Union power declined in some countries in the past decade, and the trend shows every indication of continuing in the near future. During that same period of time, income inequality rose. Some researchers suggest the two trends are related.
Income inequality rose and unionisation fell in both the United States and the United Kingdom in recent years:
Researchers argue union weakness is due to the spread of skill-based technology jobs. Unions have the greatest appeal when workers are equally skilled; technology skills destroy that equality. Consequently, it becomes less profitable to join a union. Also, increased political and managerial opposition to unions has played a role.
Due to the declining power of unions, the increasing productivity of skilled workers has not raised the incomes of their less skilled counterparts, as it once did through labour contracts.
Moreover, newly educated potential employees seemingly do not prefer unions. De-unionisation is pronounced among young U.S. workers, and the proportion of the workforce in unions declined just as college enrolments started to rise. Today, new plants and workers generally do not form unions.
Source: Deunionization, Economic Intuition, Spring 2001; based on Daron Acemoglu, Philippe Aghion and Giovanni L. Violante, Deunionization, Technical Change, and Inequality, Discussion Paper No. 2764, Center for Economic Policy Research.
For information on the CEPR http://www.cepr.org
For more on Unions and Productivity
http://www.ncpa.org/pd/unions/management.html
FMF\21 August 2001
