Center for American Progress

RELEASE: New CAP Report Suggests Unions Are Critical to Intergenerational Economic Mobility
Press Release

RELEASE: New CAP Report Suggests Unions Are Critical to Intergenerational Economic Mobility

New CAP research, co-authored with economists Richard Freeman and Eunice Han, indicates that policies that make it easier for workers to form unions and bargain collectively should be at the heart of any agenda to boost mobility.

Washington, D.C. — A new report from the Center for American Progress, co-authored with economists Richard Freeman and Eunice Han, suggests that unions play a critical role in intergenerational mobility. Using two different data sources, the report’s research examines whether an association exists between union membership and intergenerational mobility, finding that areas with higher union membership demonstrate more mobility and children with union parents earn more than the children of nonunion parents. The research strongly indicates that policies that make it easier for workers to form unions and bargain collectively should be at the heart of any agenda to boost mobility and ensure an inclusive economy.

“The fact that the effects of unions in raising the well-being of members extends to their children tells us that the ongoing decline of unions will make it harder and harder for the United States to reduce inequality and maintain a strong middle class in the future,” said Richard B. Freeman, the Herbert Ascherman Chair in Economics at Harvard University. “Given the current weakness of unions, the United States desperately needs a rejuvenated union movement or, if that is not possible, some new form of worker organization to play the union role of reducing inequality and opening doors for workers and their families.”

“Our research shows that economic mobility and union membership go hand in hand. Mobility is greater not just for children whose parents are members of a union, but even for people who merely live in areas where union membership is strong,” said David Madland, Managing Director of economic policy at CAP. “When policymakers talk about an agenda to build an inclusive economy, it’s clear that policies to strengthen unions and collective bargaining must play a central role in that discussion.”

“While the benefits of union membership for workers are already well-known, our analysis establishes that unions also benefit the children of workers,” said Brendan V. Duke, Policy Analyst at CAP. “These findings are new, but they should not be surprising given the wealth of evidence that has demonstrated time and again that unions increase economic opportunity—especially for the middle class.”

“Considering this positive correlation between unions and economic mobility, the recent movement to restrict unions’ rights is worrisome,” said Eunice Han, visiting lecturer in economics at Wellesley College. “Whether this relationship will last further into the future, affecting our grandchildren and their children, will also be interesting to investigate.”

The analysis reveals that a 10-percentage point increase in an area’s union membership is associated with low-income children ranking 1.3 percentage points higher in the national income distribution using data from Stanford economist Raj Chetty and others. The correlation is about the same size as that of high school dropout rates and segregation, two of the most important drivers of economic mobility in Chetty’s original analysis.

In the CAP paper, the authors also found that areas with higher union membership have more mobility as measured by the incomes of all children. A 10 percentage point increase in union density is associated with a 4.5 percent increase in the income of an area’s children, after controlling for their parents’ incomes. This outcome remained true even after adopting several additional controls.

The CAP report also used a second dataset to confirm the findings across households and found that children who grow up in union households have better outcomes than children who grew up in nonunion households—even after controlling for a host of factors, including parents’ education, race, age, full-time status, industry, and occupation. Importantly, the effect is concentrated among the children of low-skilled parents. CAP’s report found that for example, children of non-college-educated fathers earn 28 percent more if their father was in a labor union.

With policymakers, economists, and researchers alike focused on ways to rebuild the American middle class, CAP’s report concludes that a serious policy agenda aimed at boosting intergenerational mobility must include policies that will increase the bargaining power of workers.

Click here to read “Bargaining for the American Dream: What Do Unions Do for Mobility?” by Richard Freeman, Eunice Han, David Madland, and Brendan V. Duke

For more information or to speak with an expert, contact Allison Preiss at [email protected] or 202.478.6331.

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