The Arc of Inequality

crossposted from Dissent

If pressed to reduce the last century of economic history into one graphic, I would go with something like this. The blue line traces the rise and decline of organized labor since the end of the First World War. The red line, in an uncanny reflection, traces the income share of the richest 10 percent of Americans. The drop-down menus, offering other union density and income-share metrics, serve up variations on the same theme: as union power has declined, so too has the share of national income going to wages and salaries, and to the bottom and middle of the income spectrum.

There are, of course, a lot other things going on here. The heyday of shared prosperity (the middle years of the last century, where the two lines converge) depended on a more elaborate policy framework. While federal support for collective bargaining rights sustained a surge in labor organization, other political innovations of the New Deal (including social security and the minimum wage) secured a floor for working-class incomes. Postwar social movements girded that floor by closing off avenues for discrimination. The tax system and regulatory obstacles to speculative finance erected something of a ceiling for higher incomes. And substantial public investments (in things like the GI Bill, mortgage subsidies for veterans, housing projects, and the interstate highway system) kept the rest of the structure in pretty good repair. Since then, to put it bluntly, we’ve pretty much torn the whole house down.

On this score, union decline is—for a number of reasons—a pretty good marker for the broader dismantling of the New Deal. First, the policies driving and shaping inequality across the last generation—steep cuts in social spending, the political abandonment of organized labor, deregulation and privatization, tax cuts, and punitive cycles of unemployment—shared a common goal: to redistribute income upward by eroding the hard-fought bargaining power of ordinary Americans. Union losses account for a large chunk of rising inequality, especially for men and especially in the 1970s and 1980s.

Second, union losses have also shaped the political environment. The “right-to-work” push of the 1940s, the business offensive of the 1970s (captured in Lewis Powell’s infamous 1971 memo to the Chamber of Commerce), and the attack on public sector unions in recent years all shared the conviction that union power needed to be checked at the bargaining table and at the ballot box. Representing a third of the private workforce, mid-century unions fought and won battles over trade, workplace safety, social policy, and civil rights. With union membership at 6.6 percent of the private labor force in 2012 and falling, those battles are no longer even taking place.

And third, union decline has fed broader inequality because, in the American context, so much is at stake at the bargaining table. In settings where workers (and employers) can count on a decent minimum wage, universal health care, and expansive public retirement accounts, the stakes of private employment (and collective bargaining) are not that high. In the United States, economic security remains shackled to private job-based benefits that are increasingly elusive (or expensive), and public policies are crafted and calibrated as supplements—or as reluctant and lean alternatives.

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