Unions, Norms and the Rise in American Earnings Inequality

From 1972 to 2006, union membership among U.S. men working full-time in private-sector jobs declines from 33 to less than 10 percent.  Inequality in men's hourly wages earning increased by 40 percent in this same period.  We study the effect of deunionization on rising inequality, with a variance decomposition that accounts for how unions raise average earnings and also reduce inequality in earnings among union workers.  Going beyond earlier research, we also argue, that unions reduce inequality by establishing norms for fair wages, reducing the dispersion of wages in the nonunion sector.  Accounting for the effect of unions on the wages of union members and the effect of unions on nonunion wage norms suggests that union decline explains one third of the growth in inequality-an effect equal to the growing stratification of earnings by education.

Read the paper to be presented during this seminar, co-authored with Jake Rosenfeld, University of Washington-Seattle.

Learn more about Bruce Western.

Jointly sponsored by the Population Studies Center, Institute for Social Research, University of Michigan.
 

• DEI