Association for Public Policy Analysis & Management

Wealth is increasingly inadequate for many families to achieve long-term economic security as wealth inequality is growing. At the same time, union membership has declined, which may be one channel by which families can gain access to stable jobs and strong benefits. This paper analyzes data from the Federal Reserve’s Survey of Consumer Finances, or SCF, showing that unions can play a role in increasing wealth for middle-class Americans. We examine the link between union membership and household wealth from 1989 to 2016, finding that union status and wealth correlate with each other. We use multivariate regression to explore several possible explanations for the wealth gap by union status. These explanations include differences in savings behavior such as 401(k) plan contributions, additional benefits such as health insurance, income and employment stability, and access to financial education in addition to bargaining power. Using multivariate regressions and decompositions, we conclude that income and employment stability are the most important contributing factor to the wealth gap by union status, followed by differences in saving behavior and additional benefits. These results suggest that declining union membership in particular has contributed to rising wealth inequality. More broadly, the findings indicate that the broad rise in income and employment instability over the past two decades may be a key contributor to the persistently high and growing wealth inequality.