In a new report by the Center for American Progress, researchers David Madland and Karla Walter argue that increasing the number of unionized workers in the United States could stimulate the economy. Increasing union rates by just 5% would create $25.5 billion in new wages.
According the authors, the economy is driven primarily by consumer purchasing, which would increase if workers had more money. They cite the fact that 70% of the nation’s economy revolves around consumer spending, which has declined as workers have lost money in the current economy.
Unions Key to Increasing Wages
The best way to remedy this problem is to increase employee wages, which can be done by expanding the number of workers in unions. The authors argue that the since the 1980s workers purchasing power has declined even as productivity–along with corporate profits–have grown.
The report argues that unions were responsible for the growth of the middle class in the mid-1900s:
“Unions paved the way to the middle class for millions of American workers and pioneered benefits such as paid health care and pensions along the way”
Unions–which fought for their members interests–organized to tie wage increases to productivity growth:
“Workers helped the economy grow during this time period by becoming ever more productive, but they received only a small share of the new wealth they helped create. Throughout the middle part of the 20th century–a period when unions were stronger–American workers generated economic growth by increasing their productivity, and they were rewarded with higher wages. But this link between greater productivity and higher wages has broken down.”
However, while productivity has increased, wages have grown slowly:
“Prior to the 1980s, productivity gains and workers’ wages moved in tandem: as workers produced more per hour, they saw a commensurate increase in their earnings. Yet wages and productivity growth have decoupled since the late 1970s. Looking from 1980 to 2008, nationwide worker productivity grew by 75.0 percent, while workers’ inflation-adjusted average wages increased by only 22.6 percent, which means that workers were compensated for only 30.2 percent of their productivity gains.”
As productivity grows, profits grow, meaning that wage increases could be easily paid for in many industries.
Benefits of being Part of a Union
The report cites numerous benefits for being represented by a union, particularly with regard to wages and health benefits:
- Union workers nationwide are 28.2 percent more likely to be covered by employer-provided health insurance
- Union workers are 53.9 percent more likely to have employer-provided pensions
- Over the four-year period between 2004 and 2007, unionized workers’ wages were on average 11.3 percent higher than non-union workers with similar characteristics.
The report further argues that wage increases would likely spread to non-unionized workplaces as well, as companies would likely try to match union salaries to avoid unionization and to match what competitors offer.
Increases could be Won through Employee Free Choice Act
The authors say that a significant increase in the number of unionized workers could be achieved if Congress passes the Employee Free Choice Act. The Employee Free Choice Act is legislation currently pending before Congress that would make it easier for workers to form unions. The authors write:
“Workers attempting to unionize currently face a hostile legal environment and are commonly intimidated by aggressive anti-union employers. The Employee Free Choice Act would help workers who want to join a union do so by ensuring fairness in the union selection process.”
Current labor laws give employers a number of advantages–via codified and extra-legal but rarely prosecuted tactics–that enable them to prevent workers from forming unions.