What Happens If Labor Dies?
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But globalization by itself doesn’t necessarily lead to a weakened labor movement and declining worker income. If it did, unionized German manufacturing workers would not enjoy pay and benefits that exceed those of Americans even as their country has become the export giant of the Western world. Because unions are more powerful in Germany than they are in the U.S., and because German law requires large companies to divide their corporate boards equally between workers’ and management’s representatives, multinationals like Siemens, Daimler, and BMW have kept their most highly productive and best-paid jobs at home. Only where corporations have been free to structure globalization to their workers’ disadvantage—that is, in the United States—has it led to massive union decline.
Even so, globalization accounts for only a portion of labor’s descent in the U.S. Five years ago, economist Alan Blinder, a former vice chair of the Federal Reserve, calculated that roughly 30 million to 40 million American jobs could be offshored. People can make iPhones and blueprints and write contracts anywhere. Although most of those jobs wouldn’t be offshored, Blinder argued, anyone with such a job would sooner or later see his wages held down.
This still leaves more than 100 million American jobs that can’t be shipped abroad, whose wages can’t be undercut by the going rate in Shenzhen or Mumbai. Carpenters, cooks, supermarket clerks, and truckers have jobs that can’t be relocated. Yet unions have lost members in these place-specific sectors as well. In 1973, 40 percent of construction workers were union members. In 2004, just 15 percent were.
What drove this decline wasn’t offshore competition. It was growing employer opposition to unions, which was also the primary reason why unions could not expand into the growing service sector. Beginning in the 1970s, American businesses realized they could defeat unionization campaigns by exploiting the weaknesses of the National Labor Relations Act (NLRA), the 1935 law designed to protect workers’ right to organize, or by violating the act altogether, since the penalties for such violations were minuscule.
When a company fires a worker in the middle of an organizing drive, which the labor relations act explicitly deems illegal, the worker can file a complaint with the local office of the National Labor Relations Board (NLRB). If the board upholds her complaint, however, the most it can do is order the employer to rehire the worker and pay her back pay, minus anything she may have earned elsewhere during the months or years (the process is notoriously slow) since her firing. To get some perspective on how negligible such penalties may be, one just has to look at the 2007 unionization campaign at the Yale–New Haven Hospital, conducted outside the framework of the NLRA. An independent arbitrator ruled that management had committed numerous fair-practice violations and fined the hospital $4.5 million. During the decade of 2000–2009, by contrast, the total of all fines levied nationally by the NLRB for illegal punishment of workers for their union activity came to $36 million, or $3.6 million a year.
Richard Freeman, the Harvard professor who is the dean of American labor economists, has found that in 1950, for every 200 workers who voted to join a union, only one was fired during the organizing drive. By the early 1990s, that figure had grown to nine. American businesses had figured out that illegally firing workers to deter their unionization might be the single greatest deal they’d ever find.
What had restrained business in 1950? In part, companies held back because America was a different country then. Its population and most of its major industries were concentrated in the heavily unionized Northeast and Midwest. The Sunbelt boom had yet to take place. When the South and Southwest began to grow in the 1960s, unions couldn’t gain entry there, impeded by right-to-work laws that the federal government had allowed states to adopt when it passed the Taft-Hartley Act in 1947.