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. Union wages have been a main focus of research on inequality, but organized labor also affects nonunion workers. Economists often contrast the effects of spillover and threat. When unions raise wages for their members, employers may cut union employment, forcing unemployed workers to find jobs in the nonunion sector. The chapter argues that the labor market is embedded in a moral economy in which norms of equity reduce inequality in pay. Culturally, industrial unions often use a language of social solidarity in public discourse and within firms. Politically, US unions have been frequent advocates for redistributive public policy. Among women, the effect of declining union membership on wage inequality is smaller. Inequality grew slightly more for women than for men, but increasing women's wage inequality is unrelated to union membership.