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Study: Unions Are Key to Reducing Income Inequality

 

February 18, 2014

 

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Want to raise wages, reduce the growing income gap and grow the middle class? There's one proven solution according to a new study.

The skewing of national income to the top 1 percent of the country threatens upward mobility, which is the core of the American dream, says a new study from the Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign School of Labor and Employment Relations.

 

The pooling of resources at one end of the wealth spectrum makes it harder and harder for children of low- and middle-income families to enjoy the same educational and work opportunities as those from very well-off families, putting the future of the middle class at risk.

But there is one proven solution to overcoming the growing wealth gap and raising wages for the average American, say study authors Robert Bruno and Frank Manzo: unions.

The report takes a look at one part of the job market, construction, and the affects unionization has on industry wages.

The findings are pretty conclusive. Bruno and Manzo found that collective bargaining and unions raise workers’ incomes by nearly 22 percent. And unionization raises productivity by the same percentage.

Labor-friendly legislation is also proven to increase wages and reduce income inequality, with incomes in collective bargaining states higher and more equal. Inversely, states with so-called “right-to-work” laws report much lower wages, with construction workers making 13 percent less than their counterparts in non-right-to-work states.

Most surprisingly, the authors found that even CEO paychecks benefit from pro-collective bargaining laws. Right-to-work laws reduce construction CEO incomes by approximately 18 percent.

In the broader economy, unions are the most effective institution at reducing income inequality. Each 10 percent jump in unionization levels slashed inequality between 4 and 14 percent.

“Ultimately, pro-worker politics are the best strategy for raising worker incomes, increasing consumer demand and reducing inequality,” write Bruno and Manzo.

Click here to read the study.

 

 

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