Very few economic issues are as emotional as those that relate to the impact of labor unions. Many believe that unions represent a bedrock of America’s middle class, while others believe that they produce economic inefficiency and lost jobs. Available research supports all sides of the argument.
A study in the American Sociological Review estimates that the decline in unions may account for one-third of the rise of inequality among men. Research by Nobel Prize winner Joseph Stiglitz in his book entitled The Price of Inequality notes that when unions were stronger in America, productivity growth and real hourly compensation moved together in manufacturing. In recent years, that link seems to have been broken.
One theory holds that as unions weakened, executives were able to more easily grab the gains from productivity. According to the Economic Policy Institute, in 1965, chief executives on average earned on average twenty times as much as the typical worker. By 2013, they earned nearly three hundred times as much. Of course, there are competing explanations, including the impacts of educational attainment, globalization and technology.