RISING WAGE INEQUALITY: Unionization and Inequality in the Public and Private Sectors 2

In contrast to the pattern of increasing union membership in the public sector, the data in Table 7 and Figure 5 show uniformly decreasing private sector union rates. On average union rates fell by about 50 percent, with larger declines for younger and less educated workers, but fairly similar declines across regions and in most major industries. The decreases in membership rates for men in construction, manufacturing, transportation, communications, and retail trade are noteworthy because although these industries have experienced somewhat different employment trends over the past 20 years, in each case the union density fell by 40-50 percent. It would be difficult to find support in these patterns for a theory of union decline linked to specific demand-side factors, such as trade or technology shocks, unless these factors happened to affect union rates in all industries equally.


How do unions affect the structure of wages in the public and private sectors? Figures 6 and 7 use the methods underlying Figure 2 to compare the structures of wages among union and nonunion workers in the public and private sectors, while Figures 8 and 9 plot the unadjusted union-nonunion wage gaps by predicted skill decile in the two sectors. Qualitatively, unions seem to exert the same effects on the public and private sector wage structures. The unadjusted union gaps for men in both sectors are largest for the least skilled, and are negative for the most highly-skilled. However, as suggested in the survey by Lewis (1988), the mean union wage gap is smaller for men in the public sector than the private sector.16 Union wage gaps for women in the two sectors have similar levels and very similar patterns across skill groups. (For reference, Appendix Table 1 reports a set of conventional union wage gaps by sector and gender in 1973-4 and 1993).

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