The lost decade of wages

 

Why do we even have to make the argument that unions are the clearest road to prosperity for workers?

Because we live in a world where the rhetoric of the “free market” has so poisoned logical, fact-based debate that economic policy is now an Orwellian rabbit hole, which drags down even many well-meaning political leaders.

Nowhere is this more apparent than the United States, where union-busting has been raised to an art form, creating the highest poverty level in generations.

Let’s start with some clear-headed, fact-based data from the Economic Policy Institute. EPI dug into the “lost decade”—the last decade—of wages, pegging it to the longer term trend over the last forty years. It’s been a disaster for regular people. Workers’ median wages rose just 10.7 percent between 1973 and 2011.

You can understand what happened just by reading these five points from EPI:

  • The union wage premium—the percentage-higher wage earned by those covered by a collective bargain­ing contract—is 13.6 percent over­all (17.3 percent for men and 9.1 percent for women).
  • Unionized workers are 28.2 percent more likely to be covered by employer-provided health insurance and 53.9 percent more likely to have employer-provided pensions.
  • From 1973 to 2011, the share of the workforce represented by unions declined from 26.7 percent to 13.1 percent.
  • The decline of unions has affected middle-wage men more than any other group and explains about three-fourths of the expanded wage gap between white- and blue-collar men and over a fifth of the expanded wage gap between high school– and college-edu­cated men from 1978 to 2011.

An expanded analysis that includes the direct and norm-setting impact of unions shows that de-unionization can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.

In English: no unions means no wage increases that reflect how hard people have worked.

Now, de-unionization is not like the sun rising in the east and setting in the west. It doesn’t just happen naturally. And that’s exactly the point the good people at the Center for Economic and Policy Research have made right about the same time as EPI’s report.

CEPR wanted to show the obvious: a concerted, vicious campaign by US-based employers over the past 40 years is the cause of the decline in unions, not, as many people would like to argue, a result of globalization, technological change, or, for that matter, any large-scale shift in the public’s support for unions. And CEPR has a great way of proving this theory: comparing what happened in the US to the experience north of the US border in Canada.

What were the experiences of Canadian unionized workers versus US unionized workers?

“For the first half of the 20th century, the U.S. and Canadian unionization rates followed each other closely. But starting around 1960, when both rates were about 30 percent, they began to diverge. While Canada’s rate has held fairly steady since that time, the U.S. rate has plummeted. In 2011, the U.S. rate stood at just 11.8 percent, while it was 29.7 percent in Canada.”

Why? In a nutshell, Canada’s industrial relations law, as well as its culture, meant labor policies were quite different:

“Canada has two labor policies in widespread use that can help explain the differences between the two countries’ unionization rates and how they came to diverge. Firstly, several jurisdictions in Canada have what is called “card-check authorization” as the process for forming unions, whereby a majority of employees at a workplace sign union authorization cards and then submit them to the labor board for verification and to have their union certified. In the United States, on the other hand, petitioning the labor board with signed cards is typically just the first step in the process. Unless an employer chooses to voluntarily recognize a union, an election will be scheduled and held. During the time between the petition and the election, which is often delayed by employer opposition and can last for months, employers usually run anti-union campaigns – often committing illegal acts of coercion, intimidation, or firing – in an attempt to discourage their employees from voting to unionize.”

So:

Compared to Canada, many workers in the U.S. are not able to exercise their right to freely join and form unions and participate in collective bargaining, in large part due to employer opposition, which current labor law fails to adequately address.

This is not surprising.

And what we, then, end up with is predictable: in the US, 46 million people live in poverty, the highest number recorded during the 52 years the US Census Bureau has been tracking that figure; one in five Americans does not have good-paying, full-time work and does not have a reasonable expectation that, at the end of the month, they will end up slightly in the black, not bankrupt, homeless or so deeply in debt that there is no escape.

And, globally, according to the ILO, “about 5.1 billion people, 75 per cent of the world population, are not covered by adequate social security (ILO) and 1.4 billion people live on less than US$1.25 a day (World Bank). Thirty-eight per cent of the global population, 2.6 billion people, do not have access to adequate sanitation and 884 million people lack access to adequate sources of drinking water (UN -HABITAT); 925 million suffer from chronic hunger (FAO); nearly 9 million children under the age of five die every year from largely preventable diseases (UN ICEF /WHO); 150 million people suffer financial catastrophe annually and 100 million people are pushed below the poverty line when compelled to pay for health care (WHO).”

All of that deep, economic depression—one that predates the Global Financial Crisis—can be traced right back to the decline of union power across the globe.