Unions and Inequality

by

Barry Eidlin

• LAST REVIEWED: 30 August 2016
• LAST MODIFIED: 30 August 2016
• DOI: 10.1093/obo/9780199756384-0176

Introduction

As capitalism spread across Europe and North America over the course of the 19th century, what came to be known as the “labor question” took center stage: how to address the needs of tens of millions of dispossessed workers who were being subjected to inhumane working conditions for poverty wages. For some this was a moral question of right and wrong. For others it was a threat to social stability. For their part, workers themselves advanced their own solution to the labor question by joining labor unions in order to redress the power imbalance between labor and capital, achieve a decent standard of living, and expand notions of democratic and social citizenship. In the ensuing decades, unions became one of the key mechanisms for addressing sources of political and economic inequality. They formed alliances with political parties to push for democratic reforms, and to implement more redistributive social policies. Through negotiations with employers, they raised living standards and improved working conditions. By midcentury, many scholars viewed unions as an indispensable partner in a system of industrial democracy, a means of institutionalizing conflict and ensuring social stability. The postwar period saw a general rise in union strength and a reduction in economic inequality. There was, however, tremendous cross-national diversity in terms of labor policy regimes, party-union alliances, and union strength and influence. This was partly due to external political and economic differences but also due to internal differences in union ideologies and organizing strategies. For example, in some cases unions took divisive approaches that protected the privileges of dominant groups while excluding others, while in others they adopted more inclusive strategies that united diverse groups to fight for greater socioeconomic equality. As unions’ power increased, they were criticized for creating price distortions in labor markets, which critics charged actually increased economic inequality. While such criticisms are debatable, what is not arguable is that unions’ power to have any effect, positive or negative, has declined across Europe and North America. At the same time, economic inequality has increased dramatically. Many researchers see a link between these two trends. What remains unclear is whether and how these trends might be reversed.

Resources

At a basic level, understanding the relationship between unions and inequality starts with gathering and analyzing data on union strength and levels of different types of inequality. Organization for Economic Cooperation and Development (OECD), International Labour Organization (ILO), and Luxembourg Income Study (LIS) all provide a wide variety of by-country data on income, wealth, employment, union membership, inequality, productivity, working conditions, levels of social protection, and more. For income inequality specifically, key data sources include the United Nations University World Institute for Development Economics Research World Income Inequality Database, and the World Wealth and Income Database. Data from the Boix-Miller-Rosato Dichotomous Coding of Democracy, 1800–2010 and Center for Systemic Peace Polity IV Project offer measures of democratization, which can be combined with union data to estimate effects of union strength on levels of political inequality.

• Boix-Miller-Rosato Dichotomous Coding of Democracy, 1800–2010.

  For researchers interested in understanding the relation between economic and political inequality, the Boix-Miller-Rosato database provides useful measures of 219 countries’ democracy over more than two centuries. The database uses a dichotomous coding scheme, whereby countries are either democratic or non-democratic, based on measures of political contestation and participation.

• Center for Systemic Peace Polity IV Project.

  For researchers who want a more finely-grained coding of countries’ level of democratization, the Polity IV project measures levels of democratic and autocratic authority for 167 countries between 1800–2013 along a twenty-one-point “Polity Score” scale. The scale moves from –10 (hereditary monarchy) to +10 (what they term “consolidated democracy”).

• International Labour Organization.

  Contains over a hundred indicators covering more than 230 countries and economies, including data on union density, strikes, employment, poverty, population, and more. The ILO also hosts a wide array of databases that compile legislation, regulations, and standards related to working conditions and human rights.

• Luxembourg Income Study.

  The Luxembourg Income Study compiles and harmonizes microdata from forty-three upper- and middle-income countries, making cross-national comparisons more accurate. Includes key measures of income and wealth inequality, public taxes and transfers, labor market outcome, and more.

• OECD Statistics.

  The Organization for Economic Cooperation and Development (OECD) compiles a wide array of economic data for thirty-four developed countries, including information on union density, employment, earnings, employment protections, and more.

• United Nations University World Institute for Development Economics Research World Income Inequality Database.

  The WIID includes information on income inequality for what it calls “developed, developing, and transition countries.” This includes country-level data on income shares by quintile and decile, Gini coefficients, means and medians, and richest and poorest 5 percent income shares.

• World Bank Data.

  The World Bank collects social and economic data for a much larger group of 218 developed, middle-income, and developing countries. Resources of particular interest to those studying unions and inequality include their Poverty & Equity and ASPIRE Atlas of Social Protection databases.

• World Wealth and Income Database.

  Tracks income and wealth levels for those at the very top of the distribution. This group is often missed by traditional sampling methods. However, as wealth and income become more concentrated at the top, this group is ever more essential for understanding broader trends in economic inequality.