Rebuilding unions in the US

There's a bit of a battle going in the US over the Employee Free Choice Act. If passed, this should make it easier for American workers to unionise - it will tilt the scales back in favour of labour after a long period of an incredibly hostile environment for organised labour.

This paper (pdf) provides a good summary in favour of the EFCA. Here's a snippet:

The current economic crisis is not a result of unforeseen market forces, but of decades of failed policies that led to an unsustainable low-wage, high consumption economy. From 1947-1973, both productivity and median family income roughly doubled—a result of policies designed to promote income equality.1 However, since the 1970s, workers’ wages have failed to keep up with the continuous increase in productivity. From 2000 to 2007, income for the median working-age household actually dropped by $2,000 after inflation.2

Though average workers failed to reap the benefits of decades of economic growth, those at the top have done quite well. In 1965, CEOs earned 24 times as much as the average worker; in 2007, they earned 275 times as much as the average worker.3 The top 1% of wage earners now hold 23% of all income—the highest inequality in income since 1928.4 This stagnation of median wages despite the rise in productivity is linked in large part to the decline in union density.5 In 1960, private sector union membership was 30%;6 by 2007, it had dropped to 7.5%.7 As unions declined, both union and non-union workers lost the economic benefits of collective bargaining. More than half of the decline in the average wage of workers with no more than a high school education is attributed to the decline in union density.8 As collective bargaining declines, the distribution of income widens9—but unions help reduce income inequality and provide clear economic benefits.

On average, union members earn 30% more than non-union workers.10 When controlling for factors such as education, occupation, and experience, union members still earn 14% higher wages than non-union employees.11 The difference is even greater for Latinos, with a union wage advantage of 18%, and for low-wage workers, where union membership raises wages by 21%.12 Unions also raise the wages of African American members by 12%,13 and for women union members by 11%.14

Of course there is lobbying against the EFCA by the business community and the Right. In addition an organisation called the Financial Services Roundtable (which includes representatives of UK-listed banks) has also been lobbying against. Surely this is something that responsible investors ought to have a look at?

Hat-tip: Michael L