Research

August 10, 2011

Decline in unions accounts for one-third of the growth in wage inequality among male, private sector workers

Education is a frequently cited factor in wage differences between low- and high-paid workers. But a new study co-authored by a UW sociologist shows that unions have as much a role in equalizing earnings, and that balancing force influences pay for nonunion workers.

“For generations, unions were the core institution advocating for a more equitable wage distribution,” said Jake Rosenfeld, UW assistant professor of sociology, in a news release. “Today, when unions – at least in the private sector – have largely disappeared, that means this voice for equity has faded dramatically. People now have very different ideas about whats acceptable.”

With co-author Bruce Western, a sociology professor at Harvard University, Rosenfeld analyzed wage and salary data compiled from 1973 to 2007 by the Current Population Survey, administered by the Bureau of Labor Statistics. The monthly survey samples about 60,000 households across the country.

The study, published in the August issue of American Sociological Review, shows that from 1973 to 2007, private-sector union membership slipped from 34 percent to 8 percent among men and from 16 percent to 6 percent among women.

Deunionization and differences in education each accounted for 33 percent of the rise in wage inequality among men. Among women, who tend to make up less of the unionized workforce, deunionization accounted for about 20 percent of the increase in wage inequality and education accounted for 40 percent.

The sociologists said that most studies of wage inequality focus on the effects of educational stratification, which are pay differences based on education. Their study shows that unions have a role, too.

“Rising returns to education are still a driving force in wage inequality,” Rosenfeld said. “But our study shows that the effect of union decline on union and nonunion wages explains one third of the growth in male wage inequality over the past 40 years.”

The researchers also found that influence of unions on wages applies to nonunion workers if theyre in highly unionized industries. This is partly because nonunion employers will raise wages to the union level to discourage unionization.

Since unions started to decline before 1973, when the Current Population Survey first included questions on union membership, the study likely underestimates the influence of union decline on wage inequality, Rosenfeld said. Deunionization began in the late 1950s, he said, and became even more severe in the 1970s and 1980s.

“Union decline is wrapped up in wage stagnation and growing income polarization,” Rosenfeld said. “I hope that deunionization becomes a bigger part of the discussion of wage inequality.”

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