The Unfair Distribution of Workplace Rewards

The private sector’s declining union presence, two top sociologists contend, explains a major chunk of America’s growing wage inequality.

In the 1950s, Sears Roebuck, a nonunion employer, dominated the American retail marketplace. Sears paid decent wages. The Sears top executive, a cranky right-winger, had no mainstream political influence whatsoever.

Today, another nonunion employer — Wal-Mart — dominates American retail. Wal-Mart pays miserable wages. The billionaire offspring of Wal-Mart’s founding top exec have enormous political influence. Their fortunes have made school vouchers and other cranky right-wing privatization schemes a potent threat to American public education.[pullquote]In the 1950s, unions lifted up wages for all workers, union and nonunion alike.[/pullquote]

Wal-Mart, in other words, has contributed mightily to growing inequality in America, both economically and politically. Sears Roebuck, a half century ago, made no such contribution.

What explains the difference? One huge factor: Deunionization.

Sears in the 1950s operated in a private sector where most workers, outside the South, belonged to unions. These unions lifted up wages for all workers, union and nonunion alike, and moderated the rewards that flowed to executives at the top. Sears in its heyday generated no billion-dollar fortunes.

Wal-Mart, by contrast, operates in a private sector where unions, in large swatches of the country, have virtually disappeared.

How much of a difference does this contrast make? Sociologists Bruce Western and Jake Rosenfeld have some numbers for us in this month’s American Sociological Review. Their calculations, based on Census data, show that our declining private sector union presence explains a third of wage inequality’s growth among men since 1973, a fifth among women.

Why this gap between men and women? Men simply started the decline era with more to lose. In 1973, 34 percent of male private sector workers nationally belonged to unions. By 2007, only 8 percent. Over that same span, union membership among women dropped from just 16 to 6 percent.

Western, a Harvard scholar, and Rosenfeld, a University of Washington analyst, place these numbers in a broader analytic context. In a private sector where unions have a heavy presence, nonunion employers simply must offer something close to decent wages if they want to compete successfully for labor.

But unions may have an even larger impact on what the two sociologists call the “moral economy.” Union activism, they argue, reinforces “fairness” as a leading social value — and gives that sense of fairness a firm institutional foundation.

With this foundation now crumbling, America’s economy has lost its moral moorings. Rewards have rushed — in wildly disproportionate excess — to the upper reaches of America’s corporate hierarchy.

Our national “voice for equity,” as Western summed up last week, “has faded dramatically.”

We need that voice back.