Last week, employees at a Volkswagen plant in Chattanooga, Tenn., voted by almost three to one to join the United Automobile Workers. By the numbers, this wasn’t a big deal: It involved only a few thousand workers in an economy that employs almost 160 million people. But it was an important symbolic victory for a labor movement that even in its heyday never made significant inroads in the South.
And it’s not silly to imagine that historians will someday look back at the Chattanooga vote as a milestone on the road back to the more or less middle-class society America used to be.
Of course, we were never truly egalitarian. Even during the era of widely shared prosperity that followed World War II, many Americans, particularly people of color, were poor, and a few were very wealthy. But in terms of income and wealth we were a far less unequal nation than we are now. You can quantify this arc using statistical measures like the Gini coefficient or the ratio of top to bottom incomes. As someone who grew up in that era, I can also attest that America used to feel like a place in which most people lived in more or less the same material universe. It definitely doesn’t feel that way now.
The thing is, that relatively equal society didn’t evolve gradually. As Claudia Goldin — who received the Nobel Prize in economics last year — and Robert Margo showed in a famous 1992 paper titled “The Great Compression,” the relatively equal wage structure of the postwar era emerged quite suddenly in the 1940s. Wartime wage and price controls were an equalizing force, but the new equality persisted for decades after those controls were removed.
And the most likely explanation for the sudden but persistent move toward relative equality was something else that was sudden but persistent: the rise of labor unions, which by the late 1940s represented more than 30 percent of American workers, and remained powerful until the 1980s. Strong unions were a force for equality because they were a counterweight to both the market power of big business and the political power of big money. And the decline of unions, which still represented around a quarter of workers in 1980 but then fell off a cliff, was probably a major factor in the emergence of the new Gilded Age we live in now.
Why did unions decline? It’s tempting to assume that their diminishment was inevitable in the face of global competition and the falling share of manufacturing, their traditional stronghold, in employment. But other advanced economies are still strongly unionized — in Denmark and Sweden, for example, about two-thirds of workers are union members.
