In polite circles in Washington it is common to view unions as a quaint anachronism. They may have made sense back when most workers had little education and worked in factories, but there really is no place for them in a 21st century economy. From this perspective, the sharp decline in union membership that we have seen in the last three decades is simply a natural process, sort of like the development of more powerful computers.

There is evidence that suggests otherwise, most notably that many other wealthy countries still have very high rates of unionisation. The share of the workforce represented by unions is 80 per cent or higher in many European countries. While some may want to attribute the eurozone crisis to factors like high unionisation rates (as opposed to inept central bankers) they face the problem that non-eurozone countries like Denmark and Sweden seem to be doing just fine.

In Denmark, 80 per cent of the workforce is represented by a union and in Sweden, the share is 91 per cent. According to the most recent OECD data, their unemployment rates are both 7.8 per cent. That isn't great, but it's still half a percentage point below ours. And, both countries are able to borrow at the same or lower interest rates than the US. Clearly, high unionisation rates have not led to catastrophe.

But many still view Europe as being fundamentally different than the United States. And of course they don't speak English in Denmark and Sweden, or at least not as a first language. This is why it is useful to look at Canada, a country that is culturally and economically very similar to the United States, and a place where they do speak English (for the most part). 

My colleague, Kris Warner, compared trends in unionisation over the last century in the United States and Canada. Several items jump out in his analysis. First, patterns in unionisation were comparable until the early 1970s. While union membership rates fell consistently in the US over the last four decades, they actually rose from the 1970s to 1990s in Canada.

In the last two decades they have been dropping in Canada as well, but at 31 per cent, the unionisation rate is still far above the 10 per cent level in the US and in fact is still above its early 1970s level. Clearly it was not just economic factors that explain the decline in unions in the US.

Warner looks at some of the key institutional factors that affect the ability of workers to organise, most notably the ability of workers to form a union through majority sign-up and first contract arbitration. While there are important differences across provinces, several Canadian provinces allow majority sign-up (sometimes referred to as "card check") recognition of unions. In the United States, majority sign-up recognition is only allowed at the discretion of the employer.

Needless to say, employers who are hostile to unions are not likely to make the job of organising easier by letting them get a union by signing union cards. Anti-union employers demand elections that can be delayed long enough to mount an effective anti-union campaign. This often involves firing the workers [PDF] who are most active in supporting a union.

The other major institutional difference is that several provinces have laws that provide for first contact arbitration in the event of a deadlock in negotiations. Almost half of all successful unionisation drives in the US do not lead to a contract. While the company is legally obligated to negotiate in good faith, this is generally not much of a requirement. Delaying a first contract is an effective way to undermine support for a union and often leads to a union being decertified. Provinces with first contract arbitration have higher rates of unionisation.

The other really striking item in Warner's analysis is the pattern of de-certifications. When the Employee Free Choice Act was debated in 2008, the anti-union groups argued that majority sign-up (which was a major provision) would lead to workers being stuck with unions they didn't want. Their story was union thugs would intimidate workers into signing union cards against their will.

The differing experience in Canadian provinces over time gives us a simple way to test this claim. If workers were intimidated into signing cards, then we would expect to see a higher rate of de-certifications in provinces after they have put in place laws allowing for majority sign-up.

In fact, there is no evidence at all that there was a rise in de-certifications after majority sign-up was adopted. In several provinces the de-certification rate fell after majority sign-up was allowed. This would seem like pretty solid evidence against the "union thug" story.

All of this matters because if we chose, we could make US labour law closer to Canada's. That might over time bring us somewhat close to Canadian unionisation rates.

People who care about inequality should have this at the top of their agenda. In our bag of tricks to reverse the upward redistribution of the last three decades, higher unionisation rates should rank near the top.

Not only do unions directly help the workers they represent, but unions have been at the forefront in pushing almost every progressive change the country has seen in the last eight decades. This list includes Social Security, the 40 hour work-week, Medicare and Medicaid, the government's college loan and aid programmes, the minimum wage, and most recently the Affordable Care Act.

If you want to see what the country would look like without unions, watch re-runs of the Republican convention. If we didn't have unions, you would be looking at the centre of the American political spectrum.

(CEPR-September 2012  -  www.cepr.net )