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The Erosion of Collective Bargaining Has Cost Middle-Wage Workers Thousands of Dollars Each Year

New report shows that deunionization has fueled the growth of wage inequality

WASHINGTON - A new EPI report finds that the erosion of collective bargaining lowered the median hourly wage by $1.56, a 7.9% decline from 1979 to 2017. These losses from deunionization are the equivalent of $3,250 annually for a full-time, full-year worker. The decline hit men the hardest given they were more likely to be in unions than women in 1979: The median hourly wage of men fell $2.49 because of eroded collective bargaining, which translates into a loss of $5,171 for a full-time, full-year worker.

The report—authored by EPI Distinguished Fellow Lawrence Mishel—further shows that declining unionization explains 33% of the growth of the wage gap between high- and middle-wage earners between 1979 and 2017, by suppressing the wages of middle-wage earners while having little impact on high earners at the 90th percentile.

“For decades, the erosion of collective bargaining was a major factor depressing wage growth for the typical worker and driving the growth of wage inequality. But this decline of unions wasn’t inevitable—it was a deliberate policy choice made on behalf of wealthy interests and corporations, and it can be reversed,” said Mishel. “Rebuilding collective bargaining is a necessary component of any policy agenda to reestablish robust wage growth for the vast majority of workers in the United States.”

The share of workers covered by a collective bargaining agreement dropped from 27.0% in 1979 to just 11.6% in 2019, as aggressive corporate practices and changes in legal interpretations undercut the ability of workers to organize and bargain despite historic interest in forming unions.

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This decline has been especially harmful to men’s wages because men were far more likely than women to be unionized in 1979, when 31.5% of men were covered by collective bargaining versus 18.8% of women. However, current trends show that broadening unionization would benefit women at least as much as men.

This impact of deunionization is due to both the direct effect on wages of union workers and the “spillover” effect on wages of nonunion workers—nonunion wages are higher in occupations and industries when collective bargaining is strong. Collective bargaining increases and equalizes wages for union workers.

“Unions disproportionately benefit workers with low and moderate wages, workers with lower levels of education, and Black and Brown workers. Collective bargaining not only benefits union workers, but nonunion workers as well by raising wage standards across industries,” said Mishel. Policymakers, he stressed, “must urgently restore workers’ freedom to form a union, and that includes passing the Protecting the Right to Organize Act.”

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The Economic Policy Institute, a nonprofit Washington D.C. think tank, was created in 1986 to broaden the discussion about economic policy to include the interests of low- and middle-income workers. Today, with global competition expanding, wage inequality rising, and the methods and nature of work changing in fundamental ways, it is as crucial as ever that people who work for a living have a voice in the economic discourse.

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