Center for American Progress: Building Middle-Class Wealth Through Unions

A secure middle class depends not only on workers earning fair and stable incomes but also on their ability to sufficiently save for the future. When families live paycheck to paycheck, unexpected sickness or layoffs can spark years of compounding hardships. But when families can build up savings, they not only are able to prepare for such emergencies but also to plan to buy a home, send their children to college, start a business, or switch to a career better suited to their skills and needs, all of which help ensure an economically more secure future.

A new Center for American Progress Action Fund analysis of data from the Federal Reserve’s Survey of Consumer Finances, or SCF, shows that unions can play a role in increasing wealth for middle-class Americans.

  1. Union members generally have higher wages and better benefits than nonunion members, but these things alone do not explain why union members have more savings relative to their incomes than nonunion members.
  2. It is possible that stable union jobs that offer access to training and career opportunities make it easier for middle-class families to plan for their future and thus increase their savings. In that sense, union membership can create a virtuous cycle for middle-class stability.

Many Americans do not have enough wealth to pay for an emergency or to afford a secure retirement. The gap in wealth between the top and everyone else is staggering, vastly larger than the gap in income that often occupies policy discussions. And the chasm in household wealth has been growing alongside an increasing inequality of income and economic security. As a result, policymakers need to focus more attention on building the wealth of middle-class families. They can do so by instituting policies that directly help workers build wealth, such as by ensuring that all workers can access high-quality retirement savings accounts at work no matter their employer.13 Policies to help build wealth also can be more indirect, such as through incentives in the tax code. But policymakers need to create better-targeted tax expenditures to encourage middle-class wealth in areas such as housing and retirement because current U.S. policies to encourage asset building through the tax code are expensive and predominantly help higher-income taxpayers.

These changes are not enough, however: Policymakers also need a broader conception of how to help families build up their wealth. That means working to raise incomes and control costs of key goods such as higher education and child care. And it also means protecting and encouraging workers’ right to join together in a union. CAP Action’s analysis shows that unions can help working people build their wealth and reclaim the American Dream of economic security during their lifetime and upward mobility for themselves and their children.

Christian E. Weller is a Senior Fellow at the Center for American Progress Action FundDavid Madland is a Senior Fellow and the Senior Advisor to the American Worker Project at the Action Fund. Alex Rowell is a Research Assistant with the Economic Policy team at the Action Fund.