Unions key to middle class economics, says CCPA

OTTAWA—The share of unionized workers in Canada has dropped by only two percent over the past generation, but union representation dramatically affects workers’ ability to move up the middle class ladder, says a new study by the Canadian Centre for Policy Alternatives (CCPA).

The study looks at where unionized workers stand along the income spectrum in Canada, and finds that—especially during recessionary periods—workers with a union card are buffered from hard times and more likely to experience upward mobility.

“The findings suggest that there is a huge opportunity cost for workers who lose a unionized position, especially during recessionary periods,” says economist Hugh Mackenzie, who co-authored the study with statistician Richard Shillington.

“Conversely, workers represented by a union tend to move a rung or two up the income ladder. They’re not only better positioned to weather economic storms—they’re more likely to experience the Canadian middle class dream: upward income mobility.”

Among the study’s findings:

• About 27 per cent of full-time Canadian workers were represented by a union in 2011, most of them belonging to the upper income strata. In the lowest income decile, only eight per cent of workers were represented by a union, compared to 47 per cent in the ninth decile.
• Unionization helps families make the upper middle class: Families with one or more full-time unionized worker are 1.75 times more likely to have incomes at the upper end of the income spectrum.
• The drop in private sector unionization hollows out middle class: Between 1997 and 2011, union density among private sector workers in Canada dropped from 21 per cent to 14 per cent. This decline overwhelmingly took place in the upper half of the income distribution (deciles five through eight). The loss of a union card in the private sector often means downward mobility, where workers drop a notch or two in the income ladder (using decile analysis).
• Unionization a buffer during recessions, key to mobility: Workers who ended a recessionary period without union representation in the past generation dropped down the income ladder by two deciles or more; those who gained a union card during those periods moved up by two deciles or more. In the 2006 to 2011 period, workers who lost union jobs saw their median incomes drop by 9%. During the same period, workers who gained union representation saw their median incomes increase by 39 per cent.

“We can expect the middle class to shrink and upward mobility to stall, as long as union representation continues to decline,” says Mackenzie. “Any policy discussion around middle class economics would rightly examine these startling trends and reconsider ways to facilitate the rise of collective bargaining in Canada’s future. The health of the middle class depends on it.”