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New Study Follows the Money from Wages to Corporate Profits

Photo by RambergMediaImages//Flickr

The money that hasn’t been going into workers’ paychecks while wages have stagnated for decades has been found. It’s been diverted to corporate profits and, according to a new study, that money was rerouted because of a decline in union membership—not the technology and computerization that’s boosted productivity and eliminated jobs.   

Study author Tali Kristal, a sociologist at the University of Haifa in Israel, says:

It’s a zero sum game: whatever is not going to workers goes to corporations. Union decline not only increased wage gaps among workers, but also enabled capitalists to grab a larger slice of the national income pie at the expense of all workers, including the highly skilled.

The study was published last week in in the American Sociological Review and contradicts the theory that computerization is the main factor for soaring corporate profits and flat wages. Brandon Rees, of the AFL-CIO Office of Investment, told The Huffington Post:

The decline in union members is directly related to the stagnation of wages for working people. Economic growth has been going somewhere and it’s been going to the top 1 percent.

Kristal says, “If we want all workers to benefit from the economic growth, then:”

Policymakers can initiate some steps to strengthen unions, such as pro-union reforms of labor law, and deterioration with employers' illegal anti-union tactics that increasingly spread over the last decades.

Read the full study and read more from The Huffington Post, Think Progress and the Science Blog.   

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