NCPA - National Center for Policy Analysis

The Union Wage Premium Declines

February 1, 1999

Last week, the U.S. Bureau of Labor Statistics released data on union membership in 1998. Once again, the figures show unionization falling as a share of the labor force. In 1997, 14.1 percent of all wage and salary workers belonged to a union; last year that percentage fell to 13.9 percent. As recently as 1983, more than 20 percent of all workers belonged to a union; in the mid-1950s more than a third did so.

One factor likely to cause further union erosion is the declining union wage premium.

  • In 1994, union members made 27 percent more than non-union workers on average.
  • Last year, that premium fell to less than 25 percent.
  • And in many industries the premium has vanished -- non- union workers in finance, insurance and real estate and non-union federal workers now make more than their union counterparts.

If this trend continues many union members are going to ask what they are getting for their dues.

The AFL-CIO noted that although the percentage fell, the actual number of union members rose by about 100,000, following several years of absolute declines.

Layoffs and downsizing are a major reason for declining unionization, which explains why unions have put so much effort into organizing government workers. Government workers now account for almost 43 percent of all union workers in the U.S., up from one-third in 1983.

The wages of government workers come at the expense of private workers in the form of higher taxes. As Alex Rose, late head of the United Hatters union, once observed, governments are not employers in the traditional sense because profits do not exist. "Workers are not extracting a share of the profits but rather a share of taxes," he said.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, February 1, 1999.


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