longer raise wages toward the union-set standard as union membership rates decline.
  • The decline of collective bargaining through its impact on union and nonunion workers can explain one-third of the rise of wage inequality among men since 1979, and one-fifth among women.2

American workers want unions

We know that many more workers want collective bargaining than are able to benefit from it—and that the desire for collective bargaining has increased greatly since the 1980s.3 For instance, polling in 2005 showed that a majority of nonunion nonmanagerial workers would vote for union representation if they could. In contrast, polling in the mid-1980s suggested that roughly 30 percent of nonunion nonmanagerial workers would have voted for union representation. The bottom line is that if workers (both union and nonunion) were provided the union representation they desired in 2005, the nonmanagerial workers’ unionization rate would have been about 58 percent. The gap between actual and desired union representation is far higher in the United States than in other advanced nations.

Why is union membership in decline?

In the last two decades, private-sector employer opposition to workers seeking their legal right to union representation has intensified. Compared with the 1990s, employers are more than twice as likely to use 10 or more tactics in their anti-union campaigns, with a greater focus on more coercive and punitive tactics designed to intensely monitor and punish union activity. Employers have increased their use of more punitive tactics (“sticks”) such as plant closing threats and actual plant closings, discharges, harassment, disciplinary actions, surveillance, and alteration of benefits and conditions. At the same time, employers are less likely to offer “carrots,” such as granting of unscheduled raises, positive personnel changes, inducements, special favors, social events, promises of improvement, and employee involvement programs.4

The benefits of collective bargaining are significant

  • The union wage premium—the percentage-higher wage earned by those covered by a collective bargain­ing contract, adjusted for workers’ education, age, and other characteristics—is 13.6 percent over­all.
  • Unionized workers are 28.2 percent more likely to be covered by employer-provided health insurance and 53.9 percent more likely to have employer-provided pensions, and also enjoy more paid time off with their families.
  • Collective bargaining raises the wages and benefits more for low-wage workers than for middle-wage workers and least for white-collar workers, thereby lessening wage inequality.
  • Collective bargaining also raises wages and benefits more for black, Asian, Hispanic, and immigrant workers, thereby lessening race/ethnic wage gaps.
  • The decline of unions has affected middle-wage men more than any other group and explains about three-fourths of the expanded wage gap between white- and blue-collar men and over a fifth of the expanded wage gap between high school– and college-edu­cated men from 1978 to 2011.5

Collective bargaining and the productivity–wage gap

  • The states where collective bargaining eroded the most since 1979 had the lowest growth in middle-class wages and the largest gap between rising productivity growth and middle-class wage growth.6

Decline in union membership and the squeeze on the middle class

As union membership rates have declined, so has the share of income enjoyed by the middle 60 percent of households, as shown in the below figure.

Union membership rate and share of income going to the middle 60% of families

Union membership rate Share of overall income received by middle 60%
1917 11.0%
1918 12.1%
1919 14.3%
1920 17.5%
1921 17.6%
1922 14.0%
1923 11.7%
1924 11.3%
1925 11.0%
1926 10.7%
1927 10.6%
1928 10.4%
1929 10.1%
1930 10.7%
1931 11.2%
1932 11.3%
1933 9.5%
1934 9.8%
1935 10.8%
1936 11.1%
1937 18.6%
1938 23.9%
1939 24.8%
1940 23.5%
1941 25.4%
1942 24.2%
1943 30.1%
1944 32.5%
1945 33.4%
1946 31.9%
1947 31.1% 52.0%
1948 30.5% 52.6%
1949 29.6% 52.7%
1950 30.0% 52.8%
1951 32.4% 53.4%
1952 31.5% 53.1%
1953 33.2% 54.4%
1954 32.7% 53.7%
1955 32.9% 53.8%
1956 33.2% 54.1%
1957 32.0% 54.6%
1958 31.1% 54.4%
1959 31.6% 54.0%
1960 30.7% 54.0%
1961 28.7% 53.2%
1962 29.1% 53.7%
1963 28.5% 53.8%
1964 28.5% 53.7%
1965 28.6% 53.9%
1966 28.7% 54.0%
1967 28.6% 53.2%
1968 28.7% 53.8%
1969 28.3% 53.8%
1970 27.9% 53.6%
1971 27.4% 53.4%
1972 27.5% 53.3%
1973 27.1% 53.4%
1974 26.5% 53.7%
1975 25.7% 53.8%
1976 25.7% 53.8%
1977 25.2% 53.6%
1978 24.7% 53.5%
1979 25.4% 53.2%
1980 23.6% 53.6%
1981 22.3% 53.5%
1982 21.6% 52.9%
1983 21.4% 52.9%
1984 20.5% 52.7%
1985 19.0% 52.2%
1986 18.5% 51.9%
1987 17.9% 51.5%
1988 17.6% 51.4%
1989 17.2% 50.8%
1990 16.7% 51.2%
1991 16.2% 51.4%
1992 16.2% 51.0%
1993 16.2% 48.9%
1994 16.1% 49.0%
1995 15.3% 49.1%
1996 14.9% 48.9%
1997 14.7% 48.6%
1998 14.2% 48.6%
1999 13.9% 48.5%
2000 13.5% 47.9%
2001 13.5% 48.0%
2002 13.3% 48.2%
2003 12.9% 48.3%
2004 12.5% 48.0%
2005 12.5% 47.8%
2006 12.0% 47.5%
2007 12.1% 48.6%
2008 12.4% 48.2%
2009 12.3% 47.9%
2010 11.9% 48.3%
2011 11.8% 47.4%
2012 11.2% 47.3%
2013 11.2% 47.4%
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Source: Data on union density follow the composite series found in Historical Statistics of the United States; updated to 2013 from unionstats.com. Data on the middle 60%'s share of income are from U.S. Census Bureau Historical Income Tables (Table F-2).

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Conclusion

The erosion of collective bargaining has undercut wages and benefits not only for union members, but for nonunion workers as well. This has been a major cause of middle-class income stagnation and rising inequality. Yet, millions of workers desire union representation but are not able to obtain it. Restoring workers’ ability to organize and bargain collectively for improved compensation and a voice on the job is a major public policy priority.

Resources

1.  Wage Stagnation in Nine Charts, by Lawrence Mishel, Elise Gould, and Josh Bivens, Economic Policy Institute, 2015

2.  Unions, Inequality, and Faltering Middle-Class Wages, by Lawrence Mishel, Economic Policy Institute, 2012

3.  Do Workers Still Want Unions? More Than Ever, by Richard B. Freeman, Economic Policy Institute, 2007

4.  No Holds Barred: The Intensification of Employer Opposition to Organizing, by Kate Bronfenbrenner, Economic Policy Institute, 2009

5.  Unions, Inequality, and Faltering Middle-Class Wages, by Lawrence Mishel, Economic Policy Institute, 2012

6.  The Erosion of Collective Bargaining Has Widened the Gap Between Productivity and Pay, by David Cooper and Lawrence Mishel, Economic Policy Institute, 2015


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