Unions and their Effect on Income Inequality

In the United States during the late 1800s workers experienced extremely poor working
conditions. It was not uncommon for workers to be forced to work over 70 hours a week for very small
pay. In response to this injustice, workers began forming unions to push for better working conditions
through collective bargaining. Unions were successful in this task and helped shape many of the labor
laws which exist today. In modern times however, union membership has been steadily decreasing. Part
of this may be due to the fact that unions have been the subject of a lot of debate. Many feel that
unions should be done away with due to corruption and the lower productivity they can sometimes
cause. They feel that the relatively good working conditions of today make unions an outdated
institution. Union supporters argue that unions are needed in order to reduce income inequality.
Although unions have their drawbacks, they are a necessity in order to protect the disappearing middle
class.
Income inequality is quickly becoming a large issue in the United States. The richest people in
the country are currently earning much more than they used to with respect to the middle class. This is
causing the middle class to essentially disappear. According to a Gallup poll in 2015, only fifty-one
percent of Americans considered themselves part of the upper or middle class in while in 2000-2008 this
number was at sixty-one percent (Milligan 2015). If this trend continues, many more Americans will
wind up living in poverty which will have widespread negative effects on the economy as a whole. If the
middle class disappears, many industries will suffer that arent tailored specifically for the rich or the
poor. This will reduce jobs and decrease spending. Josh Bivens, the research and policy director at the
Economic Policy Institute feels that the main cause of this widening of the wealth gap is reduced
bargaining power. Bivens notes that in real terms, the minimum wage is lower than what it was in 1968
while productivity has increased over eighty percent (Milligan 2015). Had union membership been
increasing over this timeframe rather than decreasing, perhaps more workers would have been able to
bargain for higher wages. If this were the case then more of the money gained from economic growth
would be flowing to the pockets of the middle and lower class.
Perhaps it is widely understood that the recent rise in income inequality is an issue, but many
feel that the decline in union membership is uncorrelated. Many feel that the way to solve this issue is
through other means such as cutting taxes, which would in theory lead to more money for businesses to
pay workers and create jobs. Whether this would reduce income inequality remains to be seen.
However, according to Unions, Norms, and the Rise in U.S. Wage Inequality, an article written by
Western and Rosenfeld and published by the American Sociological Review, the decline in organized
labor has accounted for approximately a fifth to a third of the growth in inequality which occurred from
1973 to 2007 (Western and Rosenfeld 2011.) When unions decline, workers lose their leverage to
bargain wages and benefits with their employer. Without the threat of strike, many workers are
hamstringed when it comes to collective bargaining since the employer faces no repercussions for not
giving in to employee demands. This is not to say that all companies treat their employees poorly.
Costco for example, provides all employees with benefits and above average wages. Costco however,
seems to be an exception to the rule rather than the norm. A CEOs main purpose is to raise value for
the shareholder, which means increasing earnings as much as possible. Obviously if the company spends

less on wages, their profit margin will be larger. Thus many companies will pay their employees as little
as possible. Without institutional pressure from unions to raise wages, wages typically will not be raised
at an appropriate rate which is harmful to the average worker.
The Western and Rosenfeld article goes on to mention that in the 70s, many people felt as if
increased minimum wage is more important to keep wages up rather than unions. That may be true,
however without unions it would be exceptionally difficult to get the minimum wage raised. Unions are
very important politically since they comprise of a large amount of voters who typically vote in tandem.
Unions also have enough money to support the candidates who most represent their views. Even with
declining membership numbers, unions remain a political force. In the article Can Labor Still Turn Out
the Vote? by Steven Greenhouse he mentions that last election In union households in Ohio, President
Obama beat Mitt Romney in 2012 by 54 percent to 44 percent among white voters without college
degrees. But in nonunion households, he lost 39 percent to 59 percent among the same voters. These
votes helped Obama salvage a victory in Ohio which is a very important state to win for the general
election (Greenhouse 2016.) Greenhouse also notes that there were very similar results in Wisconsin,
which is also a crucial swing state. Unions can have this effect on elections because they usually
campaign intensely for the candidate they back. They will incessantly make phone calls and go door to
door to union members to try and get all members to vote for the union backed candidate. This usually
means that all members of a union tend to vote together, so if a candidate gets the backing of a union,
they can earn an extremely large number of votes.
Many people feel unions being involved so heavily in politics is not a good thing. While all
workers likely support higher wages for themselves, unions will many times indirectly take stances on
other issues when they back specific candidates. For this reason, many workers who do not support the
other views of the union backed candidate may be turned off from joining a union. Some of the fees
which union members pay go towards collective bargaining, however some other fees also become
campaign donations. One specific instance of this is the ongoing trial of Friedrichs vs California Teachers
Association (Kahlenberg 2016.) In California, non-union members may still have to pay fair share fees
to a union which represents their colleagues. These fair share fees are used to justify non-union
members benefitting from wage increases due to negotiating done by unions. In this trial, Rebecca
Friedrichs has not been paying her fair share fees since she does not support the political leanings of the
California Teachers Association. She feels that she should not be forced to pay money towards an entity
which does not represent her views. While these views are valid, fair share fees are not as large as union
membership fees. One could assume that most of the money from the fair share fees is going towards
collective bargaining- which non-union members should have no moral issue paying for. If non-union
members are receiving benefits from unions in the form of higher wages and more benefits, they should
certainly pay the unions some fee for their work. One way to guarantee all fair share wages are just
going towards collective bargaining would be more transparent spending reports on the unions part. If
they were to transparently report the amount of money which goes towards collective bargaining each
year, this number could be used to calculate fair share fees for the following year. This way all non-union
members would only have to pay the union for the increase of wages and none of the fair share fees
would have to go towards ideologies a non-union member may not support.

Another positive of increased spending transparency would be a decrease in union corruption.

One of the main reasons some people oppose unions is the corruption can go on within them. In an
article from the New York Times titled Scandals Affirm New York as Union Corruption Capital by
Steven Greenhouse, the author outlines many recent instances of corruption in New York City alone.
One of these examples includes leaders of a plumbers union accepting one million dollars in bribes to
negotiate sweetheart deals. Greenhouse also points out the salary of a plumbers union leader being
over one and a half million dollars (Greenhouse 1999.) These occurrences are unacceptable and go
against everything unions stand for. If leaders of unions are becoming millionaires, their interests may
no longer lie with the common worker, which defeats the point of the union. This being said, corruption
is not widespread through all unions and the good which unions do for workers still outweigh the
negatives caused by a few greedy members. Corruption could potentially be addressed by imposing
stricter regulations and more frequent audits.
Another issue some people have with unions is the way which non-union members can be
affected. Many times employers are forced to give jobs to union workers over non-union workers due to
demands made by the unions. This is obviously bad for non-union members since it makes it much more
difficult for them to get work. This system can also be bad for employers since it may not allow them to
hire the best people for a given job. This being said, unions can also have positive effects on the lives of
non-union workers. Historical data indicates unions actually have a positive impact on the wages of nonunion workers (Western and Rosenfeld 2011.) Unions also help non-union workers when they help push
through legislation which improve working conditions for all workers.
While unions have their issues, they are still necessary institutions for ensuring viable wages for
workers. Getting rid of unions completely would only increase income inequality which would result in
much larger issues down the road. With that being said, there are certainly ways which unions can be
improved overall. As mentioned in previous paragraphs, the way in which unions are spending money
should be more transparent. If unions were forced to report spending every quarter then it would be
more difficult for corruption to occur. These spending reports could also show what money is being used
for certain activities. If non-union workers could see that their money was just being used for collective
bargaining, perhaps they would have less of a problem with fair share fees.
Polling non-union workers about why they are not involved in unions would also be a good step
to take in improving unions in the United States. These issues can ideally be resolved by the leaders of
unions across the country, making unions more attractive to non-union workers. If non-union workers
were reduced, many of the issues which go along with partial unionization of the workforce would be
remedied. Perhaps this is easier said than done, however unions would likely be apt to make these
changes if it means more people will join. If more people join unions, they become a more powerful
entity both politically and in terms of bargaining power.
Hopefully regulations such as the ones mentioned above can be made in the near future and
union membership will again begin to increase. Unions are an essential part of democracy since they
ensure the employers cannot take advantage of workers. If union membership was to continue declining

as it has been, it would be incredibly difficult to combat income inequality as well as other issues facing
workers.

Works Cited

Western, Bruce, and Jake Rosenfeld. Unions, Norms, and the Rise in U.S. Wage Inequality. American
Sociological Review (2011): 1-25. Sage Journals. Web. 25 Feb. 2016.
Greenhouse, Steven. "Scandals Affirm New York As Union Corruption Capital." The New York Times. The
New York Times, 14 Feb. 1999. Web. 17 Feb. 2016.
Kahlenberg, Richard. "Strong Unions, Strong Democracy." The New York Times. The New York Times, 11
Jan. 2016. Web. 17 Feb. 2016.
Greenhouse, Steven. "Can Labor Still Turn Out the Vote?" The New York Times. The New York Times, 05
Mar. 2016. Web. 12 Mar. 2016.
Milligan, Susan. "The New Economic Issue." US News. N.p., 1 May 2015. Web. 12 Mar. 2016.