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“Wage Inequality and the Liberalization of Industrial Relations in the United States”

Anthony Roberts

November 15, 2015

Economic Justice, Publications, Policy Brief


Growing inequality remains one of the most concerning economic issues in the United States. Despite this concern, current policy discussions ignore the role of industrial relations in creating economic equity. As a result, contemporary policy efforts have concentrated on the reform of the U.S. tax structure for the redistribution of income. While this policy prescription is important for mitigating wealth inequality, it obfuscates how the shift towards service and technical occupations intensified wage inequality and diminished the labor share of national income in the U.S. In order to address these issues, current policy discussions need to focus on how the deregulation of industrial relations in the U.S. contributed to the growth of income inequality. This brief shows how the neoliberal reform of industrial relations contributed to the growth of wage inequality in the United States since the 1970s. The liberalization of industrial relations in the United States has been characterized by the complete collapse of collective bargaining and union representation. In contrast, Germany and Finland instituted moderate reforms despite experiencing a similar shift toward service and technical occupations. Compared to the United States, wage inequality is far more moderate in Germany and Finland because of their alternative approach to liberalizing industrial relations. This cross-national difference in reform efforts illustrates how hostile relations between organized labor and employers facilitated the deregulation of industrial relations in the United States. Accordingly, given the concern over growing income inequality, progressive policy-makers need to advance a new agenda based on promoting cooperative relations between organized labor and employers and building cross-class coalitions to support efforts to create a social partnership between employers and unions in the United States.

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