Unions bolster middle class economy: Report

Contracts buffer againt recessions, promote mobility
|labour-reporter.com|Last Updated: 05/05/2015

The key to a sanguine middle class is unionization, according to a new report.

Released by the Canadian Centre for Policy Alternatives on May 1, the study indicated union representation affects a worker’s ability to move up the middle class ladder.

Especially in hard economic times, workers that held a union card were buffered from devastating affects and more likely to access upward mobility opportunities.

“The findings suggest that there is a huge opportunity cost for workers who lose a unionized position, especially during recessionary periods,” said Hugh Mackenzie, an economist who authored the study in part. “Conversely, workers represented by a union tend to move a notch 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.”

Mackenzie found about 27 per cent of full-time Canadian workers were represented by a union in 2011, most of whom belonged to the upper income echelons. Among the lowest income group, that number was only eight per cent.

Between 1997 and 2011, union density among private sector workers dropped from 21 per cent to 14 per cent. Typically that translates to downward mobility as workers tend to drop a rung or two on the income ladder when private companies decertify, the study noted.

Because employer contracts negotiated by unions can shield against some of the economic repercussions of a recession, a strong labour movement can hold the key to mobility.

For instance, workers who ended a recessionary period without union representation in the past generation dropped down the income ladder by two deciles or more, according to the CCPA. On the other hand, those who certified in the same period moved up by at least two deciles. From 2006 to 2011, workers who picked up a union card saw median incomes increase by 39 per cent, compared to a nine per cent drop for workers who lost union jobs.

This is indicative of a shrinking middle class and a lagging mobility rubric, Mackenzie said.

“Any policy discussion around middle class economics would rightly examin 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,” he added.

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