Union Decline Hurting Nonunion Wages, EPI Says

By Llewellyn Hinkes-Jones

Sept. 15 — A decline in unionization rates has led to lower wages for nonunion workers over the past three decades, according to a new report from the labor-affiliated Economic Policy Institute.

The analysis shows that nonunion wages are measurably higher in industry-regions with higher unionization rates, and that union decline has exacerbated wage inequality for both unionized and nonunionized workers.

That decline has been particularly felt by men in the private sector who lack a college education and don't belong to a labor union. For all nonunion private-sector men, EPI estimates this translates into an annual wage loss of $109 billion.

Previous explanations for wage trends focused on globalization, technological change, and the slowdown in Americans’ educational attainment. But wage declines in certain industries isolated from larger globalization and technology changes helps prove the effect of de-unionization, report co-author Jake Rosenfeld said.

“Otherwise, we wouldn't expect to see such dramatic effects in construction, transportation, and other domestic industries like grocery retailing. That union decline is so strongly correlated with the erosion of nonunion wages in these industries, I believe, is compelling evidence that unions should be viewed as a major driver of wage trends among nonunion workers,” he told Bloomberg BNA. Rosenfeld is associate professor of sociology at Washington University in St. Louis.

The report describes unions as affecting nonunion workers through resistance to offshoring and outsourcing, threat of unionization in wage negotiations, and upward wage adjustments. Increases in wage floors push other wages up in a ripple effect to maintain wage differentials between positions, the authors say.

Union Role Exaggerated?

Aparna Mathur, a resident scholar in economic policy with the conservative American Enterprise Institute, said the findings were insignificant compared with larger economic factors contributing to the decline in manufacturing jobs, such as globalization and offshoring.

“The report makes unions out to have a much bigger role than they do. They haven’t been a bulwark against these macroeconomic forces,” she told Bloomberg BNA.

She criticized the report for not focusing on job creation, which plays a much larger role than wage increases. While unions can negotiate higher wages, they can’t force employers to remain, keep jobs, or make companies more productive, Mathur said.

“If wages were so important, you would see more people flocking to unions. Instead, unions are declining, and companies are moving to areas with right-to-work laws and lower unionization rates,” she added.

To contact the reporter on this story: Llewellyn Hinkes-Jones in Washington at ljones@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

For More Information

Text of the report is available at http://src.bna.com/iCw.

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