The blog of the Urban Institute
February 1, 2019

Can labor unions help close the black-white wage gap?

February 1, 2019

After nearly half a century of declining union membership, collective bargaining may be primed for a comeback. Given the convergence of four factors—rising income inequality, favorable public perceptions of unions, a new Democratic House majority, and likely presidential runs by several progressive candidates—legislation to ease barriers against union organization may soon gain traction.

This growing interest in strong unions is understandable in light of the well-documented link between declining union membership and rising income inequality. Less emphasized, however, is the relationship between unions and racial inequality.

A 2012 study found that if unionization rates remained at their 1970s level—when African American workers were more likely than white workers to be union members—black-white weekly wage gaps would be nearly 30 percent lower among women and 3 to 4 percent lower among men. Research also consistently finds that racial wage gaps are smaller among union members than among nonunion members.

This evidence shows that a rebound in union membership could reduce the racial wage gap that has been growing since 1979.

How unions transitioned from excluding African Americans to elevating their wages

Unions weren’t always a positive force for black workers. In 1935, when the National Labor Relations Act gave workers the legal right to engage in collective bargaining, less than 1 percent of all union workers were black. Union formation excluded agricultural and domestic workers, occupations predominantly held by black workers, and largely left black workers unable to organize.

By the late 1960s and early 1970s, unions began to integrate. The manufacturing boom brought large numbers of black workers north to factories, the civil rights movement focused increasingly on economic issues, and the more liberal Congress of Industrial Organizations organized black workers.

In 1973, unionization rates among black men were over 40 percent, while rates among white men were between 30 and 40 percent. And by the late 1970s, almost one in four black women —nearly double the share of white women—belonged to a union.

As unions declined, the racial wage gap expanded

The steep decline in unionization rates among workers of all racial and ethnic groups over the past four decades has occurred in tandem with rising racial wage inequality. In 1983, 31.7 percent of black workers and 23.3 percent of the entire workforce were unionized. In 2017, those numbers had fallen to 12.6 percent and 10.7 percent, respectively (largely because of global competition, deindustrialization, and the passage of right-to-work laws in several states).

Meanwhile, from 1979 to 2016, average hourly earnings of black men in the US fell from 80 percent of white male earnings to 70 percent of white male earnings. For black women, average earnings fell from near parity with white women to 82 percent of white female earnings.

Strong unions play a role in the racial wage gap largely because of black workers’ overrepresentation in labor market sectors that have higher rates of union membership. Union jobs pay, on average, 16.4 percent higher wages than do nonunion jobs because of workers’ ability to bargain collectively for higher pay, more transparent hiring and promotion policies, and heavier regulation of grievance procedures.

Recent research also finds that union membership delivers a larger wage premium to black workers than to white workers. Hourly wages for black union workers are 14.7 percent higher than those of their nonunion counterparts, while white unionized workers make 9.6 percent higher hourly wages than do nonunionized white workers.

The impact of increased unionization on racial equality could extend beyond hourly wage increases. A 2016 study found that black union workers are 17.4 percentage points more likely than nonunion workers to have employer-provided health insurance and 18.3 percentage points more likely to have an employer-sponsored retirement plan, advantages that are even greater among workers with no high school degree.

Higher union membership also narrows the racial wealth gap by supplying a larger wealth dividend to nonwhite workers than to white workers. The increase in earnings, benefits, and employment stability afforded by union membership translates to a higher likelihood of homeownership and larger contributions to 401(k) plans. Between 2010 and 2016, the median wealth of nonwhite union members was nearly five times greater than that of their nonunion counterparts, while the median wealth of white union members was only 39 percent greater than that of white nonunion workers.

Research and history provide a compelling case for the role of strong unions in furthering economic progress for African Americans and in reducing economic inequality among all Americans. That’s why conversations about the importance of unions should be not only class based but racially conscious.

Striking teachers cheer on January 22, 2019, in Los Angeles, as the teacher's union reached a tentative deal with the Los Angeles Unified School District. Union members have to vote on the agreement to end the strike which started on January 14. (Photo by Robyn Beck / AFP / GettyImages). 

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