Quick Hit Ellyn Fortino Friday October 25th, 2013, 12:36pm

Study: Boosting Unionization Would Help Combat Income Inequality In Illinois

Although Illinois’ economy is “tepidly growing,” workers in the state are still worse off than before the recession, labor experts at the University of Illinois say.

At 9.2 percent, Illinois’ unemployment rate is still higher than pre-recession levels, and the state’s labor-force participation rate is on the decline, according to the experts' report “The State of Working Illinois 2013: Labor in the Land of Lincoln.”

Overall, wages have been sluggish for most workers since the turn of the millennium, yet the top 1 percent in Illinois earned at least 635 percent more than the median employed worker each year. All of this has taken place as a growing number of people in Illinois have plummeted into poverty. The percentage of those living below the poverty line shot up significantly from 7.8 percent in 2000 to 12.7 percent in 2012, according to the report.

The study’s authors noted that the decline in unionization is a key reason why the state has experienced such high levels of income inequality, which can stifle economic growth. The report suggests that increasing unionization would not only be a win for workers but also for economic growth in the state.

Union membership for the state’s working-age residents dropped from 20.6 percent in 2002 to 17.2 percent in 2012, which spells some bad news for Illinois’ income gap. That’s because median union employees, who make an average of $43,687 a year, earn $10,682 more than their nonunion counterparts. Overall, union workers on average earn 5.7 percent more in income than similar nonunion employees.

Union workers in the bottom 10 percent earn an average of $14,685 a year, compared to the meager $3,701 for nonunion workers. As the report noted, unions play a key role in preventing workers from falling into poverty.

When it comes to the highest-paid workers, nonunion employees in the top 1 percent make $300,105 a year, which is far more than the $115,004 for equivalent union workers. The wage gap was also similar among union and nonunion workers in the top 10 percent. Overall, union wages are “far more compressed and evenly distributed than nonunion wages in Illinois," the report reads. 

The decrease in union membership also puts more pressure on public resources because workers without the various benefits that unions typically provide, such as health care and retirement plans, often depend on government programs. 

The report's authors offered up some ways Illinois could help address its decline in unionization.

First, the state should continue to promote workers who want to form a union. Also, employers should be forced to put up a notice detailing workers’ rights, even for those who are not in a union. Specifically, these notices should discuss lawful, collective actions employees can take in an effort to improve their pay and workplace conditions.

The study also recommended that the state avoid right-to-work policies, which weaken the labor force and drag down wages.

“Other states have tried this, and although it’s garnered their governors some national press, it’s really been to the detriment of those states that have tried it because it creates a culture of insecurity among workers,” said the report's co-author Robert Bruno, a professor of labor and employment relations. “Those policies failed, so it’s time to try something different – namely, worker-friendly policies.”

While union membership in Illinois has declined, the percentage of workers in lower-quality, part-time jobs has seen an uptick. In 1995, the share of Illinois workers who worked part-time was 15.5 percent. But that figure spiked to 19.2 percent, or nearly one-fifth of the workforce, in 2012.

“Given that we’ve shifted so much of employment to part-time, informal or conditional work, raising the state’s minimum wage would be of great help to lower- and middle-class workers,” Bruno said.

In addition to raising Illinois’ $8.25 minimum wage, the report spelled out other policy steps the state should take in order to speed up the state’s economic recovery, increase employment and reduce income inequality. The report called for the expansion of the state’s earned income tax credit, a more progressive income tax and a crackdown on wage theft. The state should also increase its investments in childhood education and public infrastructure, the report noted.

“If you combine a minimum wage hike with the expansion of the earned income tax credit, that would be an immediate help to low-wage workers,” said the report’s other author Frank Manzo, a research associate at the university’s Labor Education Program. “Those two moves alone would lower inequality and stimulate the state economy.”


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