“End Of The Middle Class?”: What Happens If America Loses Its Unions
Are American unions history?
In the wake of labor’s defeated effort to recall Wisconsin Gov. Scott Walker (R) last week, both pro– and anti-union pundits have opined that unions are in an all-but-irreversible decline. Privately, a number of my friends and acquaintances in the labor movement have voiced similar sentiments. Most don’t think that decline is irreversible but few have any idea how labor would come back.
What would America look like without a union movement? That’s not a hard question to answer, because we’re almost at that point. The rate of private-sector unionization has fallen below 7 percent, from a post-World War II high of roughly 40 percent. Already, the economic effects of a union-free America are glaringly apparent: an economically stagnant or downwardly mobile middle class, a steady clawing-back of job-related health and retirement benefits and ever-rising economic inequality.
In the three decades after World War II the United States dominated the global economy, but that’s only one of the two reasons our country became the first to have a middle-class majority. The other is that this was the only time in our history when we had a high degree of unionization. From 1947 through 1972 — the peak years of unionization — productivity increased by 102 percent, and median household income also increased by 102 percent. Thereafter, as the rate of unionization relentlessly fell, a gap opened between the economic benefits flowing from a more productive economy and the incomes of ordinary Americans, so much so that in recent decades, all the gains in productivity — as economists Ian Dew-Becker and Robert Gordon have shown — have gone to the wealthiest 10 percent of Americans. When labor was at its numerical apogee in 1955, the wealthiest 10 percent claimed just 33 percent of the nation’s income. By 2007, with the labor movement greatly diminished, the wealthiest 10 percent claimed 50 percent of the nation’s income.
Today, wages account for the lowest share of both gross domestic product and corporate revenue since World War II ended — and that share continues to shrink. An International Monetary Fund study released in April shows that the portion of GDP going to wages and benefits has declined from 64 percent in 2001 to 58 percent this year. The survey compared the United States with Europe, where the only other nations in which labor’s share declined were Greece, Spain and Ireland — countries whose economies are at death’s door. Our economy is nowhere near so weak, but as Americans’ ability to collectively bargain has waned, so has their power to keep all corporate revenue from going to top executives and shareholders.
When unions are powerful, they boost the incomes of not only their members but also of nonunion workers in their sector or region. Princeton economist Henry Farber has shown that the wages of a nonunion worker in an industry that is 25 percent unionized are 7.5 percent higher because of that unionization. Today, however, few industries have so high a rate of unionization, and a consequence is that unions can no longer win the kinds of wages and benefits they used to.
Deunionization is just one reason Americans’ incomes have declined, of course; globalization has taken its toll as well. But the declining share of pretax income going to wages is chiefly the result of the weakening of unions, which is the main reason American managers now routinely seek to thwart their workers’ attempts to unionize through legally questionable but economically rewarding tactics (rewarding, that is, for the managers).
The weakening of unions has had a huge political effect as well: the realignment of the white working class. Since the ’60s, exit polls have shown that unionized blue-collar whites vote Democratic at a rate 20 to 30 percent higher than their nonunion counterparts. The decline in union membership has weakened Democrats in such heavily white, increasingly deunionized states as West Virginia and Wisconsin — the main reason Republicans such as Walker have sought to reduce labor’s numbers. Liberals who have been indifferent to unions’ decline will find it difficult to enact progressive legislation in their absence.
Understandably, some liberals are searching for ways to arrest the economic decline of the majority of their fellow Americans in a post-union environment. I fear they’re bound to be frustrated. If workers can’t bargain with their employers, it can’t be done. If and when Big Labor dies — it’s on life support now — America’s big middle class dies with it.
By: Harold Meyerson, Opinion Writer, The Washington Post, June 12, 2012
Super Bowl Players Should Stand Up For Indiana Workers
Last July, Major League Baseball blew an opportunity to make a difference. With 28 players who were either Hispanic or of Hispanic descent participating in the league’s annual All-Star Game in Phoenix, Arizona, and the eyes of the sports world watching, nary a one spoke out against the radical anti-immigration law Arizona had passed a year before, even though it could have directly affected the players and will directly affect many of their fans. “I ain’t Jackie Robinson,” David Ortiz, one of baseball’s biggest characters, said.
Over the next 10 days, the National Football League will have a similar chance to make a difference.
Just two weeks before Super Bowl XLVI kicks off at Lucas Oil Field in Indianapolis, more than 10,000 people marched through the city to protest right-to-work legislation that is being pushed through the state’s legislature. The legislation passed the state Senate this week and the state House today, and is backed by Gov. Mitch Daniels (R). Considering the NFL nearly lost its 2011 season, and Super Bowl XLVI with it, to a labor dispute, Indiana Republicans’ assault on workers is a cause the players should be familiar with.
Fortunately, there are signs that the NFL players aren’t going to repeat Major League Baseball’s mistake. Several players have spoken out against the legislation, and NFL Players Association President DeMaurice Smith said his organization is already taking action. “We’ve been on picket lines in Indianapolis already with hotel workers who were basically pushed to the point of breaking on the hotel rooms that they had to clean because they were not union workers,” Smith told the Nation. “We’ve been on picket lines in Boston and San Antonio. So, the idea of participating in a legal protest is something that we’ve done before.”
That’s a good first step. But it’s not enough. Indiana union officials are contemplating disrupting Super Bowl-related events to draw attention to their cause, clogging city streets and slowing down events around Lucas Oil Stadium (which was built and is maintained by union workers). Labor leaders are hesitant, though, fearing that such actions could give the city and their cause “a black eye” with people who think sports and politics don’t mix. If some of the league’s top players, particularly those participating in the Super Bowl, spoke in support of those efforts, however, that perception could change.
New England Patriots quarterback Tom Brady, one of the NFL’s most recognizable players, felt strongly enough about his own rights that he signed on as a plaintiff in the players’ antitrust lawsuit against the league last year. So did Logan Mankins, Brady’s teammate, and Osi Umenyiora, a prominent defensive end for the New York Giants. Those players were willing to risk backlash from the league, public scrutiny, and their own images to fight league owners for better benefits and wages. In the week leading up to the Super Bowl, they should do the same for workers who don’t have the luxury of multimillion-dollar contracts, rich endorsement deals, and the good fortune of playing a game for a living.
Sure, with Super Bowl week ahead of them, political causes may be the furthest thing from the minds of most players. But with thousands of reporters conducting hundreds of interviews before, during, and after the big game, the players will have the chance to stand up for the rights of people they should be fighting for. Unlike their counterparts in baseball, they shouldn’t blow it.
By: Travis Waldron, Think Progress, January 25, 2012
Union-Basher Rick Santorum Has A History Of Voting To Protect Unions
GOP presidential candidate Rick Santorum’s unexpected finish in Iowa has thrust his record into the spotlight. Naturally, his anti-choice, homophobic, and patently outrageous positions only help shore up his right-wing credentials. As he said in Sioux City, “A track record is a pretty good indication of what you’re going to do in the future.”
However, some of his votes in the past will certainly put a dent in his conservative credentials. As Bloomberg News points out, Santorum spent a lot of his 16-year congressional career fighting alongside labor advocates to protect striking workers, increase the minimum wage, and ensure that the law requiring employers to pay the prevailing wage stayed on the books:
In 1993, Santorum was one of 17 House Republicans who sided with most Democrats in backing a Clinton administration bill to protect striking employees from being permanently replaced by their employers.
Santorum’s Senate service shows a clear track record of supporting the Davis-Bacon Act, the federal law that requires government contractors to pay workers the local prevailing wage (USMMMNCH) and a perennial target for elimination by the business community and anti-union Tea Party activists.
In 1996, Santorum voted in effect for an amendment by former Massachusetts Democratic Senator Edward M. Kennedy that said the 1931 law shouldn’t be repealed.
In 1999, the Senate accepted a Santorum amendment that said it should consider “reform” of Davis-Bacon rather than repeal. Later that year, Santorum was one of 15 Senate Republicans who sided with Democrats in rejecting an amendment that would have limited the application of Davis-Bacon in federal disaster areas.
Of course, Santorum’s fight for the middle class and low-income Americans may merely reflect that he first ran in “a democratic-leaning, working class congressional district” in Pennsylvania. But in seeking national office, Santorum is throwing those same people under the bus. Now, he compares programs that help America’s workers — the Affordable Care Act, Medicaid, or food stamps — to fascism, even going so far as to say, “I don’t want to make black people’s lives better” with taxpayer funds. He also advocated for the elimination of all public sector unions.
Santorum’s convenient rejection of his previous efforts may not be enough to maintain the right-wing veneer he is aggressively pursuing. After all, if he is to be believed, his track record is a good indication of what he’ll do in the future.
By: Tanya Somanader, Think Progress, January 4, 2012
Soaring Inequality: “It’s Time To Take The Crony Out Of Capitalism”
Whenever I write about Occupy Wall Street, some readers ask me if the protesters really are half-naked Communists aiming to bring down the American economic system when they’re not doing drugs or having sex in public.
The answer is no. That alarmist view of the movement is a credit to the (prurient) imagination of its critics, and voyeurs of Occupy Wall Street will be disappointed. More important, while alarmists seem to think that the movement is a “mob” trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.
To put it another way, this is a chance to save capitalism from crony capitalists.
I’m as passionate a believer in capitalism as anyone. My Krzysztofowicz cousins (who didn’t shorten the family name) lived in Poland, and their experience with Communism taught me that the way to raise living standards is capitalism.
But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.
When I lived in Asia and covered the financial crisis there in the late 1990s, American government officials spoke scathingly about “crony capitalism” in the region. As Lawrence Summers, then a deputy Treasury secretary, put it in a speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are at the heart of this crisis, and that is why structural reforms must be a major part” of the International Monetary Fund’s solution.
The American critique of the Asian crisis was correct. The countries involved were nominally capitalist but needed major reforms to create accountability and competitive markets.
Something similar is true today of the United States.
So I’d like to invite the finance ministers of Thailand, South Korea and Indonesia — whom I and other Americans deemed emblems of crony capitalism in the 1990s — to stand up and denounce American crony capitalism today.
Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.
The upshot is that financial institutions boost leverage in search of supersize profits and bonuses. Banks pretend that risk is eliminated because it’s securitized. Rating agencies accept money to issue an imprimatur that turns out to be meaningless. The system teeters, and then the taxpayer rushes in to bail bankers out. Where’s the accountability?
It’s not just rabble-rousers at Occupy Wall Street who are seeking to put America’s capitalists on a more capitalist footing. “Structural change is necessary,” Paul Volcker, the former chairman of the Federal Reserve, said in an important speech last month that discussed many of these themes. He called for more curbs on big banks, possibly including trimming their size, and he warned that otherwise we’re on a path of “increasingly frequent, complex and dangerous financial breakdowns.”
Likewise, Mohamed El-Erian, another pillar of the financial world who is the chief executive of Pimco, one of the world’s largest money managers, is sympathetic to aspects of the Occupy movement. He told me that the economic system needs to move toward “inclusive capitalism” and embrace broad-based job creation while curbing excessive inequality.
“You cannot be a good house in a rapidly deteriorating neighborhood,” he told me. “The credibility and the fair functioning of the neighborhood matter a great deal. Without that, the integrity of the capitalist system will weaken further.”
Lawrence Katz, a Harvard economist, adds that some inequality is necessary to create incentives in a capitalist economy but that “too much inequality can harm the efficient operation of the economy.” In particular, he says, excessive inequality can have two perverse consequences: first, the very wealthy lobby for favors, contracts and bailouts that distort markets; and, second, growing inequality undermines the ability of the poorest to invest in their own education.
“These factors mean that high inequality can generate further high inequality and eventually poor economic growth,” Professor Katz said.
Does that ring a bell?
So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives.
It’s time to take the crony out of capitalism, right here at home.
By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, October 26, 2011
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