The New Labor Unions

The United States built an incredible consumer economy in the post-World War II era, much of this growth based on the buying power of a labor force represented by powerful labor unions. Issues like minimum wage and labor rights were more a product of collective bargaining than of direct statutory standards. “The percentage of workers belonging to a union (or ‘density’) in the United States peaked in 1954 at almost 35% and the total number of union members peaked in 1979 at an estimated 21.0 million. Membership has declined since (currently 14.5 million and 11.3% of the labor force). Private sector union membership then began a steady decline that continues into the 2010s, but the membership of public sector unions grew steadily (now 37%).

“After 1960 public sector unions grew rapidly and secured good wages and high pensions for their members. While manufacturing and farming steadily declined, state- and local-government employment quadrupled from 4 million workers in 1950 to 12 million in 1976 and 16.6 million in 2009. Adding in the 3.7 million federal civilian employees, in 2010 8.4 million government workers were represented by unions, including 31% of federal workers, 35% of state workers and 46% of local workers.” Wikipedia.

While government workers are not generally allowed to strike, the wide disparity in job security, health and pension benefits and increasingly even wages between a well-union-represented public sector and the private sector is becoming rather pronounced. And while the President has been unable to increase the federal minimum wage, he has been able to impact wage rates paid by the government and its major vendors. I’ve blogged about how individual state and municipal governments have initiated minimum wage increases based on increased local costs of living. Without union power, particularly in the private sector, the benefit/wage structures only have government efforts to represent the vast majority of wage earners.

But there has always been a pushback on any legislation that would increase wage minima for any reason from the conservative side of our constituency. The arguments are the same. We are going to lose global competitiveness, but retail and construction jobs are locked to their unmovable locations, and the manufacturing jobs involving low-level assembly line labor seem to have long departed for countries where even if we halved our minimum wage, we wouldn’t recapture the business. We’re going to have to fire a lot of workers to be competitive, say some low-end employers. But most of those refer to retail establishments that really cannot be relocated. Others simply state that anywhere that raise wage rates is not “business friendly,” inviting other states and cities to steal away the businesses that rely on such cheap labor.

But is cheap-labor business the kind of enterprise that is so devoutly coveted by other states? Does it really matter? Aren’t we effectively increasing the reliance of the lowest-paid workers on other governmental subsidies and benefits? Like food stamps and subsidized medical care? Don’t we pay for not paying people enough directly with indirect costs?

Parallel to the press for an increase in higher minimum wages is the seemingly never-ending struggle to establish gender neutral “equal pay for equal services.” Remember how women stepped into the workforce in WWII as so many men were serving in the Armed Forces? Yes, that is “Rosie the Riveter” pictured above.  But those men came back, and wage gender-inequality became an American way of life. While today more women than men are still willing to curtail their work life (and risk their careers) to prioritize child-rearing, even where children aren’t part of the mix, women still earn less generally than their male counterparts. The main effort to remedy this situation, naturally, has emanated from the Democratic side of the aisle.

“The aim, Democrats have said, is to close a wage gap that finds women making 77 cents for every dollar that men earn. The push has been a major plank of the ‘give America a raise’ and ‘fair shot for everyone’ talking points that Democrats hope will mobilize their voter base in this year’s midterm elections and help them retain control of the Senate…Republicans have said that, although they support equal pay for equal work, the bill would increase civil lawsuits. They also say that the bill is unnecessary because discrimination based on gender is already illegal.” New York Times, April 9^th.

Some challenge how that 77 cent number has been calculated, saying that the numbers are not really adjusted for how people actually work. Okay, let’s make some basic corrections. “The official Bureau of Labor Department statistics show that the median earnings of full-time female workers is 77 percent of the median earnings of full-time male workers. But that is very different than ‘77 cents on the dollar for doing the same work as men.’ The latter gives the impression that a man and a woman standing next to each other doing the same job for the same number of hours get paid different salaries. That’s not at all the case. ‘Full time’ officially means 35 hours, but men work more hours than women. That’s the first problem: We could be comparing men working 40 hours to women working 35.

“How to get a more accurate measure? First, instead of comparing annual wages, start by comparing average weekly wages. This is considered a slightly more accurate measure because it eliminates variables like time off during the year or annual bonuses (and yes, men get higher bonuses, but let’s shelve that for a moment in our quest for a pure wage gap number). By this measure, women earn 81 percent of what men earn…” Hanna Rosin writing for Slate.com (The Gender Wage Gap Lie), August 13, 2013. Yeah, well, that’s still a 19% differential.

Unfortunately for the Democrats, facing a likely reality that will continue even past the upcoming midterm elections, the Republican forces in Congress continue to block any attempt to pass any form of legislation that might result in higher labor costs for business, no matter the need or justification. On April 8^th, even in the Democratic-majority Senate, a piece of gender-pay-equality legislation failed to produce a single Republican vote and clearly did not generate enough votes to survive a de facto filibuster challenge (the 60 vote threshold needed to move the bill to the floor for discussion).

“Had it passed, the bill would have made it illegal for employers to retaliate against workers who inquire about or disclose their wages or the wages of other employees in a complaint or investigation. It also would make employers subject to civil actions by employees who feel aggrieved. As part of the bill, the Equal Employment Opportunity Commission would be required to collect pay information from employers.” NY Times. It seems that one of the greatest sources of gender-based civil rights claims comes from women learning what their male counterparts are paid for the same work. Turning off this information source under threat of discharge most definitely serves to perpetuate the inequality.

The battle lines are being drawn. Republicans seem to be hanging their hats on a broadscale attack on Obamacare, while the Democrats have their “Republican war on women” mantra. The SuperPAC money is piling up, the hot mega-donors are pouring in their cash, and it remains to be seen if in fact the new American election platform can be purchased… or if voters can look beyond the slogans to see the real issues.

As our earnings/wealth statistics increasing mirror the skew found in “banana republics,” as our middle class continues to contract and the wealthiest segment only increases their percentage holdings of American wealth, is there a tipping point where rage at inequality trumps a platform that ties business interests to socially conservative issues (where voters actually vote against their own economic best interests)?

I’m Peter Dekom, and history doesn’t seem to support the continuation of governments that allow strong and sustained economic distortions that impair the economic well-being of the majority of their constituents (“it’s the economy stupid!”).