3:47 PM Eastern - Tuesday, January 13, 2009

The Economic Argument for the Employee Free Choice Act

As the new administration and Congress works to lift the U.S. economy out of the economic crisis, we've been working on some analyses on how our country has recovered economically since the 1940's.

What we've found isn't much of a surprise, and it makes sense: economic success occurs when rising wages spur consumer spending.

That's exactly what the Employee Free Choice Act is designed to deliver, and the legislation will play a central role in building a strong middle class that will usher in the next era of American economic strength and prosperity.

New research makes a solid case as to why the Employee Free Choice Act would be a "stimulus" that gets our economy back on track. The Economic Policy Institute estimates that if 5 million service workers join unions:

  • 5 million workers would get a 22 percent raise on average, or an additional $7,000 a year;
  • $34 billion in total new wages would flow into the economy;
  • 900,000 jobs would be lifted above the poverty wage for a family of four ($10.22/hr); and
  • Between 1.8 million and 3 million dependent children would share in these benefits.
  • The economic impact on individuals would be about four times as large as the recent federal minimum wage increase, and allow nearly six times more in new wages to flow into the economy.

We know you feel the economic squeeze - but have you heard of these facts and figures?

  • Wages are stagnant. Worker wages have increased just 0.2 percent from March 2001 to September 2008.
  • Real median household income was $1,175 less in 2007 than it was in 2000, while each family spent more than $4,600 more for basic expenses (e.g. gas, mortgage, food, and healthcare).
  • Faced with this reality, average Americans have taken on increasing debt to maintain living standards.
  • Household debt hit record levels in 2007, averaging 129 percent of disposable income.
  • Meanwhile, the average CEO pay has risen: CEO pay has skyrocketed from 27 times more than the worker wages in 1973 to 344 times higher today.

In the past, the growth of unions have helped the economy dramatically:

  • One-third of all American workers joined unions and shared in economic progress between 1947 and the early 1970s, one of the most prosperous periods in U.S. history.
  • Between 1947 and 1973, median family income more than doubled, productivity grew 2.9 percent a year, America's economic output nearly tripled and income inequality declined.

And here's what we know about unionized workers today:

  • Workers in unions earn 14 percent higher wages than workers who are not, are 28 percent more likely to have health insurance, and 54 percent more likely to have a pension.
  • The economic advantage for workers of color is even greater. African American workers in unions earn 18 percent more than their nonunion counterparts, while Latinos earn 22 percent more.
  • Unions help all workers, not just union members, as nonunion employers often attempt to match union pay and benefits to help recruit employees.

And there you have it: a simple economic argument on why the Employee Free Choice Act is vital in today's economy.

You can read about all of our facts and figures in this report below, entitled "Path to Prosperity."

Path to Prosperity

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