Labor Unions
5:00 am
Fri February 28, 2014

UW Professor Traces Growing Income Gap To The Collapse Of Organized Labor

Income inequality in the U.S. is at its highest point in 85 years, and politicians are debating ways to raise the living standard for low-wage workers. Globalization, technology and deregulation are often cited as factors behind the widening income gap. But Jake Rosenfeld at the University of Washington says there’s one cause that’s often overlooked: the decline of organized labor.

In his new book, titled "What Unions No Longer Do," Rosenfeld explains how organized labor, in its heyday in the 1940s and 1950s, lifted wages for many workers, whether or not they belonged to a union.

“So what that meant is that if you’re a business owner starting a new business in an industry or a region where organized labor is strong, and you have to set pay scales for your set of employees, often times you just look to what your industry leader is doing, so you may be a non-union company but all of a sudden you’re paying union-level wages,” Rosenfeld said.

And the threat of unionization would often prompt employers to pay their employees well as a preemptive move to dissuade them from organizing.

Back then, about one-third of the private sector workforce was unionized. But now, only about 5 percent of the private sector belongs to a union, and Rosenfeld says that means organized labor no longer has the power to lift wages broadly throughout the economy. Instead, unions are on the defensive.

On The Defensive

“Private-sector unions’ role today consists largely of forestalling wage declines among organized workers only,” Rosenfeld wrote.

In fact, employers often use non-union companies as a benchmark nowadays. In the auto industry, Rosenfeld says the pay and benefits of non-union automakers in the south, like Toyota, now are used as comparisons when negotiating union contracts.

Rosenfeld says it’s true that trends such as globalization and technological change have contributed to rising income inequality in the U.S. But he says the income gap has grown much larger in the U.S.

"Globalization [and] technological change occurred across the developed world, yet we lead the world in our inequality rates. So why is the United States distinctive here?” Rosenfeld said. “We had a collapse of organized labor the likes of which haven’t been seen or experienced in our peer nations.”

In recent years, he says organized labor has declined in countries such as the U.K. and Australia, and they’ve experienced rising income inequality. Rosenfeld says Canada, by contrast, has a unionization rate that’s two to three times that of the U.S., but has much lower inequality.

'Things Fell Apart': Loss Of Clout

Another consequence of the collapse of organized labor is diminished political clout. Unions still have quite a bit of money to use to donate for political causes and candidates but not as much as corporations, says Rosenfeld.

In the past, they made up for that with manpower, deploying union members and their relatives to get out the vote.

“With the decline in union rolls, that effect has been reduced pretty drastically,” Rosenfeld said.

One example of that loss of clout was the inability to get the Employee Free Choice Act passed after President Barack Obama was elected. That bill would have made it easier for private-sector workers to organize. Even though Democrats controlled both houses of Congress before the 2010 election and Obama had promised to support the bill while he was campaigning, the effort failed.

“Things fell apart,” Rosenfeld said. “The political support they had counted on just wasn’t there. The president never made a strong push for this piece of legislation, and it’s hard to know why. It would have been deeply, deeply unpopular with the Republican party, and he might have figured he had enough on his plate to deal with at the time.”

Rosenfeld says it’s an example of the diminished influence of organized labor.

“These days in the private sector, if you’re an employer and you’re just dead set against a labor union, there’s almost nothing the workers and the union can do to stop you from preventing a union coming into your company,” he said. “That’s just the state of the field right now.”