UNIONIZATION & INEQUALITY: TRENDS IN CANADA

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28 Οκτ 2013 (πριν από 3 χρόνια και 10 μήνες)

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UNIONIZATION &
INEQUALITY:

TRENDS IN CANADA

Lars Osberg

Economics 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



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 => 1/5
th

to 1/3
rd

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+ years

The 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 Canada

Sources: (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)

Little growth in real income for most families

0
20000
40000
60000
80000
100000
120000
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
2009 Dollars

Total Income of Canadian Family Units:

1976
-
2009

20th percentile
40th percentile
median
60th percentile
80th percentile
Taxes & Transfers offset
Rising Market Income Inequality
until 1995

After
-
tax & transfer Income Inequality rose 1996
-
2010

y = 0.0024x + 0.3716

R² = 0.8195

0.25
0.3
0.35
0.4
0.45
0.5
Gini

Index of Inequality of Equivalent

Individual Income

Canada:
1976
-
2010

CANSIM V46442259, V46442295, V46442331

MARKET INCOME
MARKET + TRANSFERS
AFTER TAX
Linear (MARKET INCOME)
BUT Rapid Real Income Growth @ Top

P20
P40
P50
P60
P80
P90
P95
P99
P99.5
P99.9
P99.99
Canada
0.40%
0.31%
0.35%
0.40%
0.71%
0.71%
1.00%
1.95%
2.44%
3.79%
5.20%
USA
0.37%
0.44%
0.49%
0.52%
0.85%
0.85%
1.34%
2.50%
2.81%
3.97%
5.49%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Percentile Points of Income Distribution

Real Income: Compound Annual Growth Rate

1987
-

2007


Top 1% takes Increasing Share in Canada & USA

Top Income Shares in Canada: recent trends and policy implications Mike Veall,
Canadian Journal of Economics

November 2012


Decline in Union Density since 1991

30
31
32
33
34
35
36
37
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
UNION DENSITY: CANADA
CALURA:1976
-
1995


CANSIM
: Table 279
-
0025

% unionized
0.300
0.305
0.310
0.315
0.320
0.325
0.330
0.335
Sep-98
Jun-99
Mar-00
Dec-00
Sep-01
Jun-02
Mar-03
Dec-03
Sep-04
Jun-05
Mar-06
Dec-06
Sep-07
Jun-08
Mar-09
Dec-09
Sep-10
Jun-11
Mar-12
Dec-12

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

y =
-
3E
-
06x
2

+ 0.0005x + 0.5165

R² = 0.4026

0.46
0.48
0.5
0.52
0.54
0.56
0.58
1961/03
1962/03
1963/03
1964/03
1965/03
1966/03
1967/03
1968/03
1969/03
1970/03
1971/03
1972/03
1973/03
1974/03
1975/03
1976/03
1977/03
1978/03
1979/03
1980/03
1981/03
1982/03
1983/03
1984/03
1985/03
1986/03
1987/03
1988/03
1989/03
1990/03
1991/03
1992/03
1993/03
1994/03
1995/03
1996/03
1997/03
1998/03
1999/03
2000/03
2001/03
2002/03
2003/03
2004/03
2005/03
2006/03
Q1 2007
Q1 2008
Q1 2009
Q1 2010
Q1 2011
Q1 2012
Employee

Compensation
as Share of GDP
:


Canada 1961
-

2012

Series1
Poly. (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 OF

THE 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