Strong unions can reduce inequality in society through various means. Most directly, through collective bargaining, they lift wages for union members and negotiate other employment benefits that stabilize incomes and secure household financial well-being for union members.

Within workplaces, unionization also correlates with reduced wage disparities among workers. This is because wages are determined through transparent, negotiated wage schedules that consider factors like seniority and experience, rather than relying on arbitrary management decisions or favoritism.

In the policy and political arenas, unions play a significant role in advocating for public programs that contribute to reducing inequality. This includes support for programs such as public pensions, unemployment insurance, and the implementation of more progressive taxation systems.

Finally, by lifting labor costs and limiting the unilateral authority of management, unions may reduce the profitability of private firms. However, the potential negative impact on profitability may be mitigated by the positive effects of unionization on labor productivity. When unions are able to redistribute income from capital to labor, they can limit the incomes received by the owners and top managers of those companies. This reduction applies to various forms of profit-dependent income such as management bonuses, stock options, and dividends, which are disproportionately obtained by the richest segments of society. This, in turn, produces a further moderation in income inequality across households.

From Jacobin