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Unionization & Inequality: Trends in Canada

Unionization & Inequality: Trends in Canada. Lars Osberg Economics Department, Dalhousie University. Does Unionization reduce Inequality ? Always or just Sometimes ? Why and How ? What’s been happening in Canada ? Inequality Union density Conclusion.

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Unionization & Inequality: Trends in Canada

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  1. Unionization & Inequality: Trends in Canada Lars Osberg Economics Department, Dalhousie University

  2. Does Unionization reduce Inequality ? • Always or just Sometimes ? • Why and How ? • What’s been happening in Canada ? • Inequality • Union density • Conclusion

  3. Does Unionization reduce Inequality ? • Always or just Sometimes ? • Why and How ? • What’s been happening in Canada ? • Inequality • Union density • Conclusion • Usually • Economic • Wage compression BUT • Union/non-union differential • Political Economy • Min Wages, Regulation, Norms • Rapid rise of Top 1%: + nil income growth for rest • Small decline union density • Political Voice – crucial

  4. Different Trends in Different Countries Union Density varies enormously 80%+ to <10% => Union/Non-union wage gap => % affected by wage compression => Political Voice Visser & Checchi Ch. 10 Oxford Handbook of Economic Inequality

  5. Greater Union Density:Highly Correlated with more Equality • Solidarity & reduction of wage differentials – a basic value • Wage compression (moreequality) within bargaining units • Sectoral / Industrial bargaining implies bigger impact on national inequality than with establishment bargaining units • Union / non-union differentials do increase inequality but are smaller where union density greater • Biggest % wage gains for low-paid – “threat effect” also benefits non-union • USA: decline union density estimated => 1/5th to 1/3rd of increase wage inequality • POLITICAL VOICE: Union impact on the “Social Wage” • Minimum Wages, Social Insurance & Quality Public Services • Macro-economic Priorities – how important is ‘Full Employment’? • The Moral Economy of Norm Formation – Consistent Voice for Equity

  6. Hourly wages: stagnant for 20+ yearsThe Evolution of Canadian Wages over the Last Three Decades: René Morissette, Garnett Picot and Yuqian Lu Statistics Canada March 2013 Analytical Studies Research Paper Series No:. 347

  7. Inequality – the price ‘we’ pay for growth? 1980 + ‘New Normal’ in CanadaSources: (1914-1960: Urquhart, MC and K. Buckley (eds) "Historical Statistics of Canada"; 1961-2000 CANSIM I series I603501 (matrix 9467) CANSIM II series V717706 (table no. 3830003), CPI - CANSIM I series P100000 matrix 9940, CANSIM II series V735319 table no. 3260001)

  8. Little growth in real income for most families

  9. Taxes & Transfers offset Rising Market Income Inequality until 1995After-tax & transfer Income Inequality rose 1996-2010

  10. BUT Rapid Real Income Growth @ Top

  11. Top 1% takes Increasing Share in Canada & USATop Income Shares in Canada: recent trends and policy implications Mike Veall, Canadian Journal of Economics November 2012

  12. Decline in Union Density since 1991

  13. 1981-1998: ↓ union density age 25-34

  14. Union Density – impacts on Top 1% share? • Direct Economic effects on top 1% ? • Limited impact • BUT for the other 99%: • Can collective bargaining at the workplace get a greater share of the gains from growth? • Who gets the rents from developing Canada’s natural resources ?

  15. Labour’s Share of GDP: Trending Down CANSIM Table 380-0001 - Gross Domestic Product (GDP), income-based, quarterly

  16. The Political Economy of Unionism • The ‘Social Wage’ = transfers + value of public services • Key to effective equality of: • real income • security • opportunity • Strong Union Movements play crucial public role • Minimum Wage, Quality Public Services & Labour Regulation • Distributional Impact of Taxation and Regulation of Environment, Financial Markets & Consumer Protection • Union Voice & Corporate Governance affect CEO compensation • Macro-economic priorities – relative importance of ‘full employment’ • “Moral Economy” of Norm Formation – e.g. top pay in public sector?

  17. Useful Sources The Evolution of Canadian Wages over the Last Three Decades: (2013) René Morissette, Garnett Picot and Yuqian Lu Statistics Canada March 2013 Analytical Studies Research Paper Series No. 347 Inequality and the Labor Market: Unions (2009) JelleVisser and Daniele Checchi – Chapter 10, Pp 230-256 in The Oxford Handbook of Economic Inequality, edited by WiemerSalverda, Brian Nolan, and Tim Smeeding, Oxford University Press, Oxford, 2009 Unions, Norms, and the Rise in U.S. Wage Inequality Bruce Western and Jake Rosenfeld (2011) American Sociological Review2011 76: 513 UNIONIZATION AND WAGE INEQUALITY:A COMPARATIVE STUDY OFTHE U.S., THE U.K., AND CANADA (2003) David Card, Thomas Lemieux, and W. Craig Riddell Working Paper 9473 National Bureau of Economic Research http://www.nber.org/papers/w9473 January 2003

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