Did Unions Create The Middle Class?

Many people . . . believe there would be no middle class in America if unions did not organize a third of the workforce after World War II. That post-war era, the sixties, still represents one of the most prosperous eras in the nation's history. But that lesson has been lost on most people who oppose unions.

From here.

Krugman agrees.

I don't oppose unions. But, I am also deeply skeptical of the claim by union supporters, and of liberal economists like Krugman, that they were as important an ingredient in creating the American middle class as claimed.

The Comparative View

Consider, for example, Japan and Western Europe. Both societies are far more economically egalitarian than the United States. They pay their executives less, and have a far more even distribution of wealth. But, they do it in two radically different ways.

Japan's big businesses are formally unionized, but their unions are company sponsored affairs that are actually forbidden by law in the United States on the grounds that they would be too management controlled. Japan also has a fairly small public sector, a very paternalistic government, a fairly weak public sector welfare state, and role for married women that is anything but equal even though unmarried women have substantial economic equality with their married peers.

Western Europe is heavily unionized (compared to the United States) with unions that are much more vigorous in asserting their rights than American unions, and those nations also uniformly have a much more comprehensive public sector social welfare state than either the United States or Japan. Germany gives workers at public corporations seats on the Board of Directors of their companies. France tolerates the kidnapping of executives in the course of union-management negotiations and gives public sector workers a frequently exercised right to strike. Sweden has very high taxes that finance a public sector welfare state that makes marriage an economically unnecessary part of being a parent.

The United States has a union movement that was almost as powerful as that of Europe through the 1960s, but that has declined in the four decades since then. It has a public sector welfare state, but it is anemic. We work more hours per year than workers in any other country in the world, and have the most unequal distribution of wealth in the developed world, together with low taxes by developed world standards overall, as measured by tax revenues collected relative to GDP. We have arguably the weakest private sector union movement in the developed world, but have a large, but timid public sector union movement.

The Weak Chain of Cause and Effect

The weakening of private sector unions has not had some of the results that you would expect. Workplace safety is profoundly improved from the standards that prevailed four decades ago when unions were much stronger. The workers whose wages have stagnated have been in industries where unions were strong, not in industries where unions have never had much of a foothold, although, in those industries, union workers tend to be paid more than non-union workers. Disgruntled workers in an American workplace are more likely to call a trial lawyer than a union organizer. American workers have less job security than their peers in either Japan or Europe, although in Japan this is mostly due to a private sector understanding of fairness, while in Europe it is mandated by law.

Income inequality in the United States has risen more or less steadily since 1947. Changing rates of unionization have done very little to alter the trend line, which has arguably flattened a little for families in the bottom 95% of the income distribution in the last decade. Earned income inequality is risen in Europe as well, but has been mitigated by their tax codes and social welfare state, rather than fundamental differences in the structure of economic relationships between people within businesses.

Public sector workers in the United States got job security and good benefits first, and unionized second, many decades after the prevailing accommodation on the shape of public sector employment terms, conditions and compensation were well established.

Did Ethnic Diversity Play A Role?

Some people would argue that American tolerance for inequality has roots in a lack of shared ethnic identity found in both Europe and Japan. I can't rule that out. There is circumstantial evidence that heavy immigration in the late twentieth century has frayed the European consensus on the social safety net and management-labor relations.

Then again, the union movement in the United States has historically been strongest in places where massive immigration has been attracted by job creation, not economically stable places, or places with homogeneous populations. The only place in the agriculture sector that there has ever been any meaningful effort at unionization, for example, has been among immigrant farm laborers. To my knowledge, there are not now, and never have been any unionized plantations. Rural America has produced a great many co-operatives but very few unions.

The deepest economic inequalities in the United States are not in the South where there is the greatest ideological and historical tolerance of inequality in the form of slavery and then, in post-slavery racism, and where opposition to unions has historically been strongest. The plutocrats who have captured such an immense share of the national wealth tend to be based in places like San Francisco and New York City where the financial sectors are strongest, despite the high and progressive taxes that they face there and the strongly liberal local politics. The strongly anti-union Deep South is the home not just of pervasive black rural poverty, but of pervasive white rural poverty.

Southern anti-unionism at the grassroots level may be a product of discontent, in the context of Southern efforts to a great extent successful, to create the "New Rust Belt" in the American South, with existing union efforts to keep new manufacturing investment in the "Old Rust Belt" where their members held jobs in manufacturing companies. From their perspective, Northern manufacturing unions most important position was their opposition to relocating jobs to the South where they lived, rather than any deep felt concern about what it was like to work in a union shop, something few Southerners have experienced.

The current hotbed of union busting sentiment, Midwest states like Wisconsin and Ohio, have historically been relatively homogeneous and inclined to have politics that focused on the collective good. Wisconsin was the epicenter of Garrison Keillor's somewhat idealized middle class heartland where petty village quibbles and small town values prevailed over deep ethnic strife. Where Swedish Lutherans and German Lutherans considered their unions to be mixed marriages. Ohio was one of the first states to proudly embrace a land grant funded system of public education.

Working Class v. Middle Class

Another part of the conundrum of identifying the union movement with the middle class, is that until the relatively recent rise of public sector unionization, unions have been largely the province of the blue collar working class (aka lower middle class). The history of the American union movement is full a smudge faced miners, rank and file factory workers, postal workers trudging through rain, sleet and snow, firemen stinking of smoke, truck drivers and skilled tradesmen.

Today's union movement is more middle class than it used to be because the working class jobs that used to be its core constituency are gone or no longer unionized, while the relatively few middle class unionized jobs have survived and grown relatively more important to the movement as a whole.

The minimum wage and hour laws that unions worked to enact were all but irrelevant to middle class workers who were paid salaries and often exempted from their application. The workplace safety protections and worker's compensation regimes that unions pushed to enact didn't mean much to people who sat behind desks and cash registers all day. The fact that employers started to offer health insurance was as much a product of World War II era wage controls as it was a product of a healthy union movement and benefited non-union workers in factory offices as much as it did union workers on the factory floor.

The entire social class that was at the heart of the union movement has contracted, and the middle class that it now claims used to identify itself with management. Bank tellers have a great deal in common with factory floor workers. They aren't paid much. They are micromanaged. They are rank and file employees of large enterprises that thrive on coordinated mass production. But, factory workers who identified as working class unionized, while bank tellers who identified as middle class, didn't.

A college education and a union card used to be considered contradictions in terms; alternative directions in life. Union leadership is how smart young working class men who couldn't dream of securing a college education or the management jobs that came with it found a way to exercise power in the large institutions where they worked, just as they did as non-commissioned officers did in the military. Yet, a college education is now often considered the defining element of the middle class.

How did access to the college educations that were the thresholds to membership in the middle class open? Mostly through the GI Bill, and after that through the shift of selective institutions of higher education to merit based admissions in the 1960s and the parallel expansion of of state institutions of higher education to accommodate the needs of former soldiers entitled to it as a result of the GI Bill. The political resistance of the civil service that was created to meet this need to being downsized (at a time when higher education employees largely weren't unionized) and student radicalism, rather than labor union efforts, does more to explain why the gates to higher education remained open.

Conclusion

Does all of this mean that unions can't play an important role in strengthening the American middle class? No. They are eager to step up to the challenge and remake themselves as a movement, and it is a task worth taking on.

But, as a matter of history, it is not at all clear that unions played an important part in creating the middle class, which was instead apparently driven by the widening availability of higher education. Instead, unions actually worked hard to secure justice for the American working class and seemed to be making good headway in doing so until sometime around 1970, when that social class in American life entered a period of seemingly permanent economic stagnation.