Examining the links between rising wage inequality and the decline of unions

The correlation between unions and economic inequality is well-documented, but has the decline of unions led to increasing inequality, or can this be explained by skill-biased technical change? As Equitable Growth Economist Kate Bahn writes in a new column (opens in a new tab) for Slate, new research (opens in a new tab) published via the National Bureau of Economic Research finds that “while education and skills training matter to worker productivity, they’re not sufficient to ensure economic security without workers’ power to bargain for better wages too.”

Princeton University economists Henry Farber, Daniel Herbst, and Ilyana Kuziemko, and Columbia University economist and Equitable Growth grantee Suresh Naidu (opens in a new tab) used survey data compiled from a variety of historical sources to explore rising and declining union density throughout the 20th century. What they found was that increasing returns to education do not adequately explain inequality, but the decline of union density does.

Says Bahn in her column in Slate: “Promoting education as the tool to overcoming economic inequality is convenient because it puts the onus on individuals to pull themselves up by their bootstraps and doesn’t call into question structures and barriers that limit economic opportunity.” She adds that “providing opportunity to American families will require a robust labor movement that balances corporate power and pushes back against the wage stagnation affecting most workers.”

Read the full column on Slate: “Education Won’t Solve Inequality (opens in a new tab).”