Why Unions are Important

The people who have been occupying financial districts in Canadian and American cities are motivated by anger over the glaring economic unfairness that exists in our society. The labour movement welcomes what these young people camping outdoors in tents are saying — because we have said the very same thing for many years.

The 1 per cent who are the mega-rich are getting richer while 99 per cent of us who are ordinary working people fight for a shrinking piece of the economic pie. Since 1976, median earnings in Canada have barely inched up from $44,100 to $45,600 adjusted for inflation. That’s an increase in income of just $1,500 in a third of a century — less than $45 a year in real terms. In contrast, the share of all individual income going to the top 1 per cent in Canada has almost doubled since the 1980s, returning it to the same level as in the 1920s.

People have had enough and say that this intolerable unfairness has to change. But how? We did have a more equal and inclusive society anchored by the middle class between World War II and the 1980s, but then the governments of Margaret Thatcher, Ronald Reagan and others ushered in a massive shift in income, wealth and power distribution to people who were already sitting pretty. American economist Paul Krugman has described this as “the Great Compression.”

The assault on the middle class has taken many forms, including tax cuts to the rich, the shredding of valuable public services, and globalization that allowed companies, especially banks, to pillage at will. The attack also included moves by governments to make it more difficult for people to join unions, and to limit the ability of those unions to bargain effectively on behalf of their members.

There is a direct relationship between the shrinking of the middle class in the last 30 years and the decline in union membership as a proportion of the Canadian private sector workforce. About one in three private sector workers were union members in the late 1980s but today that number is under one in five. We see the results in the glaring income disparity that is now shining the spotlight on the massive advantages gained by the richest 1 per cent over the last 30 years.

Unions have traditionally contributed to a healthy middle class in a number of ways. They limited to some degree the share of total national income that goes to corporate profits. That corporate share now is near a record high in Canada and the U.S. as the bargaining power of unions has weakened.

Unions have also been able to narrow the pay gap between senior managers and professionals and the rest of the workforce. There is certainly a need for income differentials to compensate employees for taking jobs that require greater skills, effort and responsibility, but the pay gap has risen to absurd levels. As recently as 1995, the average pay of Canada’s highest paid 50 CEOs was 85 times the pay of the average worker. Just 15 years later, their average compensation had skyrocketed to 219 times the pay of the average worker.

Unions are also successful in reducing systemic wage gaps in workplaces. Being in a union means better wages for women, workers of colour, aboriginal people and people with disabilities.

It is also true that the more equal wage structure in unionized workplaces will set wage and benefit standards that spill over into non-union workplaces. Those non-union workers tend to be better paid when they live in communities with a critical mass of unionized workers earning decent wages. Experts at the International Monetary Fund and the Organization for Economic Cooperation and Development have confirmed the labour movement’s argument that the single best mechanism to narrow the income gap is broad-based collective bargaining.

The final and most important reason why countries with strong labour movements are more equal is that unions advocate for government policies that benefit all working people, not just their own members. Employers, especially large employers, tend to be hostile to unions because we challenge their power in the workplace and the wider society. Beginning 30 years ago, government policies that shifted power and wealth to those who already had more set the stage for today’s growing inequity.

Lifting up the standard of living for a broadly-based group of Canadians is good for everyone. Being in a union means earning a decent wage so that people can buy a home, a car, raise a family, take a vacation, put their kids through college, and after a lifetime of work, be able to retire in dignity. Decent salaries and pensions are good for small businesses and build a better future for our children. A good standard of living creates strong, vibrant and safe communities. Unions do make a difference by reducing inequity.

Ken Georgetti is president of the 3.2-million member Canadian Labour Congress.