Labor Unions and the U.S. Economy
August 28, 2023
By Laura Feiveson, Deputy Assistant Secretary for Microeconomics
Today, the Treasury Department released a first-of-its-kind report on labor unions, highlighting the evidence that unions serve to strengthen the middle class and grow the economy at large. Over the last half century, middle-class households have experienced stagnating wages, rising income volatility, and reduced intergenerational mobility, even as the economy as a whole has prospered. Unions can improve the well-being of middle-class workers in ways that directly combat these negative trends. Pro-union policy can make a real difference to middle-class households by raising their incomes, improving their work environments, and boosting their job satisfaction. In doing so, unions can help to make the economy more equitable and robust.
Over the last century, union membership rates and income inequality have diverged, as shown in Figure 1. Union membership peaked in the 1950s at one-third of the workforce. At that time, despite pervasive racial and gender discrimination, overall income inequality was close to its lowest level since its peak before the Great Depression, and was continuing to fall. Over the subsequent decades, union membership steadily declined, while income inequality began to steadily rise after a trough in the 1970s. In 2022, union membership plateaued at 10 percent of workers while the top one percent of income earners earned almost 20 percent of total income.
Figure 1: Union Membership and Inequality
Source: Union membership data through 1994 from Farber et al. (2021) and Freeman (1998). After 1995, union membership data is from the CPS and they reflect percent of employed civilian labor force aged 16+ that are a member of a union. Top Income Share is from World Inequality Database, wid.world
Read the rest of this article here: https://home.treasury.gov/news/featured-stories/labor-unions-and-the-us-economy
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