Tuesday, September 2, 2014

What is the Scandinavian Secret that the U.S. could learn from?


As we mark the end of Labor Day weekend, Vox.com has compiled several charts that show the decline of American unionization and the possible (I’d say likely) connection to growing income inequality.
But the chart that really grabbed my attention was the one displayed above that reveals that labor unions are far less prevalent in the U.S. than they are in almost every other highly developed nation. Among the 23 other nations in that category for which there is data (those who are part of the Organisation for Economic Cooperation and Development, or OECD) 20 had higher unionization rates in 2011 than America.

And there we have the Scandinavian countries leading the way – again. Finland, Sweden and Norway top the list. Sixty-nine percent of workers in Finland have collective bargaining in their workplace.
And yet, their economies are doing fine, typically ranked among the 25 richest countries in the world, based on GDP per capita.
So many lists these days show the Scandinavian countries among the best in the world in key categories: K-12 education, good wages, low crime, low poverty, health care benefits and paid leave, and overall quality in government services.
American critics say these nations represent European-style socialism, they have ridiculously high taxes, they lack innovation and entrepreneurship. Sure, Americans would never accept the way people live in Finland. But it’s important to note that those nations also routinely end up near the top of another list – the countries were the population is most satisfied with their living conditions.

Here are some highlights of what Vox found about unions in America:
Just 30 years ago, around 1 in 5 workers was a union member. Today, it's just over 1 in 10, around 11.3 percent as of 2013. The cause of the decline is subject to heated debate. One reason may be new right-to-work laws — five states have added right-to-work laws since 1980. Some have argued that unions simply don't appeal to young workers like they once did.
Today, there are more than 3 million fewer union members than there were in 1983. But public sector unions have still grown; only private sector unions have fallen off, by around 4.6 million people.

Deunionization in the US has occurred alongside rising inequality, and some economists have suggested a causal link between the two phenomena. One 2011 paper from researchers at Harvard and the University of Washington estimated that "the decline of organized labor explains a fifth to a third of the growth in inequality" in hourly wages.

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