Between 1979 and 2013, the share of private sector workers in a union has fallen from about 34 percent to 10 percent among men, and from 16 percent to 6 percent among women. The decline in unions has not only hurt workers who would be in those unions, but it has hurt nonunion workers’ wages as well.
This decline in union density 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.
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. Moreover, unions set industry-wide norms, influencing what is seen as a “moral economy.”
Working class men have felt the decline in unionization the hardest. 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.
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. However, women’s wages would be 2 to 3 percent higher if unions had stayed at their 1979 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. 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.