A Death Spiral for the Middle Class

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       This past Monday, Wisconsin Gov. Scott Walker on Monday signed into law a measure that prohibits requiring a worker to pay union dues, striking another blow against organized labor four years after the state effectively ended collective bargaining for public-sector employees.


            As The New York Times reported the new law, effective immediately, made Wisconsin the 25th right-to-work state and the first to do it since Michigan and Indiana in 2012. Mark Mix, president of the National Right to Work Committee, claimed the action now puts pressure on other Midwest states to follow suit.  "Every worker deserves freedom of choice when it comes to union membership and dues payment, and if states like Michigan and Wisconsin can pass Right to Work then Illinois, Minnesota, Missouri and Ohio can too," Mix stated.


            Mix's professed concern for the freedom of workers is little less than disingenuous propaganda since the economic evidence and historical record show that "right-to-work laws" have significantly weakened unions, and that the decline of a viable labor movement is  inextricably linked to rising economic inequality among Americans. As employers inevitably engage in a collective "race to the bottom" the ability of employees to negotiate and demand higher wages and better conditions for work declines. 


              The labor history of the United States in the nineteenth century and the first three decades of the twentieth century was often violent and bloody. Most state courts treated labor unions and strikes as illegal conspiracies in restraint of trade and labor organizers and striking union members were regularly arrested, imprisoned and often shot by Pinkerton detectives, private militias raised by employers, and National Guard soldiers who were mustered into service by business-friendly governors in many states.


              Ever so slowly, the tide began to turn. In the 1930s, as the effects of the Great Depression became pronounced, industrial unionism, organized under the auspices of the Congress of Industrial Organizations (CIO), emerged. With the enactment of the National Labor Relations Act in 1935, the right of all workers "to organize and bargain collectively through representatives of their own choosing" was pronounced for the first time to be national public policy. Other New Deal legislation included the Walsh-Healey Government Contracts Act, which required the payment of prevailing wages on government contracts in excess of $10,000; the Railroad Retirement Act; and the Fair Labor Standards Act of 1938, which provided for the first time, with certain exceptions, a nationwide minimum wage floor and maximum workweek of 40 hours per week within three years of its enactment date.


            Courageous individuals such a Bill Haywood, Mother Jones, Eugene Debbs, John L. Lewis, and Walter and Victor Reuther, among thousands of others, struggled to secure social and economic justice for American workers. Organized labor brought to America the right to grieve mistreatment in the workplace, "just cause" termination standards, the eight hour day, weekends off, overtime and rest break regulations, workers' compensation, unemployment insurance and pensions. 


            Sadly, however, since the 1940s, the American labor movement has been forced into retreat. After the death of Franklin Roosevelt and the election of a Republican Congress in 1946, right-wing liberalism and laissez-faire economics one again became resurgent. The first great success of New Deal critics was achieved with the enactment of the Taft-Hartley Act in 1947, which was passed over President Truman's veto. The effect of this legislation was to outlaw "closed shops" and to permit individual states to allow "open shops"--i.e. shops in which elected unions could not require all of the employees to belong to the unions, irrespective of whether the non-union employees also received and enjoyed the benefits of collective bargaining.


            As a result of that legislation, corporations began an inevitable migration to the South where welcoming state legislatures hastily enacted "right-to-work" laws. The migration of these manufacturing companies away from the unionized urban centers of the Midwest and North left hundreds of mill towns impoverished and desolate, and the union movement, over time, has been effectively eviscerated.

            By 2010, according to the U.S Department of Labor,  only 12.3 per cent of employed wage and salary workers were union members. Not surprisingly, many of the same non-union employees did not seem to understand that their ability to influence working conditions and wages, as solitary individuals who lacked comparable bargaining power with managers and owners of business, was virtually nil. Apparently, however, the myth of the autonomous, self-made individual who can receive recognition, remuneration and advancement solely by dint of one's own hard work continues to resonate in the workplace to the present, notwithstanding all of the evidence to the contrary.

            Even among the few unionized workers still employed in manufacturing, downward economic pressures have forced many unions to acquiesce to a two-tier pay system imposed by management: younger workers now make substantially less per hour than more senior employees who perform the same work. The effect of this two-tier system denies younger workers upward mobility and divides workers based solely upon dates of hire: "The changing job market is undercutting entry-level wages for those who do not go to college. In the 1960s and 1970s, you saw high school graduates getting good jobs at Ford and AT&T, jobs that in inflation-adjusted terms were paying $20 or $25 in today's wages," said Sheldon Danziger, a professor of public policy at the University of Michigan. "Nowadays most kids with just high school degrees will work in service-sector jobs for $10 or less..."


            Perhaps as worrisome are the long-term trends which suggest that, absent substantive structural reform, unemployment will remain even more intractable long after the economic meltdown that began in 2008.  Between 1975 and 2005, entry-level wages for male high school graduates who did not graduate from college declined 19 percent after adjustment for inflation while the incomes of their female counterparts fell 9 percent. Lastly, men who were in their thirties in 2004 are reported to have had a median income of 12 percent less, after adjusting for inflation, than did their fathers' generation when the latter were in their thirties.


            Robert H. Frank, a  Cornell University economist reported in a New York Times op ed column in 2010 that during the decades after World War II, incomes in the United States rose rapidly and at about the same rate - approximately 3 percent a year - for employees at all income levels. As a consequence, America had an economically dynamic middle class; its roads and bridges were well maintained; and Americans as a whole were optimistic as investments in infrastructure and public goods increased. In that era of relative economic equality, Frank noted, that public support for infrastructure - paid for by taxes - enjoyed wide support.


            By contrast, Frank notes that, from 1980 to 2010, as the economy has grown much more slowly, America's infrastructure has fallen into grave disrepair. Simultaneously, all significant income growth has been concentrated at the top of the scale with the largest share of total income going to that top 1 percent of earners.


            Harold Meyerson has described the correlation between union membership and economic equality in article in the American Prospect in 2012. He observed that "From 1947 through 1972, productivity in the United States rose by 102 percent, and median household income rose by an identical 102 percent. In recent decades, as economists Robert Gordon and Ian Dew-Becker have shown, all productivity gains have accrued to the wealthiest 10%. In 1955, near the apogee of union strength, the wealthiest 10 percent received 33 percent of the nation's income. In 2007, they received 50 percent."   


            Colin Gordon, a Professor of History at the University of Iowa, has argued that "One hallmark of the first 30 years after World War II was the "countervailing power" of labor unions (not just at the bargaining table but in local, state, and national politics) and their ability to raise wages and working standards for members and non-members alike. There were stark limits to union power--which was concentrated in some sectors of the economy and in some regions of the country--but the basic logic of the postwar accord was clear: Into the early 1970s, both median compensation and labor productivity roughly doubled. Labor unions both sustained prosperity, and ensured that it was shared."


            As the labor movement declines, the American workplace will increasingly be governed, once again, by the nineteenth century doctrine of employment-at-will, a legal fiction  created by state courts in the United States during this country's First Gilded Age and one that that embodies an ideological worldview informed by Social Darwinism. That legal fiction - which posits some kind of equality of bargaining power between individual workers and employers - further circumscribes the ability of most Americans to protect their livelihoods or to improve their conditions of work.


            The mythology behind "right-to-work" laws and companion efforts have largely succeeded in gutting this country's labor laws but they have produced have produced results quite different from the economic theory their proponents endorse. As Isaiah Berlin sagely noted, "Freedom for the wolves has often meant death to the sheep." In a world of unrestrained competition, only the few, the wealthier, the more powerful, the more resourceful, the better educated, the more mobile, will be able to maximize their opportunities; everyone else gets left behind or becomes "road kill."


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