Workers’ Bargaining Power and Income Inequality
In the US NEWS article “The Fall of Unions From Power”, it points out that the union participation rate has reached the lowest point since the Great Depression and it has attributed workers’ decreased bargaining power to decreased participation rate in unions. More importantly, the article points out that the widening gap between the rich and the poor is likely influenced by the change in bargaining power, as decreased bargaining power of workers led to lowered or steady wages, while wages of the top management increased.
If we look closely at these occurrences, we can explain them in terms of bargaining and power in networks. Power is an attribute of an individual as well as that of a relation among individuals, and power imbalance in a relation can be a result of a large social network in which one person involved occupy more important position and has access to more opportunities than the other person.
According to a recent report from the Center for American Progress mentioned in the article, unions “fight for key middle-class interests both in the workplace and in the political arena”. Thus, when unions are strong, workers have stronger bargaining power. When the skilled workers all participate in unions and bargain with companies about their wages, a company’s power is limited, because as there is limited number of skilled workers out there, companies have limited outside opportunities and can only negotiate with the unions to increase workers’ wages or benefits.
After the Great Depression, the high unemployment rate remains. Under such a circumstance, there are more supplies in the work force than demand by companies. With the decline of unions, workers are increasingly dependent on their bosses, while their bosses, on the other hand, have multiple choices because of the large pool of unemployed workers. In the article, Casteel says, “ When people are dependent on what the boss is willing to give you versus what they can sit own and bargain for and retain through written contract, the situation that exists kind of speaks for itself.” Such dependence allows the companies or the managers to have more power over the workers, and allows the companies to hire workers at wages as low as possible. As workers usually don’t have second options, they tend to take what they get, which results in increased inequality.