Widening the gap: The effect of declining unionization on managerial and worker pay, 1983–2000

This paper examines the relationship between falling union membership and the pay gap between workers and managers during the 1980s and 1990s. Analysis of industry-level data from the Current Population Survey indicates that unions boost median worker pay and are also associated with slightly higher mid-level managerial pay, as the union wage premium reverberates up the pay scale. Despite the positive association with both median worker and managerial pay, estimates indicate that union decline widens wage dispersion within the workplace. The wage premium unions offer workers dwarfs the positive union effect on managerial compensation, suggesting that unions operate to influence the underlying pay norms of a firm in the wage determination process.