Because blue-collar worker income in Sweden, Norway, and Denmark is so high, Americans are often surprised to learn that none of the Nordic social democracies have minimum wage laws. The truth is that they don’t need them, thanks to the immense (albeit gradually waning) power of Scandinavian labor unions. Organized labor in that region of Europe has used its power to set a de facto wage floor, rendering parliamentary action superfluous.
Danish organized labor, for example, has negotiated collective bargaining agreements that cover approximately 80 percent of the country’s workers. That means even the handful of firms outside those contracts need to keep wages high in order to hire and retain employees. To a great extent, unions set the price of Danish labor, even in workplaces where there are no union members.
New research from the Economic Policy Institute suggests that American unions play a similar role — or at least they used to. An EPI report issued on Monday argues that the decline of organized labor has seriously damaged the earning power of even non-union working men in the private sector.
After analyzing nearly four decades of wage data, EPI estimated that male non-union workers in the private sector would be earning, on average, $2,074 per year if the percentage of unionized workers in the private sector had stayed flat since 1979. Overall, EPI found that male non-union workers in the private sector have been losing about $109 billion per year. Women in non-union, private sector jobs took a much smaller hit to their income — about $24 billion annually — because men were significantly likelier to be union members in 1979.
The EPI report was co-authored by Washington University-St. Louis sociologist Jake Rosenfeld, author of the excellent 2014 book What Unions No Longer Do. Rosenfeld told me he had expected to find that union decline had somewhat depressed non-union wages, but that the scale of the effect was “staggering."
“It has to be seen as a top culprit in the ongoing financial fragility of the average American worker,” said Rosenfeld.
The United States has never had anything close to Denmark’s union density, so the American labor movement was never able to play Nordic labor’s decisive role in setting wages. But the organizing wave that took place during and after the Great Depression certainly made unionization into a clear and present danger for employers in key industries. Setting higher wages at non-union shops became a way to compete for workers, but it also helped mollify existing employees and remove an incentive they might have for seeking union representation.
Higher pay at non-union shops turned out to be good for the businesses that had already signed collective bargaining agreements with their employees. If non-union factories needed to keep wages relatively high in order to stave off unionization, that meant they couldn’t dramatically undercut the already unionized firms when it came to labor costs.
Now wage trends follow the reverse logic. Private sector union workers sometimes need to accept slower wage hikes, or even wage cuts, so that their bosses can keep the lights on in a market dominated by powerful non-union actors. The classic example of this defensive bargaining is United Auto Worker’s reluctant embrace of the two-tier contract during the Great Recession; in 2007, the union agreed to contracts with the Big Three auto companies that would result in substantially lower wages for new employees. (The tiered system now seems to be on its way outwith the new round of contracts.)
In order to ease the downward pressure on members’ wages, unions need to either drastically expand their membership or find some other way to lift wage floors industry-wide, including at non-union workplaces. One of America’s biggest unions, SEIU, seems to be trying out both strategies. While the union has long had an aggressive, expansionist approach to scooping up new membership, in recent years it has also put more of its resources into state and local minimum wage efforts. SEIU's biggest push along these lines has been the Fight For $15 campaign.
While it’s still unclear whether the national Fight For $15 campaign will ultimately result in some form of union representation for fast food workers, it has already boosted service sector wages in many parts of the country. And a higher industrywide wage floor, in turn, has changed the baseline in negotiations between unions and employers. (Although, controversially, organized labor has lobbied for union exemptions to some minimum wage laws.)
This strategy, and the findings of the EPI report, also suggest that one of the oldest debates in the labor movement may have ended in a draw. Organizers, workers, and labor leaders have long argued over whether it makes more sense to pursue an ambitious form of unionism rooted in social movement politics, or a more circumspect “business unionism” that aims mainly at servicing organized labor's existing membership.
Maybe those two positions aren’t mutually exclusive after all. Even business unionism at its most parochial can indirectly raise wages at non-union firms, and even social movement unionism at its most romantic can yield tactical benefits that are good for existing union members.
“Pure and simple business unionism is going to have some spillover effect for non-union workers,” said Rosenfeld, citing the findings of his analysis. “That said, they need allies, and a broader community acting on behalf of average workers."