Unions, technology, social-class, and earnings inequality in the US, 1984-2019

Abstract

Earnings inequalities in the US have steadily grown in the last decades, and between-class inequalities have been a central component of this process. However, while research has highlighted the strengthening relationship between occupational social classes and earnings, less attention has been paid to what factors have altered the market returns of different social classes. The present article investigates the contribution of two of the most widely recognized drivers of wage inequalities – de-unionization and technological change – to the growth of between-class inequalities. Using direct measures for computerization and union density at the industry level, this article analyses their relationship to the earnings growth of employees in different social classes from 1984 to 2019. Descriptive results underline the diverging earnings growth of manual and non-manual workers. Furthermore, minor support is found for the claim that computerization at the industry level was associated with the earnings growth of salariat and non-manual workers. In contrast, de-unionization is related to the diverging fortunes of manual and service classes in two ways. First, unionization is positively associated with the earnings of all social classes but more strongly with those of the lower classes. Second, manual workers were employed in much greater numbers in industries that experienced severe declines in union density and have thus been majorly affected by its decay. Finally, the growth in educational levels for non-manual classes emerges as a crucial determinant of their faster earnings growth. Overall, results support recent sociological literature suggesting that institutional factors, rather than technological change, are primarily responsible for rising inequalities in the US.