To Reduce Urban Inequality, Reconsider Unions
Cities have become simmering cauldrons of economic inequality, especially after the Great Recession. In his new book, Richard Florida writes that this condition is at the heart of what he calls the “New Urban Crisis,” and suggests fixes in the form of equitable housing, tax, infrastructure, and anti-poverty policies.
But there’s another solution, now largely overlooked, that has helped reduce gross inequality in the past: collective bargaining. In a new working paper, economists Brantly Callaway at Temple University and William J. Collins at Vanderbilt University examine the decades after the Great Depression, when economic inequality declined dramatically—and then stayed low for several decades after. They conclude that the simultaneous rise of unionization during this time “was not merely a coincidence.”
The analysis, published by the National Bureau of Economic Research, is based on a novel dataset—a comprehensive multi-city survey conducted in 1951, which collected information about wages, union status, levels of educational, work history, and family background. In five cities—Philadelphia, New Haven, St. Paul, San Francisco, and Los Angeles—the researchers compared the wages of men who were members of unions to those who weren’t, controlling for differences in education, foreign-born status, and geography, among other factors.1
Abstract
We study a novel dataset compiled from archival records, which includes information on men’s wages, union status, educational attainment, work history, and other background variables for several cities circa 1950. Such data are extremely rare for the early post-war period when U.S. unions were at their peak. After describing patterns of selection into unions, we measure the union wage premium using unconditional quantile methods. The wage premium was larger at the bottom of the income distribution than at the middle or higher, larger for African Americans than for whites, and larger for those with low levels of education. Counterfactuals are consistent with the view that unions substantially narrowed urban wage inequality at mid-century.