Union Membership Boosts Children's Advancement

The following was reported last month in The New York Times:

It is well established that unions provide benefits to workers — that they raise wages for their members (and even for nonmembers). They can help reduce inequality.

A new study suggests that unions may also help children move up the economic ladder.

Researchers at Harvard, Wellesley and the Center for American Progress, a liberal think tank, released a paper Wednesday showing that children born to low-income families typically ascend to higher incomes in metropolitan areas where union membership is higher. . . .

“It’s a striking relationship,” said Lawrence Summers, the former Treasury secretary and Obama economic adviser, who is participating in a discussion with some of the study’s authors on Wednesday. “It’s further grounds for concern about the decline of unionism in the United States.”

The authors posit a variety of reasons for why higher rates of unionization tend to coincide with greater mobility, beyond the effect on parents’ wages, which would seem to be the most obvious way unionization could matter.

Their most interesting explanation is that unions are effective at pushing the political system to deliver policies — like a higher minimum wage and greater spending on schools and other government programs — that broadly benefit workers. Perhaps not surprisingly, three cities that appear to reflect the union effect — San Francisco, Seattle and New York — are all jurisdictions where the minimum wage is rising substantially (though for New York it is only for workers in fast-food chains.).

The researchers looked at the expected income of people ages 29 to 32 whose parents were at the 25th percentile of income nationally when they were teenagers. They found that a 10-percentage-point increase in the rate of unionization in an area coincided with a rise of an additional 1.3 points on the income distribution as the average child becomes an adult. . . .

The correlation remains statistically significant even when the researchers controlled for a variety of other social and economic variables, like the child poverty rate and median house value.

“I would have thought we could have found things that might have killed off the effects,” said Richard B. Freeman, a labor economist at Harvard who was one of the study’s authors. “And we basically didn’t.”

Moreover, the benefits aren’t exclusive to low-income children. The researchers also find that a 10-percentage- point increase in the rate of union membership is associated with a 3 percent to 4.5 percent increase in the incomes of all children — regardless of their parents’ income. (The differences in the 3 percent and 4.5 percent arise from the number of demographic variables the researchers control for.)

Because there is more upward mobility in areas with greater unionization generally, the researchers concluded that the result was not because the children of union members seized opportunities from other children. . . .

. . . the result is especially telling given a common critique of unions — that they may raise wages for workers in an area, but they lower employment by making marginal workers unaffordable. Even if that’s the case, the current study suggests that the benefits of greater unionization are outweighing the costs: Children are doing better on average when unionization for their parents’ generation is higher, even if the higher rates of unionization could theoretically lower employment.

If unions were doing more harm than good, we wouldn’t expect to see mobility rise as the rate of unionization does.

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