If We Had Some Ham

More than anything else, Lawrence Summers’s and Anna Stansbury’s Washington Post op-ed making the argument that the way to reverse the declining share of income claimed by labor is to increase the power of unions, reminds me of the old vaudeville joke: “If we had some ham, we could make a ham and cheese sandwich if we had some cheese.” Consider:

Economic analysis often ascribes these trends to some combination of globalization, technological change and rising monopoly power. But our research suggests that a more compelling explanation is the broad-based decline in worker power. As workers have become less able to share in the profits generated by their firms, income has been redistributed from employees to the owners of capital. That has contributed to higher income inequality along class and race lines.

The evisceration of private-sector unions is the most obvious example of the decline in worker power. At the peak, one-third of the private-sector workforce belonged to a union; that number is now 6 percent. But other factors also affect the degree to which workers can share in firms’ profits. Because of increased shareholder activism, rising levels of debt, increases in private equity and changing corporate norms, businesses are increasingly run for shareholders rather than their stakeholders. Ruthless management tactics involving precise measurement of workers’ day-to-day activity have become widespread.

Meanwhile, workers at large firms or in highly paid industries (such as manufacturing, construction or transportation) used to earn large wage advantages, as they shared in the profits generated by their companies, but these benefits have declined by half since the early 1980s. An increasing number of workers are outsourced domestically, employed by staffing or temp agencies or misclassified as independent contractors, reducing their ability to share in the profits of the main firm they work for. And the real value of the minimum wage is lower than it was in the 1970s.

Why did this happen? Some portion of the decline in worker power may have been an inevitable outcome of globalization or technological change. But our research — which examines shifts in labor shares and corporate profits across different industries — indicates that changes in policy, norms and institutions are the most important explanatory factors. This view is supported by the fact that the legal and political environment has been tilted substantially in favor of shareholders and against workers since the 1980s, a trend exemplified by the expansion of state right-to-work laws undermining unions’ ability to fund themselves and the increasing corporate use of union avoidance tactics, both legal and illegal. The fact that the decline in unionization, the rise in income inequality and the fall in labor’s share of income have all happened to a greater extent in the United States than in much of the rest of the industrialized world also suggests an important role for U.S.-specific explanations.

See what I mean? The decline in bargaining power is less a consequence of globalization, technological change, or consolidation than it is due to reduced workers power which is due to globalization, technological change, and consolidation. If you read very carefully you can ferret out their proposals for remedying the situation:

  • Eliminate right to work laws
  • Ensure that workers that aren’t actually independent workers are not classified as such
  • Sector level collective bargaining

Fair enough. How? Constitutional amendment? And how do they propose to reduce offshore outsourcing in the face of rising U. S. labor costs? I genuinely want to know.

The art of making policy resides in identifying the alternatives, weighing their costs and benefits, and pursuing the most doable. Contrary to Dr. Summers I would attribute the decline in union power overwhelmingly to globalization, technological change, consoolidation and their run-on effects as well as the following:

  • Union corruption
  • Obeisance of the unions to the Democratic Party even as the party abandoned policies that bolstered workers’ power in favor of neoliberal policies.
  • The adversarial relationship between organized labor and corporations built into our legal system.
16 comments… add one
  • Grey Shambler Link

    Bullet point number two has been a thorn for years. All we get from the DNC for our support are words and glossy mailings directing our vote.

    Yes, I know the reason. They can count.

    I think the answer is for (former) workers to join and co-opt the BLM riots. Everyman understands the economics of being broke and jobless.
    BLM gets what they want. AND respect and words of praise from leaders, government and corporate. Even corporate sponsorship, in the case of the NBA.

  • walt moffett Link

    In addition, another factor would be the union givebacks that left new hires out in the cold and so less inclined to join.

    Grey, bring back the IWW? They understood how to apply demonstrations and riots as bargaining tools.

  • The time for action was when Ford, GM, and Chrysler started buying small engines made in Japan or South Korea. That should have shut the entire auto industry down if not provoking a general strike shutting the whole country down. Instead the UAW of the time sat there fat, dumb, and happy.

  • Guarneri Link

    The authors are full of shit.

    Your last three dot points all have a place in the debate. But it was work rules (probably best classified under union corruption) that did them in. The stories of shutting a line down to call a union electrician to change a light bulb or fuse are not apocryphal, they are true. I’ve seen it in spades with my own two eyes. And it was all about union dues paying bodies.

    You can pay 5, 10, 20% more per hour. But you can’t pay 2x and 3x because of union rules. The unions destroyed themselves.

    And walt makes a point I’ve also seen in spades. Pit a 20 year union guy vs his new hire “brother” when it comes to $ ? Heh, sorry brother, you understand, right?……. Solidarity my ass.

  • In my time I have been a member of two different unions. My first exposure to a union was when I was in the steel mill. Over in the corner I saw a guy sleeping on a stack of sacks. I looked quizzically at the individual who was leading me through the mill. I was told that was the shop steward.

  • CuriousOnlooker Link

    Thinking about one of the suggestions — “Sector level collective bargaining”; a prerequisite for success is industries where production is wholly located in this country.

    e.g. doctors / nurses / grocery workers / writers guild.

    That is rarely the case in manufacturing, but mostly true in services.

    Since services are 70+% of the economy; it may work.

    The biggest risk would be incentivizing employers to invest in automation / robotics to do these services; where the automation / robotics come from overseas or outsourced. i.e. switch non-tradable “services” into tradable “goods”.

  • Since services are 70+% of the economy; it may work.

    We may need to reassess. When the dust has settled 70+% of the economy might not be services any more.

    And I think that I need an explanation of why telemedicine with a physician who lives two miles away (or ten miles away) is acceptable but telemedicine with a physician who lives 10,000 miles away is not. The regulatory issues are thorny.

  • Grey Shambler Link

    “union electrician to change a light”

    I’ve heard of such but never seen it myself.
    I think there was never enough money in the dairy industry to push for such contracts. Well, on second thought there were job descriptions and rules to increase the number of positions but where I worked they were routinely ignored as we were only 14 people at my location and we were close so we went along to get along.
    Big shops like GM probable so, here in town Goodyear Tire was notorious for that and arrogant and well paid up to the day they closed.
    Unions here won’t make a comeback. Things have changed, you can’t hire on to the good life you have to build your own. Becoming the best at what you do and building a reputation for that.
    It just leaves so many people out with no direction or traction to even begin .

  • Grey Shambler Link

    O.T. Sorry.
    @Steve: What do you know of ” Excited Delirium”?

  • I would add that “learn to code” isn’t that good advice now that your competition for that sort of job is anyone anywhere in the world with a notebook computer and an Internet connection.

  • Guarneri Link

    “My first exposure to a union was when I was in the steel mill. Over in the corner I saw a guy sleeping on a stack of sacks. I looked quizzically at the individual who was leading me through the mill. I was told that was the shop steward.”

    Yer anner, I rest my case.

    Grey – walk through a mill or an auto stamping plant. Go to the Chicago Convention Center. And on and on. These are no empty anecdotes.

  • Grey Shambler Link

    If union members or anyone working for an individual or corporation isn’t giving their best to further that interest, they are fools. If they shirk because they believe the company is dishonest or siphoning off their own funds, they should quit. The reason that they don’t is that they live paycheck to paycheck and are dependents of the company they hate. They’ve come to believe the company is their parent and they are mistaken. It may well be that the union furthers that illusion, but they’ll never sign union cards telling people to be their own man.

  • Greyshambler Link

    bring back the IWW:
    God you’re old. Sure, I’ll throw a rock from my car window.

  • TarsTarkas Link

    Why don’t they just propose that everyone who has a job must belong to a union and pay dues, ban all imports, and make it illegal to close a firm for any reason whatsoever. It would be a more honest presentation of their goals.

  • steve Link

    I was a member of 1099 for a while back when I was a mental health worker. It was back when pts were being released from state hospitals but there weren’t enough in-patient psych beds to handle pts who decompensated. We ended up keeping pts for days in small rooms, often in restraints since we didnt have anywhere else to put them. We were severely understaffed. It was pretty dangerous. It is where I got stabbed the first time and we had to fight with and restrain a number of people. I personally disarmed several people. Twice I opened our door to find someone pointing a gun at me (OK once it was just a starters pistol, but it was kind of dark and hard to tell at first.)

    Once we joined the union we got a security guard, increased staffing and they finally fixed the lights. It was nice having security guards as they were mostly off duty police. They got my tickets fixed for me and when I bought a car that was a lemon they offered to have it stolen for me so I could get insurance money. Those were the days. Anyway, my recollection of a union is not entirely negative. Our employer was perfectly willing to cut corners and have us bear the risks before we had the union. Being on strike did suck.


  • steve Link

    Oops, meant 1199. Teamsters. I really cant type.

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