Unions built the middle class in the last century and, with the right conditions, can do so again this century, a new report by Unifor economist Jordan Brennan has found.
“What we call the ‘middle class’ today had little precedent in human history until unions helped create it,” Brennan writes in The Creation of a Shared Prosperity in Canada: Unions, Corporations and Countervailing Power, published recently by the Canadian Centre for Policy Alternatives.
“The erosion of unions since the late 1970s has meant wage stagnation, a shrinking national wage bill and heightened income inequality,” Brennan writes.
“Union renewal could play a crucial role in restoring middle class security and mass prosperity.”
In the report, Brennan correlates the rise in average wages from 1910 to the mid-1970s, when unionization reached its peak, and the stagnation of real wages since as union membership declined.
“This period (1910 to 1977) roughly corresponds with the growth of the middle class in Canada and accompanying creation of a shared prosperity,” he writes. “However, the growth of hourly earnings stagnated after 1977, rising a meager 3 percent in inflation-adjusted terms in the generation since.”
Brennan calculates that for every percentage change in unionization (up or down), the average income of Canadian workers goes up or down by close to $500 dollars.
“This is the average ‘value’ of labour unions to the Canadian workforce,” Brennan writes.
By contrast, working people lose ground as corporations become more concentrated and powerful – boosting income inequality. Correcting that will require stronger unions, and governments to stop attacking union rights.
“The optimistic assessment is that governments are attacking unions despite the fact that unions play a progressive role in middle class formation,” Brennan writes.
“The more cynical assessment is that government are attacking unions because they understand the role that unions play in building a shared prosperity.”