Stronger Unions Could Reduce Income Inequality and Strengthen Oregon’s Economy

April 29, 2016

The long-term decline in union representation in Oregon has contributed to the rise in income inequality, which now stands near record highs. Greater levels of union representation could not only help narrow income inequality, but could support economic growth.

Unions-graph-sm

For decades, top income earners in Oregon have garnered an ever-larger portion of the state’s economic benefits, while the broad group in the middle and below have lost ground.

Between 1984 and 2014, the share of Oregon income going to the top 20 percent of earners grew by 22 percent, while the portion going to the bottom 60 percent shrunk by 26 percent.

These trends have occurred at the same time unionization in the state has declined. Between 1984 and 2014, the share of Oregon workers represented by a union declined 40 percent.

The decline in the unionized workforce helps explain the widening income gap. Research shows that erosion of unions nationally accounts for about a third of growth in wage inequality among men and about a fifth among women.[1]

A growing body of research also suggests that increased income inequality undermines economic growth, especially long-term growth. Analysts have found that large income gaps reduce consumer demand, hamper acquisition of skills and limit private investment.[2]

Thus, a resurgence of union representation in Oregon could not only benefit workers and reduce income inequality, it could also promote economic prosperity.


[1] Deunionization nationally can explain 33.9 percent of the growth of wage inequality among men and 20.4 percent of the growth of wage inequality among women from 1973 to 2007. Michel, Lawrence, Unions, Inequality, and Faltering Middle-Class Wages, August 29, 2014.

[2] Andrew G. Berg and Jonathan D. Ostry, Equality and Efficiency,” Finance & Development, Vol. 48, No. 3, September 2011, ; Jonathan D. Ostry, Andrew Berg, and Charalambos G. Tsangarides. Redistribution, Inequality, and Growth International Monetary Fund, February 2014; Boushey, Heather and Carter C. Price, How Are Economic Inequality and Growth Connected? A Review of Recent Research, Washington Center for Equitable Growth, October 2014; Ryder, Guy, Urgent Action Needed to Break Out of Slow Growth Trap, International Monetary and Financial Committee, International Monetary Fund, Thirty-Third Meeting, April 16, 2016; Dabla-Norris, Era, Kalpana Kochhar, Nujin Suphaphiphat, Frantisek Ricka, Evridiki Tsount, Causes and Consequences of Income Inequality: A Global Perspective, June 2015; “Trends in Income Inequality and its Impacts on Economic Growth”, OECD Social, Employment and Migration Working Papers, No. 163, OECD Publishing, 2014; Orrson, James. Income Inequality in America: A Call for Action and Effective Policy, White Paper, May 2015.

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