From the 1970s until recently, income inequality in the United States rose markedly, real median wages stagnated, and many measures of the strength of the middle class decreased. Over the same period, workers’ bargaining power diminished, a trend that can be seen in steadily declining union membership rates. Strengthening worker power—particularly by supporting unions—could reverse these longstanding trends and improve the wages, benefits, and well-being of the middle class, and bolster the overall U.S. economy. In 1935, the National Labor Relations Act (NLRA) provided federal protections to most private-sector workers seeking to improve working conditions by forming or joining unions.1 Union membership spiked following passage of the NLRA, from 11 percent of the non-agricultural labor force in 1934 to 28 percent in 1939. Unionization rates continued to rise through the 1940s and then leveled off through the mid-1950s at around a third of U.S. workers (Figure 1).2 Figure 1: Union Membership and Inequality 10 12 14 16 18 20 22 24 0 5 10 15 20 25 30 35 40 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 Percent Percent Year Income Share of Top 1% (right axis) Union Membership Rate (left axis) Source: Union membership data through 1994 from Farber et al. (2021) and Freeman (1998). After 1995, union membership data is from the CPS and reflects the percent of employed civilian labor force aged 16+ that are a member of a union. Top income share is from the World Inequality Database. At that time, the shares of Americans graduating high school and attending college were rising rapidly, and the proportion of American children who could expect to earn more than their parents was higher than it is today.3 1 29 U.S.C. §§ 151–69 2 Farber, Henry S., Daniel Herbst, Ilyana Kuziemko, and Suresh Naidu. 2021. “Unions and Inequality over the Twentieth Century: New Evidence from Survey Data.” The Quarterly Journal of Economics 136 (3): 1325–1385; Freeman, Richard B. 1998. “Spurts in Union Growth: Defining Moments and Social Processes.” In The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, edited by Michael D. Bordo, Claudia Goldin, and Eugene N. White, 265–296. Chicago: University of Chicago Press; U.S. Bureau of Labor Statistics. n.d. Current Population Survey (CPS) – Union Affiliation Data. Last accessed March 15, 2023. https://beta.bls.gov/dataViewer/view/timeseries/LUU0204899600; World Inequality Database. n.d. Top 1% Share – Pre-tax National Income for the USA. Last accessed March 15, 2023. https://wid.world/data/. 3 Chetty, Raj, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, and Jimmy Narang. 2017. “The fading American dream: Trends in absolute income mobility since 1940.” Science 356 (6336): 398–406. Labor Unions and the Middle Class 5 Despite pervasive racial and gender discrimination, in the mid-1950s, overall income inequality was close to its lowest level since its peak before the Great Depression. Since the passage of the Taft-Hartley Act in 1947, the legal framework protecting workers’ rights to organize has eroded, and employers have capitalized on that erosion by opposing unionization attempts and reducing union representation.4 Consequentially, union membership rates have been steadily shrinking.
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