Unions, Norms, and the Rise in American Wage Inequality

Publication Date:
Jan 2011
Project Programs:
Social Inequality

From 1973 to 2007, private sector union membership in the United States declined from 34 to 8 percent for men and from 16 to 6 percent among women. Inequality in hourly wages increased by over 40 percent in this period. We report a decomposition, relating rising inequality to the shrinking weight of the union wage distribution. We also argue that unions helped institutionalize norms of equity reducing the dispersion of nonunion wages in highly unionized regions and industries. Accounting for the effect of unions on union and nonunion wages suggests that the decline of organized labor explains a fifth to a third of the growth in inequality—an effect comparable to the growing stratification of wages by education.

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