The Source of All Our Pain - By the Numbers
Union density fell below 15% in 1995, and the top 10%’s share of income passed 40% in 1996 — those trends have continued, into our current era of multibillionaires metastasizing while the minimum wage in places like Texas, Pennsylvania, and Georgia has been stuck at $7.25 an hour since 2009.
By Steve Wishnia
Two economic statistics, a side topic where I recently encountered them, tell a stark story about the history of this country during the last century.
The share of U.S. income going to the top 10% in 2022 was the highest it’s been since 1940, at 48.3%, according to a report released Feb. 13 by the Economic Policy Institute on right-to-work-for-less laws. Meanwhile, only 10% of American workers were union members last year, the lowest percentage since 1934—since before President Franklin D. Roosevelt signed the National Labor Relations Act, which officially established the right to engage in “concerted activities” for workers in most jobs.
Over 105 years, these numbers reveal broad patterns. In the 1920s and the 1930s, the top 10% never got less than 43.7% of income, and they took 49.1% in 1934, their highest share in the last century. Union membership fell from 17.6% in 1921 to 9.5% in 1933, the lowest in the last century. The unprecedented unemployment in the depths of the Depression led to widespread pay cuts for those still working: In 1933, the Briggs Manufacturing auto-parts plant in Detroit cut wages to 10 cents an hour for men and a nickel for women, labor historian Irving Bernstein wrote in The Lean Years.
Prices were lower back then, but not that low: Streetcar fare in Detroit was six cents each way. The Briggs pay cuts provoked a strike, led by the leftist Auto Workers Union, that got wages restored, but failed to win bargaining rights.
Unions doubled their strength from 1936 to 1938, with the CIO organizing campaigns and the United Auto Workers victory in Flint bringing density from 11.1% to 23.9%. That didn’t reduce income inequality, though. By 1940, the top 10%’s income share was back up to 48.9%.
World War II quickly turned the tide. By 1943, the top 10%’s income share had fallen to 38.9%. It would stay below 40% for the next half-century. Meanwhile, union density passed 30% in 1943 and reached an all-time high of 33.4% in 1945. And the top marginal federal income-tax rate, the tax on income above the floor of the highest bracket, was raised to 88% in 1942 and 94% in 1944. It would stay above 80% until 1964.
Union density declined gradually after 1960, but the great wave of organizing public-sector workers in the 1960s and early ’70s sustained it. But it plummeted after 1980. It fell by more than a quarter in the first six years of Ronald Reagan’s presidency, as federal policy revived union-busting and factories emigrated to lower-wage zones, and sank below the 20% mark in 1984. Meanwhile, the top 10%’s share was creeping up, augmented by the speculative fortunes made on Wall Street and Reagan cutting the top tax rate by more than half.
The mid-1990s saw another malignant milestone, as President Bill Clinton rammed the North American Free Trade Agreement through Congress, dismissing job security as an antiquated delusion, and the Republicans’ extreme right wing, preaching the Mammonite gospel of free-market ruthlessness, gained control of Congress. Union density fell below 15% in 1995, and the top 10%’s share of income passed 40% in 1996.
Those trends have continued, into our current era of multibillionaires metastasizing while the minimum wage in places like Texas, Pennsylvania, and Georgia has been stuck at $7.25 an hour since 2009.
These numbers were peripheral data in the Economic Policy Institute study, which said that while advocates of banning the union shop trumpet claims that it increases job growth, the reality is that there are no “measurable employment advantages” between states with and without those laws, which prohibit labor contracts that require nonmembers to pay representation fees to the union. States’ employment rates “reflect fluctuations within business cycles,” it said.
Where right-to-work-for less laws do make a difference, the EPI study said, is that workers in the 26 states that have them are less than half as likely to be in a union, and on average “have lower wages, reduced access to health and retirement benefits, and higher workplace fatality rates.”
But as the cynical computer-geek joke goes, “that’s not a bug, it’s a feature.”