Chapter 5

Contemporary observers contend that neoliberal economic policies are attempts to restore the political-economic power of the capitalist class. This study examines the effects of unions and the minimum wage on wage inequality over a twenty year period using state data. The response variable in this study is residual wage inequality among full-time year round non-agricultural workers age 18 to 64 within the lower 48 states over the period 1980 to 2000. Consistent with institutionalist theorists, unions and the minimum wage are inversely associated with residual wage inequality. However, the effect of union density is found to shift from inverse to positive for earners closer to the left tail of the wage distribution by the late 1990s. The shift in the effect is interpreted as potentially the result of neoliberal economic policies intended to weaken labor unions in an attempt to restore class power