Economic Mobility and Union Membership Go Hand In Hand
We all can agree that zip code shouldn’t determine destiny and a child’s economic future should not be determined by his or her parents’ income. Upward mobility and opportunity are the definition of the American dream. But today, the United States has less mobility and fewer opportunities than other advanced economies: a U.S. child born in the bottom quintile of the income distribution has only a 7.5 percent chance to reach the top quintile of the income distribution as an adult. In comparison, a child born in Denmark in the bottom quintile has an 11.7 percent chance of reaching the top quintile as an adult. That child born in Canada has a 13.4 percent chance.
Understanding the challenges to economic mobility are key to increasing it. A groundbreaking new report from researchers at Harvard, Wellesley, and the Center for American Progress does just that: it finds that economic mobility thrives where unions thrive. The data show a strong relationship between union membership and intergenerational economic mobility. Here are some other key findings from the report:
- Areas with higher union membership demonstrate more mobility for low income children. Low-income children rise higher in the income rankings when they grow up in areas with high-union membership. A 10 percentage point increase in a geographic area’s union membership is associated with low-income children ranking 1.3 percentile points higher in the national income distribution.
- Areas with higher union membership have more mobility as measured by all children’s incomes. After controlling for parents’ incomes, the report finds that a 10 percentage point increase in union density is associated with a 4.5 percent increase in the income of an area’s children.
- Children who grow up in union households have better outcomes. Children of non-college-educated fathers earn 28 percent more if their father was in a labor union.
- Union density is one of the strongest predictors of an area’s mobility. The relationship between unions and the mobility of low-income children is at least as strong as the relationship between mobility and high school dropout rates—a factor that is generally recognized as one of the most important correlates of economic mobility. Furthermore, unions remain a significant predictor of economic mobility even after one controls for several variables including race, types of industries, inequality, and more.
These findings indicate that those who want to increase economic mobility should support unions. “The ongoing decline of unions will make it harder and harder for the United States to reduce inequality and maintain a strong middle class in the future,” explains Richard B. Freeman, Herbert Ascherman Chair in Economics at Harvard University and lead author of the report. Former Treasury Secretary Lawrence Summers, quoted in New York Times coverage of the report, says the results show “further grounds for concern about the decline of unionism in the United States.”
BOTTOM LINE: There’s new evidence about the importance of unions in America: Economic mobility and union membership go hand in hand. Unions need support to continue their role of reducing inequality, opening doors for workers and their families, and keeping America a place where you don’t need to be born wealthy to get ahead.
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