Ever wonder why income inequality in the U.S. is so extreme? Here is one big reason why:
This graphic compares the portion of income received by the richest 10% and the portion of the workforce who are union members. Note that those at the top earners take a larger share of the nation’s income when unionization rates are low but a smaller slice in times when union membership is high. It’s no mystery that income inequality today is at a historic high at a time when union density is historically low.
This is only one piece of the story. Another key part of the inequality equation are changes in tax policies over the last 30-40 years that reduced taxes on corporations and on those with high incomes and more wealth, while increasing sales taxes and payroll taxes that take a larger portion smaller incomes. Another factor are “free” trade policies that allow capitalists to move assets freely around the world to maximize profits, but deny workers the freedom to pursue higher wages beyond their nation’s borders.
Declining union membership is critical to understanding the growing gap between those at the top and everyone else. And it also points to a practical strategy to reverse the trend. If more workers formed unions — particularly those workers with college degrees and white-collar jobs who have been convinced by employers that they don’t need unions — it would go a long way to making our society more equitable. And best of all, it’s a solution that doesn’t depend on the actions of politicians or the wealthy who fund them. We can do it ourselves.
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