The Numbers Tell a Stark Story

Here's a puzzle that former Labor Secretary Robert Reich wants you to think about: Over the last four decades, American workers became dramatically more productive. We're talking 87% more productive since 1979. But their hourly pay? That only climbed 32%. So where did all that extra value go?

Reich has a theory, and it involves unions. Or rather, the disappearance of them. In a recent post on X, he pointed out that roughly 25% of workers were unionized in 1979. Today, that figure has collapsed to just 10%. His conclusion: as unions lost their grip, the "super-rich" captured a bigger slice of the wealth that workers were creating. His prescription is straightforward: "We must build back union power."

When the Rules Changed

Reich argues this wasn't some gradual drift. Speaking at The Progressive Forum in Houston, he traced the inflection point to the early 1980s when, as he put it, "the rules of the game changed." The Reagan administration ushered in tax cuts for the wealthy, relaxed antitrust enforcement and took an aggressive stance against unions.

"Up until then, the median wage continued to rise with productivity," Reich explained. "But after that, the median wage... began to stagnate and more and more of the nation's wealth and income went to the top."

The decline has been long and steep. Retired union organizer Bill Barry notes that union membership peaked at 37% in 1957. By 2024, only 11% of U.S. workers belonged to unions, and in the private sector specifically, the rate dropped below 7%.

The Spillover Effect, In Reverse

Here's where it gets interesting. Barry points out that unions historically created what economists call a "spillover effect." When unions negotiated better wages and conditions, even non-union employers had to raise their standards to compete for workers. Everyone benefited.

Now we're seeing the reverse. Writing for the Emergency Workplace Organizing Committee, Barry argues that today's non-union companies are pulling standards down, dragging wages and benefits lower even for unionized workers. It's a race to the bottom instead of the top.

Consider this: of the ten largest employers in America today, only UPS (UPS), parts of Kroger (KR), and railroads owned by Berkshire Hathaway (BRK) have any meaningful union presence. The biggest employers of American workers are largely union-free zones.

What Went Wrong With Organizing

Barry traces part of the problem to a strategic shift. After the 1930s, many unions moved away from grassroots organizing toward what he calls a "servicing model." Union officers focused on delivering benefits to existing members rather than expanding membership. Organizing new workplaces became secondary.

Relying on politicians hasn't filled the gap either. Reich didn't mince words about his former boss, President Bill Clinton, criticizing him for prioritizing deficit reduction over public investment. He also questioned whether President Joe Biden's vocal union support translated into tangible gains. And as for Trump? "Trump is not the cause of what we are in. He's the consequence," Barry said.

The Path Forward

Both Reich and Barry argue that unions need to get back to basics: organizing. Barry poses a provocative question: What if all the money unions spend on political campaigns went into new organizing drives instead?

Reich's message to younger Americans grappling with economic inequality is part pep talk, part reality check. "It's perfectly fine to be depressed," he said. "But it's not appropriate to be cynical. A cynic feeds off of hopelessness."

The productivity-wage gap isn't just an abstract economic problem. It's a story about power, about who gets to claim the fruits of economic growth. Whether unions are the solution is a debate that will continue, but the numbers Reich highlights make one thing clear: something fundamental shifted in the American economy over the past four decades, and workers didn't capture the upside.