Median Worker Makes $3,250 Less Per Year Than in 1979 Due to Decline in Unions

As unionization and collective bargaining have declined in the U.S., wages have also declined for the average worker over the past four decades, finds a new report by the Economic Policy Institute (EPI) released Thursday.

“A major factor depressing wage growth for middle earners and driving the growth of wage inequality over the last four decades has been the erosion of collective bargaining,” wrote Lawrence Mishel of EPI. For the average worker, the decline in unionization has led to a decrease in wages of $1.56 per hour worked, or the equivalent of $3,250 less per year. This is a 7.9 percent decrease from 1979 to 2017.

Because men were more likely than women to be part of a union in 1979, the decline in wages has been worse for men. The median male wage declined $2.49 per hour over the same period, or the equivalent of $5,171 a year.

Since 1983, the first year that the Bureau of Labor Statistics (BLS) began recording union data comparably, the proportion of workers in a union has fallen by nearly half. Whereas in 1983, the union membership rate was 20.1 percent, the rate in 2020 was only 10.8 percent, according to BLS.

Decreasing union membership has also caused an increase in the wage gap between the upper- and middle-classes, finds EPI. Deunionization is responsible for a large part of the growth of the wage gap between those in the 90th percentile of earners and the 50th percentile over the past four decades. “Deunionization has this result because it depressed the wages of middle-wage earners but had little impact on high-wage earners at the 90th percentile,” writes EPI.

Wage inequality between nonwhite and white people has also increased as a result of declining unionization, writes Mishel. Nonwhite people benefit the most from unions due to a higher likelihood of their being employed in low-wage jobs.

The long-term decline in union membership in the U.S. is a result of laws like the Taft-Hartley Act of 1947, which enacted restrictions on unions, many of which still exist. A 2018 court case, Janus v. AFSCME Council 31, also weakened unions by declaring it unconstitutional for unions to require fees for collective bargaining. The decline in unionization isn’t for lack of interest among workers — as EPI points out in a different report — because a higher proportion of nonunion workers say they would vote for a union than nonunion workers from 40 years ago did.

Instead, the decline of unions in the country can be attributed largely to strong corporate opposition to unionization. As has been demonstrated countless times over the past years, and especially publicly so by Amazon recently, corporations have been empowered by weak labor laws to pull out all stops, including illegally firing workers and spending millions of dollars to stop unionization efforts.

Though these companies may face penalties from the National Labor Relations Board (NLRB) for violating labor laws, the penalties are often no more than a slap on the wrist for large multinational corporations.

Aside from the decline of unions in the U.S., EPI writes, “the only factor more responsible for weak wage growth for the typical worker is the excessive unemployment perpetrated by central bank policymakers’ high interest rate policies and fiscal austerity.”

Declining unionization and erosion of collective bargaining is especially pronounced in the U.S. In European countries like Sweden, Denmark and Finland, by contrast, union membership hovers around 65 percent; in Iceland, 92 percent of workers were in a union as of 2018. And in countries with lower union membership like France, where only 10 percent of workers were in a union in 2018, nearly 100 percent were covered by collective bargaining agreements, wrote Pacific Standard.

One solution to declining union membership could be the Protecting the Right to Organize Act, or PRO Act, which was passed in the House last month. The PRO Act makes it easier for workers to unionize by, among other provisions, giving the NLRB more authority to punish companies for breaking labor laws. It also contains a provision to override so-called “right-to-work” laws that weaken unions financially.