RISING WAGE INEQUALITY: Conclusions

th_zasedanieThe primary objective of this paper is to re-assesses the connection between declining unionization and widening wage inequality using data for men and women from the early 1970s and early 1990s. The evidence points to three main findings on this issue. First, since the fraction of women belonging to unions has been relatively stable over the past two decades, shifts in unionization explain virtually none of the rise in overall wage inequality among female workers. Second, the decline in union membership among men explains a modest share — no more than 15-20 percent — of the rise in overall male wage inequality. Third, within the public sector, rising unionism has been a significant force in forestalling rising wage inequality among both men and women. For men, the differences in trends in union membership between the public and private sectors can explain 50-80 percent of the slower growth in public sector wage inequality relative to the private sector. For women a similar calculation shows that differences in unionism can explain 20-30 percent of the difference in the growth of wage inequality between the sectors.

A secondary goal of the paper is to develop a deeper understanding of union membership patterns and union wage effects in the labor market as a whole and in the public and private sectors. As late as 1974, union membership in the U.S. economy was concentrated among men with average or slightly below-average education working in the private sector. Today, the highest union membership rates occur for highly-educated women in the public sector. Despite this dramatic shift, an important characteristic of unions — their tendency to raise wages more for workers with lower measured skills ~ has persisted. Indeed, there has been remarkable stability in the structure of union-nonunion wage gaps across different skill groups over the past 25 years. A comparison of union relative wage structures in the public and private sectors suggests that unions exert about the same effect on different skill and gender groups in the two sectors, and that despite the shifts in union membership, the structure of union relative wage effects is about the same in the mid 1990s as in the mid 1970s.

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