Organized Labor's Check on Rising Economic Inequality in the U.S. States

Abstract

Recent demonstrations of growing economic inequality in the United States raise normative concerns about the political representation of all but the very wealthiest citizens. Building on existing cross-national work on the roles of unions in welfare states, I provide evidence that organized labor, as a political institution, limits unequal income distributions in the U.S. states. The states are useful to our understanding of labor's influence on inequality as states differ in their acceptance of labor unions, base levels of inequality, political preferences, industries, and levels of development but are all nested within a single overarching national framework. Over the 39-year period examined, states where unions maintain more members remain more equal within the labor market and after redistribution via government transfer. These effects persist after accounting for state-level policy, demography, and economic conditions. However, states where union membership has the largest influence on inequality have also seen growing attempts to reduce unionization rates. Overall, I find that unions are still able to limit the growth of economic inequality in spite of declining levels of union membership.

Labor Unions and Support for Redistribution in an Era of Inequality*

“…Indeed, unionized workers have higher wages and more generous benefits than do their nonunionized counterparts (Rosenfeld, ; Western and Rosenfeld, ), and working poverty is lower in U.S. counties with high levels of unionization (Brady, Baker, and Finnigan, ). Labor unions have been linked to more liberal public policy and lower inequality (Becher, Stegmueller, and Käppner, ; Bucci, ; Franko, Kelly, and Witko, ; Kelly and Witko, 2012; Radcliff and Saiz, ), as well as greater demand for redistribution and liberal public policy (Franko, ), at the U.S.‐state level, and greater political equality in representation (Ellis, ; Flavin, ). In a recent review, Ahlquist () notes that higher levels of unionization have been linked to lower levels of income inequality, both in the United States and cross‐nationally.…”

“…The decline of organized labor is often viewed by scholars as a driver of rising inequality (Ahlquist, ; Bartels, ; Bucci, ; Schlozman, Verba, and Brady, ; Volscho and Kelly, ). Typically, labor unions are thought to reduce income inequality through two mechanisms.…”

“…These were originally collected by Franko, Kelly, and Witko (), ranging from 1976 to 2006. They were extended up through 2014 by Bucci (). I use them here through 2011.…”

Chasing Disparity: Economic Development Incentives and Income Inequality in the U.S. States

“…Data on household income by source come from the U.S. Census Bureau's Annual Social and Economic Supplement (ASES). The measure is constructed by Kelly and Witko (2012) and extended to 2014 by Bucci (2018). 4 This dependent variable is used to test the pre-transfer hypothesis.…”

“…Policy experimentation in the states allows scholars to test whether a given policy mitigates or exacerbates income inequality. Previous studies have examined the effect of state-level welfare spending, unemployment and disability insurance, progressive tax rates, Earned Income Tax Credits (EITCs), the minimum wage, right to work, and levels of unionization on inequality (Barrilleaux and Davis 2003; Bucci 2018; Hatch and Rigby 2015; Hayes and Medina Vidal 2015; Kelly and Witko 2012; Kogan 2017). In their excellent work on state policy and inequality, Franko and Witko (2018) identify some states as leaders in adopting policies to mitigate inequality, such as Washington, New Mexico, Oregon, Michigan, and New York, each of which adopted higher minimum wages and more generous EITCs.…”