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Collective Bargaining Erosion Hits Everyone

by Joye Barksdale  |  January 08, 2015

Collective Bargaining Erosion Hits Everyone Note: Data are for compensation (wages and benefits) of production/non-supervisory workers in the private sector and net productivity of the total economy. "Net productivity" is the growth of output of goods and services less depreciation per hour worked.

If you’ve accelerated your pace at work but your paycheck seems stuck in neutral, you know by now that you’re not alone. The widening gap between productivity and pay is a long-term trend that, perhaps not surprisingly, is related to the erosion of collective bargaining, according to a new study by the Economic Policy Institute.

Productivity and compensation went pretty much hand-in-hand from the end of World War II until the 1970s. But since then, productivity – defined as the output of goods and services per hours worked – grew substantially while worker compensation lagged, especially in the past 10 years.

“One key factor in the divergence between pay and productivity,” the EPI study reports, “is the widespread erosion of collective bargaining that has diminished the wages of both union and nonunion workers.”

From 1948 until 1973, productivity increased by 96.7 percent while hourly compensation increased by 91.3 percent. But from 1973 through 2013, productivity increased 74.4 percent while hourly compensation increased by only 9.2 percent, the study reveals.

Employers could afford to pay better, but it’s not happening “because policy choices made on behalf of those with the most income, wealth and power have suppressed wage growth for the vast majority,” the study states. One of those choices has been to undermine collective bargaining. In states where collective bargaining declined the most, compensation grew the least.

The EPI report concludes: “Any effort to reestablish a link between pay and productivity growth will need to promote policies that enable workers to once again join unions and bargain collectively.”

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