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Labor on Labor: Increased Bargaining Power Will Lead to a Good Jobs Economy

Posted by Will Rice (will) on Nov 07 2011 at 4:07 PM
FALL 2011 >>

By Larry Cohen

American working families are in a continuing free fall.

The good news is that today there is a growing movement based on the interests of working families, the 99 percent, instead of continuing giveaways to the wealthiest.  The Occupy movement, students, workers, community activists, people of faith, and ordinary Americans are all peacefully protesting and uniting around a shared vision of restoring the American Dream. 

Many factors are critical to adding quality jobs to our economy.  Infrastructure and public sector investment, as proposed by President Obama in the Jobs Act are important.  Green transportation and energy, high speed Internet, investing in education and safety all make sense.  Fair trade rather than continuing with trade policy aimed at foreign policy and not good economic investment in America is critical.

But a critical element that is often skipped, even by labor spokespersons, is restoration of real bargaining rights for workers. Bargaining rights, in turn, will help restore effective consumer demand and bring about an economic recovery that includes working families, not just the wealthy.

For example, 45,000 workers at Verizon and Verizon Wireless remain in a tough contract fight. To even get to this point, they were on strike for two weeks to push this $100 billion company to actually bargain and not simply repeat demands for $1 billion in concessions. Cuts in wages, benefits, and jobs have become the new normal; yet resistance on the scale that Verizon workers are demonstrating is, sadly, nearly unthinkable in the United States of the 21st century.
The surge in organizing in the 1930s meant bargaining coverage—the number of workers covered by collective bargaining and contracts—grew from 8 percent in 1930 to 35 percent 30 years later.  In those years, working families gained better health care, pensions, higher wages and expanding organizing rights. Americans expected that their children and grandchildren would have a better life. And in those years, they were right.

But everything changed as bargaining rights declined, and they’ve been declining in the US now for 40 years. Now, just 7 percent of private sector workers have bargaining rights. In the public sector, where more workers have gained collective bargaining coverage in the last 40 years, we’ve seen those rights under attack this year in state after state.
Today, real wages, which were increasing until about 1973, have stagnated and are in decline. The gap between productivity and real wages continues to widen. So the value of what we as workers produce increases but because bargaining power has declined, our wages don’t keep pace and we fall further behind.
This productivity gap over four decades represents $500 per week in lost wages for the 90 percent of Americans without collective bargaining.  CEOs and Wall Street bankers have grabbed their share, and today, they want our share too. In 1980, CEO pay was 42 times the average worker’s pay. Today, it’s 343 times the average worker’s pay.
CEOs and their political supporters are writing the rules, getting richer and now dominate almost every aspect of our lives. Workers, almost completely without a voice, continue to lose ground. Corporate and political attacks on bargaining rights are a root cause of these human and economic problems.
Outside the U.S., the story is often quite different. Bargaining coverage in Canada is 2.5 times the U.S rate. In Europe (including the east), bargaining coverage is four or more times the U.S. rate.   And there are many examples in the global south, from South Africa to Brazil and Argentina, of movements uniting democracy and workers’ rights that have boosted the standard of living in stunning ways.  South Korean wages in manufacturing and services now rival or exceed our own as bargaining coverage has climbed.
In nearly every other industrial democracy, there is public and political support for collective bargaining.  It’s no coincidence that in those other countries quality and cost effective health care is the norm, retirement security means much higher income replacement and public policy supports retaining jobs in key industries. Why are U.S. workers constantly told they must adapt to a global economy, except when it comes to workplace rights and the means to improve their standard of living?
Bargaining rights are critical to any functioning democracy. And bargaining rights are critical for a functioning economy.
The tie-in between high levels of collective bargaining, a rising standard of living and a prosperous economy is no secret.  In 1938, when the United States was still gripped by the Great Depression, economist John Maynard Keynes wrote to President Franklin D. Roosevelt, stating that jobs program and financial regulation were important, but “I regard the expansion of collective bargaining as essential.”
Keynes was not a noted union supporter, but he understood, as did economists for decades to come, that collective bargaining is a critical engine to fire up the demand curve and enable workers to improve their conditions in discussion with management, thus improving the economy. We will never have an economic recovery in this country if instead very profitable employers automatically cut wages, cut benefits and ship more good jobs overseas because their colleagues at other firms are all doing it.  That remains a race to the bottom.
If U.S. workers had extended bargaining rights and had a seat at the table, they would negotiate higher wages. Then growing demand that would produce more jobs, a higher tax base and support for critical services in our communities.
We need to restore workers’ rights so that we all can negotiate and engage our employers in a meaningful way.  Collective bargaining is how we will fire up demand, so that workers can improve their conditions and improve the economy. We can’t have a 21st century economy based on 19th century fairy tale capitalism.  
Unless workers can truly use bargaining rights to better their conditions, we’re headed for a “dollar store” economy. We won’t have a real economic recovery and we won’t create the quality jobs that working families need to restore a middle class standard of living.

Larry Cohen is president of the Communications Workers of America.