causes of income inequality, equality

The Causes of Wealth Inequality (20): Weak or Declining Unionization, Ctd.

drowning in money

(source)

Not all countries where income levels are very unequal are also countries where labor unions are weak or in decline; but some are, notably the U.S. For that reason, and because labor unions are generally regarded as forces advocating for a more equitable wage distribution, it’s tempting to see a causal link between declining unionization and increasing income inequality.

There’s a study out which estimates that approximately a fifth of the increase in hourly wage inequality among women in the U.S., and about a third among men, is explained by declining union membership.

Deunionization also increases inequality in sectors where unions have always been weak or absent, because companies in those sectors tended to follow wage levels in unionized sectors as a means to compete with union employers or to discourage unionization. Unions also influenced general government policy – e.g. minimum wage laws – which benefited non-unionized sectors. And, finally, with unions no longer making the general moral case for equality, voices against equality have gained the upper hand.

union density income inequality

(source)

I know it’s only a correlation and hence no evidence of causation, but the correlation is indeed striking:

union membership and minimum wage

(source)

More posts in this series here.

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