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Ramesh Ponnuru's Claim that the Reduction in Union Strength Is Benign: For the Virtual Green Room

Rebutted by Henry Farrell:

Ramesh Ponnuru argues that the relevant social science suggests that US policy makers should not try to reverse the decline of unions.... Ponnuru’s claim is that:

The shift toward a more competitive economy has not hurt workers in general: Total employee compensation as a share of the economy held fairly steady during the second half of the last century even as unions were shrinking. (It’s true that wages as a share of the economy fell, but that was a result of the increased cost of benefits.) The shift has, however, increased inequality among workers, with more rewards going to those with higher skills....

‘[W]orkers in general’ seems a rather unusual proxy for ‘immiseration of the middle class’ given the high degree of variation in employee compensation (those in the highest income segments, where inequality has increased most dramatically since the late 1980s, cannot plausibly be described as ‘middle class’).... Western and Rosenfeld’s figures suggest that the decline of unions has been just as important a factor as education in explaining the rise of inequality among men.... The decline of American labor and the associated increase in wage inequality signaled the deterioration of the labor market as a political institution. Workers became less connected to each other in their organizational lives, and less connected in their economic fortunes. The de-politicization of the American labor market appears self-reinforcing: as the political power of organized labor dissipates, economic interests in the labor market are dispersed and policymakers have fewer incentives to strengthen unions or otherwise equalize economic rewards.

In short, there is good prima facie support for the claim that deunionization has hurt the middle class by contributing to a particularly top-heavy form of increased income inequality, from an author whom Ponnuru cites and presumably takes seriously...

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