Download - Unionization & Inequality: Trends in Canada
UNIONIZATION & INEQUALITY: TRENDS IN CANADA
Lars OsbergEconomics Department, Dalhousie University
• Does Unionization reduce Inequality ?• Always or just Sometimes ?• Why and How ?
• What’s been happening in Canada ?• Inequality• Union density
• Conclusion
• 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
Different Trends in Different Countries
Union Density varies enormously - 80%+ to <10%
=> Union/Non-union wage gap
=> % affected by wage compression => Political Voice
Þ Visser & Checchi Ch. 10 Oxford Handbook of Economic Inequality
Greater Union Density:Highly Correlated with more Equality
• Solidarity & reduction of wage differentials – a basic value• Wage compression (more equality) 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
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
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)
Real (2000 $) Hourly Wage in Canada1914-2000
0
5
10
15
20
25
year
hour
ly w
age
(200
0 $)
Little growth in real income for most families
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
0
20000
40000
60000
80000
100000
120000
Total Income of Canadian Family Units:1976-2009
20th percentile 40th percentile median 60th percentile 80th percentile
2009
Dol
lars
Taxes & Transfers offset Rising Market Income Inequality until 1995After-tax & transfer Income Inequality rose 1996-2010
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0.25
0.3
0.35
0.4
0.45
0.5
f(x) = 0.00239271708683473 x + 0.371559663865546R² = 0.819504766207336
Gini Index of Inequality of Equivalent Individual IncomeCanada: 1976-2010
CANSIM V46442259, V46442295, V46442331
MARKET INCOME Linear (MARKET INCOME)MARKET + TRANSFERS AFTER TAX
BUT Rapid Real Income Growth @ Top
P20 P40 P50 P60 P80 P90 P95 P99 P99.5 P99.9 P99.990.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Real Income: Compound Annual Growth Rate 1987 - 2007
Percentile Points of Income Distribution
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
Decline in Union Density since 1991
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
30
31
32
33
34
35
36
37
UNION DENSITY: CANADA CALURA:1976-1995
CANSIM: Table 279-0025
% unionizedSep
-98
Aug-99
Jul-0
0
Jun-0
1
May-02
Apr-03
Mar-04
Feb-05
Jan-0
6
Dec-06
Nov-07
Oct-08
Sep-09
Aug-10
Jul-1
1
Jun-1
20.3000.3050.3100.3150.3200.3250.3300.335
UNION DENSITY: CANADA LFS 1997-2013
CANSIM Table 282-0077
% UNIONIZED
1981-1998: ↓ union density age 25-34
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 ?
Labour’s Share of GDP: Trending Down CANSIM Table 380-0001 - Gross Domestic Product (GDP), income-based, quarterly
1961/03 1964/06 1967/09 1970/12 1974/03 1977/06 1980/09 1983/12 1987/03 1990/06 1993/09 1996/12 2000/03 2003/06 Q3 2006Q4 20090.46
0.48
0.5
0.52
0.54
0.56
0.58
f(x) = − 2.86319383210334E-06 x² + 0.000506263895100266 x + 0.51652055697734R² = 0.402647344176147
Employee Compensation as Share of GDP: Canada 1961 - 2012
Series1 Polynomial (Series1)
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?
• 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) Jelle Visser and Daniele Checchi – Chapter 10, Pp 230-256 in The Oxford Handbook of Economic Inequality, edited by Wiemer Salverda, 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 Review 2011 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