A revived labor movement is needed to reverse decades of income inequality.
Labor is having a moment the likes of which it hasn’t experienced in decades.
In Joe Biden, the labor movement has the first full-throated, pro-union president since Harry Truman. A drive to unionize Amazon.com Inc. warehouse workers in Bessemer, Alabama, is being watched closely as a possible harbinger of a broader effort to unionize nonmanufacturing industries. And earlier this month, the House passed the most sweeping pro-union piece of legislation in nearly a century, the Protecting the Right to Organize Act, which seeks to strip away some of the advantages companies have long had in successfully fighting off organizing drives.
There is no doubt that the U.S. needs a revived labor movement. According to one important study, between 1973 and 2007, labor’s decline accounted for 30% of the rise in income inequality among men and 20% for women. If the country hopes to rebuild the middle class and reduce income inequality, it simply has to do more to push the percentage of private sector workers who belong to unions, which stands at 6.3%, closer to the public sector rate, which is five times greater and lifts the overall number to 10.8%. What is less clear is whether this moment turns into anything more than, well, a moment.
A surprising fact: By statute, the federal government is pro-union. In 1935, two years into Franklin D. Roosevelt’s first term, Congress passed the National Labor Relations Act (also called the Wagner Act).
1 Its stated purpose was “to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.” (Emphasis mine.)
After decades of labor battles, many of them violent, the Wagner Act established rules designed to put workers on a more equal footing with management when trying to organize and bargain. For instance, the law says that companies can’t refuse to negotiate with workers who have chosen to unionize, and it created the National Labor Relations Board to adjudicate organizing drives and make sure everyone plays fair. John L. Lewis, the president of the United Mine Workers of America, called it labor’s Magna Carta.
Within two years, the United Auto Workers conquered General Motors Co. and Chrysler Corp. In 1941, Henry Ford grudgingly succumbed and Ford Motor Co. became a union shop as well. As Timothy Noah points out in his book “The Great Divergence,”
2 by 1950 the UAW had won not only middle-class wages for its workers but cost-of-living adjustments, health insurance and pensions — benefits that would soon spread far beyond the auto industry. By 1954, “union density” — the percentage of the workforce that was unionized — stood at 28%, up from 7% in 1933.
Most people mark the decline of unions with Ronald Reagan’s decision to fire striking air-traffic controllers in 1981. But that’s not quite right. In fact, union density never topped that 1954 mark and declined gradually in the 1960s and 1970s. Why? Because of the Taft-Hartley Act, which a Republican-dominated Congress passed over Truman’s veto in 1947. Taft-Hartley didn’t overturn the Wagner Act, but it crafted new rules that returned the advantages to management. In vetoing the bill, Truman denounced it as “deliberately designed to weaken labor unions.” He was right.
[E]ncouraged employers to threaten workers who want to organize. Employers could hold “captive meetings,” bringing workers into the office and chew them out for thinking about the union. And Taft-Hartley led to the “union busting” that started in the late 1960s and continues today.
Reagan’s firing of the air-traffic controllers turned a slow decline into a rout as corporate executives — and the anti-union law firms that sprang up to advise them — realized that in addition to taking advantage of Taft-Hartley, they could simply ignore the Wagner Act because the penalties were minimal and the government wasn’t going to stop them anyway.
Other factors were at play as well, of course. Globalization made it easy to shift manufacturing to countries such as Mexico and China, where workers were paid a fraction of a union member’s wage. Advances in logistics made international supply chains — once nearly impossible to pull off — routine.
When foreign automakers began building assembly plants in the U.S. in the 1980s, they chose right-to-work states in the South that were fiercely anti-union — indeed, the UAW has consistently failed to unionize those plants.
As good-paying manufacturing jobs dwindled, they were replaced by low-paying service jobs. U.S. law makes industrywide union drives extremely difficult, so union efforts are invariably restricted to individual workplaces. Were employees at a McDonald’s restaurant ever going to have the wherewithal to form a union? Of course not.
Meanwhile, the largest private employer in the country, Walmart Inc., with 1.5 million U.S. employees, used every trick in the Taft-Hartley book whenever a union threat arose in one of its stores. Noah recounts the one successful union drive in the company’s history, in 2000, when 10 meat cutters at a Supercenter in Jacksonville, Texas, voted 7-to-3 to join a union:
Within days of the vote Walmart announced that it was phasing out meat cutting at all its Supercenters, starting with the 180 stores that just happened to include the one in Jacksonville. … “This decision was in no way related to the Jacksonville situation,” a Walmart spokeswoman explained, presumably with a straight face.
There’s another factor I need to mention: Many of the people who had traditionally supported unions stopped caring. By which I mean liberals, particularly the liberal establishment, which became disconnected from the union movement as it became more technocratic and elitist. Bill Clinton, after all, was the president who signed Nafta into law and then spent the rest of his presidency ignoring the harm it did to manufacturing workers. During the 2008 financial crisis, many of Barack Obama’s aides were willing to let Chrysler go under — until Ron Bloom, the one aide who had actually worked with unions, argued vehemently that the government couldn’t abandon all the people who would lose their jobs. “There wasn’t one guy in that room who’d spent any serious time having beers with real workers,” Bloom later told the journalist Ron Suskind.
6 “The basic college-educated-liberal attitude towards unions was evolving from solidarity to indifference to suspicion.” He does not exempt himself. As he made his way in New York as a prominent writer and editor, he looked down his nose at “boring” unions. It took him the better part of a lifetime to realize that the indifference to unions by liberals like him had allowed them to ignore growing income inequality and the pain it was inflicting on so many working-class Americans.
Andersen’s mea culpa hit me hard because that’s my story, too. My parents, both public school teachers, were staunch union members who had spent time on picket lines. Yet once I began focusing my journalism on business, I started to see things through the same prism as the rest of the liberal establishment. Sure, globalization hurt workers in Detroit or Akron, Ohio. But it kept prices low, right? And all the economists said that there were more winners than losers. Maybe out-of-work Detroit residents should move to Texas. Or join a retraining program. The liberal mindset — my mindset — decried Walmart’s poverty-level wages but never connected those wages to the fact that Walmart had successfully shut out unions.
7 Geoghegan writes that the House passed labor reform bills three times during his life only to have them die in the Senate. Geoghegan is only a few years older than me. When I read that sentence, I realized, with some embarrassment, that I had no memory of any of those efforts.
I read Noah’s book, “The Great Divergence,” a decade ago when it was first published. The book is about the causes of income inequality; there are chapters on maximizing shareholder value, on the effect of globalization, on the widening advantage for people with college degrees and so on. These solidified the impression I already had about the factors that contribute to growing income inequality.
But when I read the chapter on unions, it was as if the lightbulb went on. Of course labor’s decline was an important reason the rich were getting richer at the expense of everyone else. But like many liberals of my generation, I had overlooked it. Unions didn’t just raise wages for its members; nonunion shops in similar industries often had to raise wages to keep pace. And the lack of unions meant that companies faced no pressure to pay a decent wage.
Labor's Love Lost
Income inequality has grown as union membership has declined
Source: Historical Statistics of the United States and Unionstats.com (density); Thomas Piketty and Emmanuel Saez (inequality)
Noah told me recently that by the time he was writing his book in 2011, the connection between labor’s decline and income inequality was well established in the academic literature. But the same was not true among the general population.
“When I went around hawking my book in 2012,” he told me in an email:
There was a curious resistance to my chapter on unions, among both liberals and conservatives. They just didn’t want to hear that solving the inequality problem might require handing power back to workers.
He continued: “I found myself telling audiences that if they cared about inequality and didn’t want to discuss reviving unions, then they should take up chess because they were wasting their time.”
During his eight years as vice president, Biden didn’t talk much about unions — nor, of course, did Obama — but as a candidate in 2020 and now as president, he has made strengthening unions a core plank in his plan to create millions of middle-class jobs. A few weeks ago, he took the unprecedented step of inserting himself in the fight between Amazon and the Retail, Wholesale and Department Store Union in Alabama.
In a short video released by the White House, Biden didn’t mention Amazon by name, but there was no mistaking what he was referring to. “Unions built the middle class,” he began. He continued:
Today and over the next few days and weeks, workers in Alabama and all across America are voting on whether to organize a union in their workplace. … There should be no intimidation, no coercion, no threats, no anti-union propaganda. No supervisor should control employees about their union preferences.
Biden concluded: “Make your voice heard.”
Of course, intimidation, coercion, threats and anti-union propaganda are exactly what Taft-Hartley legalized in 1947. And while Amazon is hardly the only offender, it is nonetheless going to great lengths to persuade its employees to vote no.
According to the Washington Post, workers get four or five anti-union emails a day from the company, and anti-union signs have even been posted in the bathroom stalls. The New York Times reported that “at certain training sessions, company representatives have pointed out the cost of union dues.” The union even says that Amazon had the county change the timing of a traffic light where union organizers handed out flyers.
(Amazon says that it asked for the light change because of traffic issues. As for the larger issues, a spokeswoman told the Times, “It’s important that employees understand the facts of joining a union. We will provide education about that and the election process so they can make an informed decision.”)
The voting by employees is taking place now and won’t end until the end of March. The issues are less about pay — the company pays its warehouse workers a minimum of $15 an hour — than working conditions. (The union drive appears to have been prompted by cases of Covid-19 among Amazon workers.) The stakes are high not just for Amazon and its employees but for the nation. The company employs 1.3 million people, and should the union win, one could easily see union drives at other Amazon warehouses — which, in turn, could spur other service workers to attempt to unionize, especially knowing that the president will be shining a light on their efforts.
Still, the odds are against the Amazon workers, given the company’s built-in advantages. Democrats are trying to change that with the recent passage of the PRO Act. Among other things, the bill would allow for certain kinds of picketing and strikes that Taft-Hartley outlawed, prevent employers from permanently eliminating striking workers and add penalties and remedies that would inflict real pain on employers that violate labor laws.
In the House, only five Republicans voted for the bill. In the Senate, at least as things currently stand, it would need 10 Republican votes to pass. Like virtually all progressive legislation, the PRO Act won’t become law anytime soon unless the filibuster is eliminated.
Even so, there is reason for optimism. Celine McNicholas, the director of government affairs at the Economic Policy Institute, a worker-focused policy group, pointed to a recent Gallup poll showing that 65% of Americans approved of labor unions, up from 48% in 2009. According to McNicholas, the number of young people who are pro-union is even higher. “Younger workers have none of the outdated hang-ups,” she told me.
Geoghegan noted that several of Biden’s top aides, including his chief of staff, Ron Klain, and Jared Bernstein, a member of the Council of Economic Advisers, are fiercely pro-union. Andrew Stern, the former president of the Service Employees International Union, was also encouraged by Biden’s pro-union stance, but he also said that the unions have to be willing to spend money on organizing drives — even if some of them fail — to take full advantage of the moment. “They have to invest money and time and talent if they are going to grow again,” he said.
There’s another cause for optimism: The liberal intelligentsia is embracing unions again. The connection between unions and inequality has become too glaring to ignore anymore. For instance, when Toys “R” Us Inc. went out of business — and the private equity firms that had sucked it dry didn’t even offer to pay a dime in severance to workers — it offended the conscience. Would a union have made a difference to those workers? Quite likely.
“It’s a really important moment,” Stern told me. “The Amazon fight is shedding light on the lengths one of the most successful corporations in the world will go using traditional anti-union tactics. The president has decided that unions are his partners and workers deserve a fair chance to have a union. The contextual atmosphere is really strong.”
But workers won’t get representation without a fight. Unions need to take advantage of this moment to start organizing drives, and they need everyone’s support. Otherwise we might as well just play chess.
So named for its chief sponsor, Senator Robert F. Wagner of New York.
The full title is “The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It.”
The full title is “Which Side Are You On: Trying to Be for Labor When It’s Flat on Its Back.” Geoghegan is an occasional contributor to Bloomberg Opinion.
The most astonishing example is Volkswagen, which twice took a hands-off stance when the UAW tried to organize its Tennessee plant. The workers still rejected the union.
Suskind tells this story in “Confidence Men: Wall Street, Washington, and the Education of a President,” about Obama’s first two years in office.
The full title is “Evil Geniuses: The Unmaking of America: A Recent History.”
The full title is “Only One Thing Can Save Us: Why America Needs a New Kind of Labor Movement.”
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Joe Nocera at email@example.com