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Economic Impact of Labor Unions - 3/10/15

Very few economic issues are as emotional as those that relate to the impact of labor unions.  Many believe that unions represent a bedrock of America’s middle class, while others believe that they produce economic inefficiency and lost jobs.  Available research supports all sides of the argument. 

A study in the American Sociological Review estimates that the decline in unions may account for one-third of the rise of inequality among men.  Research by Nobel Prize winner Joseph Stiglitz in his book entitled The Price of Inequality notes that when unions were stronger in America, productivity growth and real hourly compensation moved together in manufacturing.  In recent years, that link seems to have been broken. 

One theory holds that as unions weakened, executives were able to more easily grab the gains from productivity.  According to the Economic Policy Institute, in 1965, chief executives on average earned on average twenty times as much as the typical worker.  By 2013, they earned nearly three hundred times as much.  Of course, there are competing explanations, including the impacts of educational attainment, globalization and technology.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.