How to fight back against the middle-class squeeze? Form a union, says new study

With wages for most workers failing to keep up with the cost of living, families in Silicon Valley, California and throughout the nation are feeling the "middle-class squeeze": working hard but unable to make ends meet.

Perhaps the most at risk are families who have been squeezed right out of the middle class -- trapped in the low-wage, dead-end jobs that are increasingly becoming the only jobs available (a recent analysis concluded that only one out of every four jobs in the U.S. can be considered a "good job".)

How can a community (or a nation) reverse a trend like this, and turn its low-wage jobs back into good jobs? There's no single answer, but a new study performed by the Center for Economic and Policy Research (CEPR) makes a powerful case for the wage-raising effects of one strategy: unions.

CEPR looked at five years' worth of wages for union and nonunion workers in every state, adjusting for differences in education, age, experience, gender, and race to make sure they were comparing workers with similar characteristics. They broke it down further by examining the impact of unionization on workers at different wage levels.

Their findings:

• In every state and in the District of Columbia, unionization significantly improves workers' wages.


• Nationwide, low-wage workers gain the largest benefit from joining a union. The typical union wage premium for a low-wage worker (10th percentile wage level) is 20.7 percent: the equivalent of a raise from $10.00/hr.to $12.07/hr.


• In California:


• the lowest-wage workers (10th percentile) see a 16.5% wage increase from unionization;


• middle-wage workers (50th percentile) see a 15.9% wage increase;


• and higher-wage workers (90th percentile) see a 6.0% wage increase.

Unfortunately, joining a union isn't as easy as signing up on the dotted line. Workers who want to organize a union are usually subjected to intimidation, threats, harassment, mandatory anti-union meetings, or even being fired for speaking up (the latter is illegal, but it still happens, and even employers who get caught illegally firing employees for organizing don't face high enough penalties to be deterred.) The system currently in place, overseen by a National Labor Relations Board comprised of political appointees, is heavily slanted towards making it extremely difficult for workers to stand up for their rights while giving a free pass to unscrupulous employers, and indirectly penalizing those employers who try to treat their workers fairly and do the right thing.

Legislation currently in Congress, titled the Employee Free Choice Act, would help restore the rights that have been eroded by making it easier for a majority of employees in a workplace to form a union. Based on the findings of the CEPR study, this legislation would not only restore lost rights, but could also go a long way towards helping workers restore their eroded paychecks.

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The Middle-Class Squeeze

A recently released study of inequality shows that nearly all the benefits of California's growth since the late 1990s have gone to just one group: the wealthy.

The "Pulling Apart" study from the Economic Policy Institute analyzed income gains state-by-state for low, middle, and upper-income Americans. Between the late 1990s and the mid-2000s, in California:

• The poorest fifth of families (with average income of $18,312) saw no significant income growth.


• The middle fifth of families (with average income of $50,981) grew by just $1,889, or roughly $315 per year.


• Average income for the highest-income fifth of families grew by $16,772. Most of this growth was at the very top of the scale; for the top 5% (with average income of $243,386), average income grew by $41,988.

This tremendously uneven distribution of growth led to stagnation for the middle class and the poor, and accelerated the growing gap between the very high-income and everyone else.

The gap between California's middle class families and the state's wealthiest residents is now the 3rd largest of any state in the country. (We can congratulate ourselves on providing a fairer shake for the middle class than Oklahoma or Mississippi, which were ranked #1 and #2.)(Continued...)

Because it does not include capital gains, this analysis actually underestimates the gap between the superrich and everyone else.

How do middle class Americans view this decade's economic shifts? In a recent poll of the U.S. middle class, 54% of respondents said that in the past five years, they had made no financial progress or had fallen behind. "Middle class" for this poll was self-defined by the respondents, 53% of whom identified as middle class (another 19% identified as lower-middle and 19% as upper-middle).

The Pew Research Center has been asking this survey question -- "Are you better off now than you were five years ago?" -- since 1964. This year, more middle class Americans said they were not better off than at any point in the past fifty years. An ever higher proportion, 79%, said that it's become more difficult for middle-class families to maintain their standard of living.

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