States with Stronger Unions Have Stronger Middle Classes
New Census Bureau data on state incomes released yesterday show just how important unions are to creating a strong middle class. An update to an analysis in our April 2011 report, “How Unions Make the Middle Class,” finds that a 10-percentage-point increase in the unionization rate would boost the average annual income for middle-class households—unionized or not—by $1,501 a year. Ensuring the United States has a strong middle class is critical, as the middle class is the engine of economic growth.
Unions strengthen the middle class by advocating for workers both in the workplace and in our democracy. Organized labor not only fights for higher wages and better benefits at work but it also makes democracy work for the middle class and advocates for policies that boost the middle class as a whole. As the new Census data make clear, stronger unions create a strong middle class not only at the national level but at the state level, as well.
In 2011, for example, the five states with the lowest unionization rates—North Carolina, South Carolina, Georgia, Arkansas, and Louisiana—all had middle classes with below-average strength, with strength defined as the share of income going to the middle 60 percent of households. Four out of the five states with the highest unionization rates—Alaska, Hawaii, Washington, and Michigan—all had middle classes with above-average strength.
The chart below shows the state-by-state impact of increasing unionization rates by 10 percentage points, returning them roughly to their 1980s levels. All middle-class households would feel the effects of this benefit, whether they have union members or not. These figures are based on a regression analysis that looks at how unionization rates affect the share of income going to the middle class, while taking into account other important factors such as education levels, unemployment, the income level of a state, and industry employment mix.
The boost from increased unionization is roughly equivalent to the $1,664-per-household boost from increasing college attainment rates by 10 percentage points. Improving educational outcomes and increasing access to higher education are correctly pointed out as important steps for bolstering the middle class, but, as our numbers show, we should not underestimate the importance of unions.
The American middle class has weakened over the past several decades and now receives the lowest share of income it ever has—45.7 percent—since the data were first collected in 1967. We can begin to rebuild our middle class, however, starting with these 35 policies. As our analysis shows, strengthening organized labor is one of the most important first steps.
David Madland is the Director of the American Worker Project at the Center for American Progress Action Fund. Nick Bunker is a Research Assistant with the Action Fund.
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Senior Fellow; Senior Adviser, American Worker Project