Debate: Is There a Substitute for Unions in Achieving Equitable Growth? And Can Unions Be Saved?

February 28, 2014

Evan Soltas kicked off a debate:

Evan Soltas: Is the U.S. Better Off Without Unions?: “Three decades ago… Richard B. Freeman and James Medoff published… What Do Unions Do?

If they wrote it today, they would have to call it What Did Unions Do? Unions are dying… from about 35 percent in the 1950s to 6.7 percent in 2013…. Unions have been undermined by a combination of worker hostility and the rising power of capital over labor. Their demise raises a question: Is the U.S. better off without them?

Freeman and Medoff’s conclusion still stands. Unions have two roles to play in the American economy: They balance power between employers and workers, and they provide a voice for workers that management can hear. Freeman and Medoff thought the first role was important but not entirely positive, and they’re right…. But that’s not the union’s only job… their role as a worker voice… is unambiguously good. Whether to mourn unions depends on whether you believe the good outweighs the bad. Wherever you land on that question, though, the U.S. must find ways to replace what good unions did. It must restore power to labor in a world without Labor.

And that couldn’t be much more urgent. Workers’ share of income, which until recently had been so stable that fundamental economic models are premised on its stability, is plummeting…

The online debate continues:

Evan Soltas: “You’ve got an uninterrupted decline in the unionization rate since the 1950s….

The U.S. in the 1960s and 1970s wasn’t exactly a hotbed of anti-union sentiment…. The consensus of research [is] that the decline of unions can be explained by global economic competition…. An actual rebuttal would have responded to the evidence I put forward, not just repeat the view that employer opposition matters…. I couldn’t find one bit of research arguing what Hiltzik or Wasser say: that union decline is primarily the result of public policies that undermine labor or increased employer hostility.

What Hiltzik and Wasser are more interested in doing, as Hiltzik’s title question “Are unions necessary?” suggests, is saying that you need unions to get liberal policies. I have no doubt that unions would make it easier…. And I think Kevin Drum’s assessment, which describes the political vacuum left by the decline of unions, is totally on point. But… if we can’t save unions, then it doesn’t count for anything that unions help win whatever policies you desire. The thesis of my original piece was that since the decline of unions, the U.S. political system has done a poor job of sharing prosperity with workers — and that since unions aren’t a real option going forward, we have to look for other ways to build employee bargaining power.

It’s entirely non-responsive to my position to say, as Timothy Noah does, “To think you can tackle inequality without empowering workers is fantasy.” Or, as Jeff Spross does: “[Evan] wants to replace unions w/ policies only passable w/ the political muscle unions historically provided.” Or, as Hiltzik does: “Where does he think the impetus for these advances will come from, if not the labor movement? He may not have noticed, but Congress today is in the grip of the employer class.” Or, as Wasser does: “I still don’t see how we get to policies like full employment, which Soltas believes will address inequality better than unions. Who, if not unions, has the resources, both in terms of money and supporters, to support this policy agenda and take on any opposition to it?”…

If it’s a “fantasy” to think we can do good for workers without unions, then you better have some compelling evidence that unions can be brought back to life…. We have no other choice but to look for another way to restore labor’s share, but I also think another way exists…. Clinton did it in the 1990s…. The second largest U.S. antipoverty program (the earned income tax credit, after Social Security) was born in a de-unionized America, and mainly with the backing of Republican presidents…. We can rebuild the power of labor without labor unions. We just have to try.

Michael Hiltzik: Are unions necessary?: “The discussion was inspired by the recent defeat of a United Auto Workers drive at the Chattanooga, Tenn., plant of Volkswagen….

There really is no question that the decline of workers’ voice and worker rights resulting from the decline of unions has played an important role in the rising power of the shareholding and managerial class. One hates to say of a writer as fluent as Soltas that his analysis lacks the depth that would come from experience, but Wasser is certainly correct in arguing that Soltas’ argument that the U.S. is better off without unions and “unions can’t be saved” reflects the limitations of textbook-learning…. To think that federal labor law has had “little to do” with union decline, as Soltas puts it, is hopelessly naive…. Over the years, employers have developed an exquisite arsenal against union organizing. For a succinct description of how the war is waged, Soltas needs to examine “Confessions of a Union Buster,” the heartfelt memoir Martin Jay Levitt published in 1993…. One simply can’t explain the decline of union representation without acknowledging the role of employer opposition and its empowerment by government policy, as outlined in this 2009 report from the Economic Policy Institute….

It’s also important to understand two additional factors that make union organizing difficult, and which can’t be absorbed from college textbooks or academic papers: fear and complacency. Fear reigns during periods of slack employment and job growth…. Complacency reigns during periods of tight labor supply and prosperity, when the workforce figures, why siphon off part of my paycheck in union dues, since I’m already well-paid and reasonably secure?… Fear has been the dominant factor over the last decade… but they’re both obstacles to union growth.

Yet we must ask why employers would so assiduously fight unions if not for fear of their effectiveness? Soltas’ take on the union’s role in the workplace is by far the most naive element of his original piece. He cites a judgment by two academic economists that unions balance power between employers and workers, and that this role is important but not entirely positive. “They’re right,” he concludes. Although union power “helps union members, it’s inefficient and bad for the economy as a whole, and it’s especially bad for nonunion workers.” Soltas cites no authority for these statements. That’s unsurprising because they’re nonsensical….

As for the benefits unions have brought to nonunion workers, they’re legion: progressive workplace laws including safety and child labor regulations, overall higher wages, retirement and healthcare benefits. The decline of all these features of the American workplace has coincided exactly with the decline of unions. That should tell you something. 

Soltas argues that the answer to the decline of unions is to “stop businesses from abusing labor laws by classifying their employees as independent contractors.” We should institute “monetary and fiscal policies aimed at full employment,” he says. Where does he think the impetus for these advances will come from, if not the labor movement?

Michael Wasser: Yes, Evan Soltas, the U.S. Still Needs Unions: “The loss of unions, in Soltas’s opinion, is a natural and unavoidable outcome of a global economy….

First, it is naïve to think that unions simply have run their course. Our broken labor law makes it incredibly difficult for workers to form unions…. Soltas doesn’t even consider the ramifications of broken labor law. Soltas also misses the boat…. Unions protect the interests of all workers… the only formidable bulwark against the flood of corporate money…. Unions are also necessary if public policy is going to effectively promote worker voice. Works councils and other non-union mechanisms can only succeed if workers have, under the protection of law, the ability to band together and engage in self-directed concerted activity – or put more simply, if they can form unions. It is fine if workers can exercise their voice in a non-union setting. However, without the right to form unions and engage in protected activity, workers run the risk of employer-dominated processes that may provide them a proverbial seat at the table without an ability to make the boss listen.

I give Soltas credit for acknowledging the importance of worker voice…. However, he is mistaken to believe that worker voice can be promoted, protected and effective without the presence of unions.

Update – 2/21/14 : Evan Soltas replied…. It may be that we agree to disagree, but in the spirit of well-intentioned debate, I offer the following thoughts on his reply:

  1. On the question of the future of unions, larger economic forces have certainly made it more difficult for unions to regain density…. Given that workers are still trying to organizing unions, one must ask why they don’t succeed. The answer, as Kate Bronfenbrenner describes convincingly in detail, is intense employer resistance. Much of this resistance violates federal labor law…. This is not a natural outcome. It is the result of a deliberate decision to not address the deficiencies in our labor law.

  2. I still don’t see how we get to policies like full employment, which Soltas believes will address inequality better than unions. Who, if not unions, has the resources, both in terms of money and supporters, to support this policy agenda and take on any opposition to it?…

  3. It is not just my view that the decline in unions contributes to the rise in inequality…

Evan Soltas: “Why unions can’t be saved: I’m grateful to Michael Wasser of “Jobs With Justice”….

Wasser’s argument is straightforward: Unions aren’t dead yet, and they are the only way to get public policies that advance labor and reduce inequality. So there are two ideas here, the potential and the uniqueness of unions. Wasser says unions still have potential and that labor’s gains from unionization are unique. I disagree on both. I think unions are far more likely to grow weaker over, say, the next ten years than they are to grow stronger. And I think that there are many other ways to advance labor — ways that are, to my taste, preferable to re-unionization.

Kevin Drum: Unions Are Dying. What Will Replace Them?: “Unfortunately, I agree with Soltas:

The decline of union power is irreversible. Private-sector unions are all but dead, and public-sector unions are barely hanging on by their fingernails. That doesn’t mean liberals should give up on labor, or that labor should give up on organizing new industries. Of course they shouldn’t. It just means that as a broad-based force that provides a countervailing force against the power of the business community, labor’s day is over. Like it or not, liberals have to figure out something else to play that role.

This is where I depart a bit from both Soltas and Wasser—in emphasis if not in detail. Their focus is primarily on what unions do specifically in the workplace: balancing power between employers and workers and providing a voice for workers that management can hear. Both of those are important, and both are problematic: You can reasonably argue about whether they’re a net positive, or whether unions are the only way of obtaining them. But I view the primary strength of unions differently: They’re a broad-based force that represents the interests of the middle class in the American political arena. Here’s how I put it a couple of years ago after a quick review of the ways in which the past three decades have been disastrous for American workers:

This didn’t all happen thanks to a sinister 30-year plan hatched in a smoke-filled room, and it can’t be reined in merely by exposing it to the light. It’s a story about power. It’s about the loss of a countervailing power robust enough to stand up to the influence of business interests and the rich…. America needs a countervailing power as big, crude, and uncompromising as organized labor used to be.

And that is a statement of pessimism, because no one on the left seems to have any serious ideas about what this countervailing power might be now that labor is a shadow of its former self. Organized labor really is unique, as Wasser suggests, and for all its problems, that’s why I mourn its decline. There’s no longer any serious countervailing power against the interests of business interests and the finance community, and we’re paying a high price for that.

Timothy Noah: Timothy Noah (TimothyNoah1) on Twitter: “No discussion here of GDP shift from labor to capital while labor declined. Honestly believe that’s coincidence?

Global changes play role in labor decline. But compare US unions w/ German ones and observe role of govt policy. This column really irritates me b/c it’s so precisely what the Bloomberg View, Davos-attending crowd wants to hear. To think you can tackle inequality without empowering workers is fantasy. And any construct that empowers workers is a union. You can call it a banana if you like, but it’s a union.

It’s happening at widely varying rates of decline. And it can be reversed by globalizing labor. The Norquists of the world know this–that’s why they mobilized against Chattenooga. It’s happening already. German union pushed VW to unionize Chattanooga. Expect more.

Daniel Altman: The Bad Bargain: “What explains the growing levels of income and wealth inequality inside rich countries?…

A measure of labor’s share called “real unit labor cost” — in plain English, the total wages and benefits paid to all workers, divided by total output in an economy — used to range from about 50 percent to 75 percent for countries in the Organization for Economic Cooperation and Development; now it’s down to roughly 40 percent to 70 percent. What happened? Economists like to tell three stories… union membership… the integration of the global economy… changes in technology… more sophisticated machines and ways of doing business… [made it] easier to replace labor with capital… especially… in low-skill industries. All three of these stories are really about bargaining power….

Despite the ugly consequences for society of the decline in labor’s bargaining power, some pundits have suggested that the trend is not a bad thing. For them, the solution is simply to turn workers into bigger investors. In the United States, this notion is risible. Ranked by net worth, the lowest three quarters of families received less than 2 percent of their income directly from financial assets over the past decade, versus close to 80 percent from wages….

Education may be a better answer. Bargaining power has eroded much less in high-skilled occupations that can’t easily be sent offshore or replaced by machines, whether in factories or on farms. It’s not easy for everyone to climb the skills ladder, though, and doing so takes time, especially with a U.S. educational system that’s struggling to keep up with foreign competition.

A quicker fix might be for workers to take some of their bargaining power back. One way is for governments to negotiate for them, by raising minimum wages….

The truth is that to stop the erosion of labor’s bargaining power, action at home would not be enough; workers would have to act at the global level… wworkers would have to join together to limit companies’ labor options all over the world. It may seem farfetched to imagine call center workers from Idaho negotiating alongside those from India, but it might also be the only way for the ones in Idaho to regain what they’ve lost. The question is whether the ones from India will go along.

Matt Bruenig: Globalization and Technology Cannot Explain Union Trends: “Evan Soltas has been on a tear about unions….

In his initial take, he did not mention anything about their political role. He trumpets the importance of full employment while somehow never asking which political actors are meant to push the federal government to make that happen. Capital certainly won’t: it is often benefitted by a buffer stock of unemployed people and high interest rates….

Soltas… endeavoured to answer the union question with wonk-economics methods, when the union question is one of political economy…. Rates of union coverage (how many people are covered by a union agreement) and union membership (how many people belong to a union) vastly differ across developed countries… from 13.3 percent in the United States to 99 percent in Austria…. These cross-country differences pose a considerable challenge to the economic-determinist theory of union decline. Soltas might come back and say that there is at least a political-economic-determinist theory of union decline for America because of the kind of country it is (liberal market), but this is a much different point….

[Moreover,] our liberal market neighbor to the north has somehow taken a very different path than us, which again suggests that economic fundamentals do not require the kind of union decline America has seen…

February 28, 2014

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