Unions, Norms, and the Rise in U.S. Wage Inequality

The decline of organized labor in the United States coincided with a large increase in wage inequality. From 1973 to 2007, union membership in the private sector declined from 34 to 8 percent for men and from 16 to 6 percent for women. During this time, wage inequality in the private sector increased by over 40 percent. Union decline forms part of an institutional account of rising inequality that is often contrasted with a market explanation. In the market explanation, technological change, immigration, and foreign trade increased demand for highly skilled workers, raising the premium paid to college graduates (for reviews, see Autor, Katz, and Kearney 2008; Gottschalk and Danziger 2005; Lemieux 2008).