Women are twice as likely to be underpaid compared to men if they are not in a union. Indigenous Australians are three times as likely to be underpaid.
The finding, from research conducted by Andrew Leigh, a Labor frontbencher and former professor of economics, will be unveiled in a speech on Monday that will defend the role of trade unions and home ownership, both of which he says were strong under the long-serving Coalition prime minister Robert Menzies and are under attack by Malcolm Turnbull.
"At the end of World War Two, Australia was a nation where just 53 per cent of households owned their homes," he will tell the Per Capita Reform Agenda conference in Sydney. "In the major cities, the figure was 46 per cent. Most city-dwellers rented.
"Then in the post-war years, something remarkable happened: the Australian home ownership rate surged. By 1961 it was 70 per cent. In just over a decade the distribution of Australian housing wealth became significantly more equal.
"Under Robert Menzies the Coalition did not choose to mount a stirring defence of property investors. Instead, they presided over a steady rebalancing of the economy, and even went so far as to incorporate home ownership into their story of what the Liberal Party stood for.
"With the home ownership rate now the lowest it has been in six decades, this is worth remembering. The Liberal Party has not always been the party of landlords."
Dr Leigh will say union membership averaged 49 per cent throughout Menzies reign from 1949 to 1966. It was still 49 per cent in the early 1980s and then slid rapidly to just 15 per cent. Among private sector workers it is 11 per cent; among overseas-born workers, 12 per cent and among workers aged under 25, only 7 per cent.
"Unsurprisingly, unions increase wages," he will say. "One recent study finds they are worth 5 to 10 per cent. The impact is strongest at the bottom. But as membership declines, it will become steadily more difficult."
Using the Melbourne Institute Household, Income and Labour Dynamics survey, Dr Leigh calculated the gender pay gap in hourly earnings across nearly 8000 workers. Among non-union workers, women earn 13 per cent less. Among unionised workers women earn only 7 per cent less. Although there are other possible explanations, difference suggests that unions help to narrow the gap.
Indigenous workers in non-unionised workplaces earn 18 per cent less than non-indigenous workers. If the workplace is unionised, the gap is only 5 per cent.
"Every time you see someone proposing policies that make it harder for unions to organise, remember what this means for our economy," Dr Leigh will tell the conference. "It means a larger gender pay gap, indigenous Australians being left further behind and more economic inequality."
He will say Menzies presided over average wage growth that was five times faster than it had been in the first four decades of the twentieth century. With today's Coalition attempting to suppress wages and legislating to weaken trade unions the history is "worth remembering".
"Australia once had a Liberal Party that worked to deliver strong real wage growth," he will say. "Equality is a Labor value, but it isn't just a Labor value – it is also an Australian value. Robert Menzies knew this. But do his heirs?"
