We’re a long way out from America’s oft-romanticized Gilded Age, when roughly one-third of the country’s working population belonged to unions in one shape or another, tax rates were much higher than they are now, and when a lot of people tend to think that things were, well, just plain better. So, what’s changed? Well, after 50 or 60 years, a handful of wars, and an almost-unrecognizable new economy, just about everything.
Also, union membership has declined substantially, which has been a major factor in the widening income inequality gulf. That’s according to a new release from The International Monetary Fund, which points a finger at the world’s wealthiest as the main cause.
“Inequality has risen in many advanced economies,” write Florence Jaumotte and Carolina Osorio Buitron, authors of Power From The People, which digs into the relationship between union membership and inequality.
“Largely because of the concentration of incomes at the top of the distribution. Measures of inequality have increased substantially, but the most striking development is the large and continuous increase in the share of total income garnered by the 10% of the population that earns the most.”
One huge contributor to the growth of inequality over the past few decades, the authors found, was the systematic and deliberate dismantling of unions — which typically help raise wages and offer more employment security for workers. “We find strong evidence that lower unionization is associated with an increase in top income shares in advanced economies,” the IMF report says. “Historically, unions have played an important role in the introduction of fundamental social and labor rights. Conversely, the weakening of unions can lead to less redistribution and higher net income inequality.”
While it’s pretty apparent that unions have been demonized in many respects over the past couple of decades, it’s becoming increasingly clear as to why — weakening workers’ organizations is obviously paying off in a big way for those at the top.
Business owners and others in positions of power are obvious going to be at odds with union groups, as the two have always been in a tug-of-war battle for shares of an organization’s profits. That’s nothing new — but what is new is how the country’s top earners have been able to turn public opinion against unions, and have even passed laws that have stripped away collective-bargaining rights, fundamentally weakening workers’ groups, and making them less effective.
Clearly, this has worked in favor of business owners and those on the high-end of the earning scale, and have negatively impacted wages for the working class. It’s also why so many big businesses fight very hard to keep unionization from occurring within their own employee ranks, with companies like Wal-Mart and McDonald’s being two of the most high-profile examples. If both of those companies were to allow their employees to unionize and collectively bargain for higher wages and additional benefits, it would eat into profit margins, and ultimately come out of the pockets of shareholders and company leadership.
The easy solution, then, is to stop unionization in its tracks and chip away at the population’s confidence in labor groups.
That’s not to say that unions don’t have their problems — they can be detrimental to the growth of some businesses, causing jobs to be shipped overseas, as we’ve seen with many manufacturing positions. Also, they can catch the ire of the public by going on strike, as seen most recently with the west coast port shut downs caused by striking longshoreman. Those actions cost the economy big bucks, and though they might be effective, do hurt union’s perception in the public eye.
As with anything, unions come in many shapes and forms, and some are positive forces for change in the business world, while others devolve into other things. But it’s clear that the elite have been able to focus the public’s attention on the negatives, and use that to weaken overall union membership over the course of many years. That process has, again, paid off in spades. The problem is that when there is less money going to workers, inequality grows.
Dropping rates of union membership aren’t the only factor perpetuating the inequality cycle, not by a long shot. But it is a piece of the puzzle.