How Does Declining Unionism Affect the American Middle Class and Intergenerational Mobility?

32 Pages Posted: 19 Oct 2015 Last revised: 15 Feb 2023

See all articles by Richard B. Freeman

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Eunice Han

Harvard University; University of Utah - College of Social & Behavioral Sciences - Department of Economics; Wellesley College

David Madland

Center for American Progress

Brendan Duke

Center for American Progress

Date Written: October 2015

Abstract

This paper examines unionism’s relationship to the size of the middle class and its relationship to intergenerational mobility. We use the PSID 1985 and 2011 files to examine the change in the share of workers in a middle-income group (defined by persons having incomes within 50% of the median) and use a shift-share decomposition to explore how the decline of unionism contributes to the shrinking middle class. We also use the files to investigate the correlation between parents’ union status and the incomes of their children. Additionally, we use federal income tax data to examine the geographical correlation between union density and intergenerational mobility. We find: 1) union workers are disproportionately in the middle-income group or above, and some reach middle-income status due to the union wage premium; 2) the offspring of union parents have higher incomes than the offspring of otherwise comparable non-union parents, especially when the parents are low-skilled; 3) offspring from communities with higher union density have higher average incomes relative to their parents compared to offspring from communities with lower union density. These findings show a strong, though not necessarily causal, link between unions, the middle class, and intergenerational mobility.

Suggested Citation

Freeman, Richard B. and Han, Eunice and Han, Eunice and Madland, David and Duke, Brendan, How Does Declining Unionism Affect the American Middle Class and Intergenerational Mobility? (October 2015). NBER Working Paper No. w21638, Available at SSRN: https://ssrn.com/abstract=2675911

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