Matt Yglesias discusses University of Haifa sociologist Tali Kristal’s new work on the (possible) role of declining unionization levels on wages across sectors, and he includes the following excerpt from a American Sociological Association press release:

“It was highly unionized industries — construction, manufacturing, and transportation — that saw a large decline in labor’s share of income,” Kristal said. “By contrast, in the lightly unionized industries of trade, finance, and services, workers’ share stayed relatively constant or even increased. So, what we have is a large decrease in labor’s share of income and a significant increase in capitalists’ share in industries where unionization declined, and hardly any change in industries where unions never had much of a presence. This suggests that waning unionization, which led to the erosion of rank-and file workers’ bargaining power, was the main force behind the decline in labor’s share of national income.”

Scott Winship has provided historical context that might have some bearing on Kristal’s analysis in “Overstating the Costs of Inequality“:

Analysts such as Jared Bernstein (of the Center on Budget and Policy Priorities) often claim that worker pay has not kept up with productivity, citing this as evidence that gains at the top were effectively stolen from the middle.21 While it is true that wage increases have lagged behind productivity growth in recent decades, my ongoing research suggests a simple explanation: Compensation outpaced productivity growth during the mid-20th century (in the peak years of unionism), and recent decades have seen a correction in which productivity levels have had to catch up to pay. On balance, the numbers still favor workers: If President William McKinley had been told in 1900 how much higher productivity would be in 2013 and had used that information to guess how much higher hourly compensation would be, his prediction would have been too low.

The same dynamic might not apply to trade, finance, and services, which represented a much smaller share of tht total work force during the mid-20th century than in recent decades. Had construction, manufacturing, and transportation not experienced deunionization, perhaps offshoring and automation would have played an even larger role. Kristal makes a related observation in her paper:

The final component of workers’ relative bargaining power is more global and relates to U.S. trade with low-wage countries. As U.S. trade barriers have fallen in recent years, low-wage countries like China and India have begun exporting to the United States many of the more labor-intensive products (e.g., t-shirts and sneakers) formerly produced domestically. This import penetration places U.S. workers in direct competition with lower-paid workers in developing countries. Competition curbs workers’ bargaining power, brings down the wages of the least-skilled U.S. workers (Wood 1994), increases earnings inequality among workers (Alderson and Nielsen 2002), and reorients manufacturing activity toward capitalintensive plants (Bernard, Jensen, and Schott 2006). Therefore, although importing manufactured goods from less-developed countries increases the economy’s income, it does not translate into a rise in average earnings and thus decreases labor’s share (Kristal 2010).

Kristal’s paper raises a number of interesting questions. Yet I wonder if there are other differences between the union and non-union sectors she identifies that might be salient, per Erik Brynjolfsson and Adam Saunder’s description of “digital organizations” in Wired for Innovation:

In Wired for Innovation, Erik Brynjolfsson and Adam Saunders describe how information technology directly or indirectly created this productivity explosion, reversing decades of slow growth. They argue that the companies with the highest level of returns to their technology investment are doing more than just buying technology; they are inventing new forms of organizational capital to become digital organizations. These innovations include a cluster of organizational and business-process changes, including broader sharing of information, decentralized decision-making, linking pay and promotions to performance, pruning of non-core products and processes, and greater investments in training and education.

Brynjolfsson and Saunders go on to examine the real sources of value in the emerging information economy, including intangible inputs and outputs that have defied traditional metrics. For instance, intangible organizational capital is not directly observable on a balance sheet yet amounts to trillions of dollars of value.

Note that while digital organizations are in some sense flatter and less hierarchical, they rely more heavily on performance-based compensation — this combination (more autonomy, but also more variation in pay) seems uncongenial to traditional unionism, which tends to emphasize lockstep promotions and well-defined job roles.