How much can trades unions do to reduce inequality? I ask because Polly writes:
If unions had been stronger over the past 20 years, we would not have slid back to the same level of wealth inequality as 1937, nor would the top 3% own three times the wealth of the entire bottom half of the population.
I fear this overstates unions' force for egalitarianism. Yes, they do help increase equality. But their effect is modest.
For example, this paper shows that the standard deviation of wages in unionized firms is only around one-fifth lower than that of non-unionized firms, even controlling for obvious causes of inequality. And this paper (pdf) estimates that deunionization accounts for 34% of the rising wage inequality in the UK and 41% of the rise in the US between 1983 and 1998.
Even if unions had stayed quite strong, therefore, wage inequality would still have risen a lot.
I'd highlight two limits to unions' ability to restrain inequality:
1. Globalization. Low-wage workers face intense competition from India and China. There's not much unions can do in the face of this huge supply of cheap labour.
2. Unions don't sufficiently combat the managerialist ideology that's helped top pay rise relative to the median. In some (many?) cases, unions should be saying to managers: "You serve no useful function here. You have no great skills that justify your high pay. You owe your success merely to office politics. We can run this organization better than you."
But unions don't say this; they accept management's right to exist. And in merely fighting for better pay and conditions, they help create the impression that it's unions that are the rent-seekers, when the truth is that it's the bosses who are.
In this sense, unions help underpin capitalism.