Strictly Business: Decline of unions has steep price

If you’re part of the working poor or a member of the fading American middle class, you’re well aware that your income — the lifeblood of building a life in this world — has either stalled or flat out taken a nosedive.

It’s not supposed to be this way.

After all, we’ve been told that if we work hard and play by the rules we’ll grab a nice piece of the American dream. And that’s what democratic, industrialized nations do: They offer a path to shared prosperity, where the many — not just the plutocratic few — make gains.

But the notion of an upwardly mobile nation has become an American fairy tale.

The body of evidence is irrefutable. Here’s just a small taste:

• Between 2002 and 2012, wages were stagnant or declined for the entire bottom 70 percent of the wage distribution, according to the Economic Policy Institute, a nonprofit, nonpartisan think tank. As a result, EPI says, “the vast majority of wage earners have already experienced a lost decade, one where real wages were either flat or in decline.”

• In Clark County, moderate-wage and middle-income jobs — paying from $12 to $24 per hour — have declined by more than 7 percent between 2007 and 2012, according to Scott Bailey, regional labor economist for the state Employment Security Department.

There are many reasons for this shameful body of evidence, including a U.S. tax policy that has effectively redistributed income upwards for decades.

But new ground-breaking research by Bruce Western of Harvard University and Jake Rosenfeld, a professor at the University of Washington and co-director of Scholars Strategy Network Northwest, shows the decline of unions — once assigned a modest role in explaining wage inequality — has actually played a significant role in this troubling trend.

A summary of their findings:

• “Declining unionization was associated with about a third of the increase in wage inequality for men from 1973 to 2007 and about a fifth of the increase for women. For male workers, therefore, the impact of declining unions has been roughly equal to the impact of the growing wage gap between college and high school-educated workers.”

• “When unions went into a tailspin, the entire surrounding labor market was affected. Worker leverage suffered and prevailing wages faltered. Pay at work grew more unequal for union members and nonunionized workers alike.”

But isn’t it true that unions are an antiquated drag on economic growth? Isn’t it true that technology and globalization are simply inescapable determinants of lower pay?

No. For example, Canada’s overall unionization rate is “roughly three times our own,” Rosenfeld told me in an email, and the country hums with lower unemployment and economic growth rates comparable to our own over the past few years.

And Canadian businesses “experienced the same technological changes as we did, and went through the opening up of global markets just as we did,” Rosenfeld said. “As a result, Canada’s unionization rate did decline — but not nearly to the extent that ours did, largely due to a different political environment, different organizing laws in certain provinces, and employers that were and are not so universally opposed to organized labor.”

In other words, rising wage inequality is a policy choice.

And that’s no fairy tale.

Aaron Corvin is a Columbian business reporter. 360-735-4518, Twitter: http://twitter.com/col_econ; http://twitter.com/col_energy; http://www.columbian.com/weblogs/strictly-business, or aaron.corvin@columbian.com