When Unions Were Strong, The Lowest Earners Were Much Better Off

In 1950, America was a very different place. Bobby socks, and uh, socially acceptable white supremacist terrorism. On the upside: Unions were strong as hell, and nobody benefited more from that than those at the bottom.

A new NBER research paper uses a rich and detailed new set of data about workers thousands of workers in six different cities across America in 1950. This was close to the all-time peak for union strength in our country, when post-war political and labor trends had driven almost 30% of the national work force to become union members. It therefore is a perfect historical period of history to study in order to answer the question: What can unions do for workers? Today, we live at a time of paltry union membership and extremely high economic inequality; in 1950, by contrast, the researchers note that “the high point of American unions coincided with the low point of American wage inequality in the twentieth century.”

It is not news that the decline of union membership is tied to the rise in economic inequality. Weaker unions mean less bargaining power for the working class which has resulted in a decline in the labor share of income. What this paper does is to look with a new level of accuracy at what effect high levels of unionization had on inequality, at different levels of earnings. And if you care at all about finding ways to build a decent floor for the lowest-wage workers in our country, and about finding ways to shrink our enormous levels of wealth inequality, this finding is instructive: the data showed that unions in 1950 had their strongest positive effects on the lowest earners.

The largest union wage gaps [between union and non-union workers] appear at the bottom of the wage distribution, and they were larger for African Americans and for less-educated men… A “no unions” counterfactual wage distribution, which imposes the non-union wage structure on union workers and combines that distribution with the actual distribution for non-union workers, is substantially more unequal than the actual overall wage distribution.

It’s common fucking sense! Unions serve to shrink the gap between rich and poor workers, both curbing, at least somewhat, excessive pay at the top (by increasing labor’s collective power to take a bigger piece of the pie) and by curbing excessively low pay at the bottom (by setting reasonable floors for the lowest-earning members). Is this some communist fantasyland? No, it is the United States of America during the Good Old Days that Republicans are always acting like they want to return to. This is what made them golden, motherfuckers?

Sayeth the authors: “Our historical interpretation is that in the wake of the Great Depression, workers sought and policymakers delivered institutional reforms to labor markets that promoted unions, reduced inequality, and helped lock in a relatively narrow distribution of wages that lasted for a generation.” Huh, a mass social movement applying political pressure to elected leaders who in turn passed laws that addressed the problems at hand? How could we ever return to such a utopia? Might as well give up.