Unionization Cut Poverty Rate

It may be stating the obvious, but a new study of U.S. wage data over decades reveals unionization cuts poverty rates by more than two-thirds. Only 5.9% of families with at least one union member lived in poverty, compared with 18.9% of families without union members, it says.

The data, analyzed by University of Minnesota sociology professor Tom VanHeuvelen and David Brady, a public policy professor at the University of California, Riverside, also shows that, over time, states with higher unionization rates had lower poverty rates, too. A research brief on their findings appeared in the blog The Conversation.

“When policymakers and academics develop plans to address poverty, they rarely, to our knowledge, consider the impact of labor unions,” the two wrote. Their data, from the University of Michigan’s Panel Study of Income Dynamics,” covered 40 years, from 1975–2015.

“Research across social science disciplines shows time and again unions have been central to bolstering the American middle class by raising wages and expanding access to fringe benefits,” they added. That’s a point Democratic President Joe Biden frequently makes. 

“Thus, it is logical, though rarely discussed, that unions would also reduce the risk people become impoverished,” the two researchers added.

The average annual poverty rate in union-heavy states, such as Alaska, California, Hawaii, Illinois, Michigan and New York, was seven percentage points below the annual average poverty rate of less-unionized states, the two report.

Similarly, the 2017 U.S. poverty rate was 18%, far above poverty rates in its “peer group” of developed nations, most of them with higher union density, the two note.

Their study backs the federal government’s annual data comparing union and nonunion workers. It shows a consistent union wage advantage of about 20%. 

In 2020, the difference was $186 more per week for the median wages of unionized workers, the Bureau of Labor Statistics reported. The median is the point where half the workers are above and half below. 

But the researchers used the Michigan data because it lets scholars measure changes in income—and in class—over time.

That data also let VanHeuvelen and Brady measure relative poverty, accounting for inflation, income support programs and other factors. By contrast, the federal “poverty line” for families of three or four hasn’t changed in at least a decade.

“Our results suggest that had union membership not declined dramatically since the 1970s, we could reasonably expect poverty rates would be significantly lower,” the two said.

“We intend to conduct additional research, both within the United States and among other countries, to better understand the mechanisms linking unionization to poverty. More broadly, the biggest open question is whether U.S. labor unions can expand their membership again and provide these types of protections against adverse economic forces.”