lecture 12: ahlquist labor movements

Question 1

Effects of labor movement for inequality:

Answer 1

Share of total income going to the top 1% since 1900:
Evolution of inequality in english speaking countries: (U shape)
Share that top 1% is getting is falling in most of the 1920s (new deal era, post war construction of social welfare state)
In continental europe and japan (L shape)
Same trend pretty much but not as sharp
Gini Index (income inequality):
1 means perfect inequality (all of the income earned in the nation is earned by 1 person)
0 means perfect equality (everyone in nation makes same income)
UN standard for income inequality (close to or above 0.4 means problem - economic,social, political and more problems)
Late 1960s: the income inequality had improved over the course of the first half of the 20th century (coming from gilded age); after that starts increasing (US has always had a higher level of income inequality)
Regardless, income inequality is going up in all countries on graph
Union Density:
% of workforce which is unionized
Means different things in different places
Different baselines for different countries, but still peak around 1960s-70s and decline after
**
Fewer and fewer people are covered by union protection at the same time as income inequality increases; there may be correlation but we don’t know if one is causing the other. **

Alhquist tries to get at this and see if correlation is causation here

Wage distribution:
Higher union density on average, less inequality
More union density, ratio between 90th and 50th percentile fall

Question 2

the findings

Answer 2

• Unions impact on politics is as important as their impact on economics
• Unions impact on income distribution has weakened in the 21st century (late 20th century there was bigger effect from unions on affecting income distribution than 21st century)
• Effects of unionism conditioned by political institutions (which are themselves the product of labor movements)
• Makes establishing a causal relationship quite challenging
• If u establish such institutions which have an effect of reducing inequality (wage compressing) they are a consequence of a union and may continue to have that kind of effect regardless of unions presence or not
• So in short term u can say that the effect would have been there of union or not but institution wouldn’t have been started/initiated had it not been for a union

Question 3

How can unions reduce wage inequality:

Answer 3

• Direct: unionize a workplace and raise the wages of low income workers
• Spillover effects: things unions do that would affect inequality but not necessarily in a direct way:
  * May restrict employers ability to pay high wages to executives (eg: walmart income inequality discrepancy is so high; unionizing workplace to restrict high wages to executives means more profit going to cost of reproducing a worker and high wages).
  * Unions cannot bargain over wage cuts of executives but when they bargain for their own higher wages, it is an indirect effect because profits would have to be redirected and same amount cannot go to executives
• Union threat effect (pre-emptive raises):
  
  • employers giving wage raise and saying now don’t have to form a union
• Union coverage effect:
  * public policy extends gains to other workers:
  * If minimum wage goes up, makes it easy for workers to negotiate for higher than old minimum wage (without hike, it isharder to argue for a certain increase)
  * If minimum wage goes up, makes it easy for workers to negotiate for higher than old minimum wage (without hike, it isharder to argue for a certain increase)
  * France: gains from one union applied to other sectors regardless of union or not(?)

Alhquist:
* Good evidence that unions are raising wage floor; more likely to have other benefits
* Says no evidence that unions might have the possibility of increasing inequality (if u have increased wage because of union, those that aren’t will not have this advantage) but he says unions help the middle strata which does not raise inequality

Question 4

How can unions reduce wage inequality (via political actions):

Answer 4

1. Tripartite industry level bargaining: (representatives from government, representatives from employers, representatives from workers come together and decide on unionizing actions) usually works well because they can compete together on efficiency and innovation as opposed to wage compression
2. Can gain political power by pushing for progressive tax rates:
   Income, capital gains, wealth, inheritance
3. Raise minimum wage
4. Establish sectoral minimum wage
5. Push to expand social welfare protections:
   * Taking health/pensions out of negotiations
   
   • Makes unions job easier because it is the responsibility of governments and not employers

Question 5

Conclusion

Answer 5

• union power has weakened significantly over the past few years. Declining unionization accounts for almost 30% of 1973 to 2007 growth inequality for men. May be some other factors such as new technologies, globalization but unionization plays a big role
• Unions are different in different places, study focused on US and western europe and canada
• China: only one union federation: associated with CCP, cannot do anything that CCP disagrees with; most common arrangement is that HR person (rep) in union; don’t aggressively bargain for things if their position is that of an HR
• Usually sides with management and calls police to break up strikes etc.
  *

Question 6

Different channels through which political inequality can be exercised

Answer 6

1. formal political inequality;
   * Jim crow (system of racialized difference)
   * Property requirements (vote or run for office show u own this much property)
   * Persists in USA: incarceration (if ur incarcerated, u use your right to vote while ur in prison or in some states even after you come out of prison)
2. Informal: shows how it is not formally a law or something institutionalized, but seen regardless
   * Pervasive to campaign donations (gives access to political power that poor people dont have)
   * Lobbying (good connections with congressional representatives and can get their perspectives heard)
   * Who runs and gets elected to congress (shows how white people are overrepresented in congress and are mostly wealthy)
   * Political participation: having time to participate in politics/vote/meetings etc.
   *

Question 7

How might unions ameliorate inequality?

Answer 7

Strikes
France more than 1 mil people going on strike to go against requirements to raise retirement age
Political training
Getting people used to thinking about participating in politics to articulate their own desires in political ways that are intelligible to relevent parties and stakeholders
Getting people to run for local office (unions can have resources to train people)
Voter turnout
If u are a union member and are a preferred candidate, knock on doors, calls etc. to vote for candidate. Collective deliberation of which candidate is serving best for members or goals
Lobbying
Unions and labor movements can also lobby for political officials, usually at a disadvantage drom wealthy people because they dont have enough resources, but still can.