It's become harder for middle-class workers to give their kids a better life. Unions could help turn that around, a new Treasury report finds.

Joe Biden (C) walks with members of Culinary Workers Union Local 226 on a picket line outside of Palms Casino Resort on February 19, 2020 in Las Vegas, Nevada.
Joe Biden walks with members of Culinary Workers Union Local 226 on a picket line outside of Palms Casino Resort on February 19, 2020, in Las Vegas.Mario Tama/Getty Images
  • A new report from the Treasury Department looked at the economic impact of unions.

  • The report found that union workers make more than their nonunion peers and have more benefits.

  • That might be a solution for a middle class dealing with rising debt and stagnant wages.

The American middle class has been shrinking and weakening over the past 50 years. The Biden administration's latest research suggests that labor unions might be able to help turn that around.

A new report from the Treasury Department — the first from the department to probe how unions impact the economy and middle class — looked at how the middle class has deteriorated in the US and ways that union benefits might ameliorate that.

"Middle-class wages and household incomes have stagnated in recent decades," Janet Yellen, the Treasury secretary, said in a press call. "Both renting and owning a home have become more expensive and so have education and healthcare."

Middle-class workers, whom the Treasury defines as falling in the middle of the national income distribution and by markers such as owning a home or being able to afford a college education, have seen real wages barely grow, income volatility increase, house prices skyrocket, and debt-to-income ratios more than double. Many are also contending with student-loan and mortgage debt, leaving them unable to save for retirement.

"The decline in intergenerational mobility may be the single trend that best encapsulates the pervasive sense of the deterioration in the middle class," the Treasury report found.

That's where unions can come in, Yellen said.

"These findings challenge arguments that unions hold back growth," Yellen said. "Unions could contribute to reversing the stark increase in inequality we've seen in recent decades, promoting economy-wide growth."

Over the past 50 years, middle-class wages have stagnated, with middle-class workers still earning less than the highest earners' median income in 1970. Pew Research Center found that the share of adults living in middle-class households fell from 61% in 1971 to 50% in 2021.

The Treasury report found that union workers make 10% to 15% more than nonunionized colleagues. That's one economic factor that could give union workers — who are more likely to be considered middle class — a boost. But beyond higher pay, union workers are five times more likely to have what's called defined-benefit retirement plans, meaning that their retirement funds will guarantee a specific monthly payout once they're no longer working. Union workers are more likely to know their schedules ahead of time, cutting down on scheduling instability and effectively putting more money in their pockets since they're able to plan ahead for things like childcare.

Union workers are also more likely to have paid sick leave, medical benefits, subsidized commuting, and even more likely to receive unemployment insurance should they get laid off — which the report finds is "likely the result of unions providing resources that ease filing procedures for members regarding their access to and eligibility for UI benefits."

The trickle-down effect of those benefits might boost the middle class, especially since nonunion firms feel a spillover effect and have to compete on workplace amenities and wages. The report found that the combination of higher union wages, stronger job security, and equity might help raise homeownership and education and spur mobility.

"For generations, union workers have fought for and won higher wages, better benefits, and safer working conditions for millions of American workers," Vice President Kamala Harris said. "Union organizing and collective bargaining has made it possible for so many working families to buy a home, build a future, and retire with dignity."

Despite increased interest in labor unions and prominent strikes across the country, union membership still remains at historic lows. Labor advocates say that membership would be bolstered by stronger federal protections such as the stalled PRO Act — a bill that's unlikely to get passed anytime soon.

Read the original article on Business Insider