Union Card or Master Card -- How a Nation of Workers Became a Nation of Debtors

It has been apparent for some time that the 20th Century US social contract is defunct beyond repair. Now the economic system faces the prospect of collapse as well. Not surprisingly, these developments are related. They did not come about overnight.

Looking back, it's easy to see that the system which emerged from the post-Bolshevik revolution, mass industrial production era of the 1920's, 30's and 40's was beginning to unravel by the end of the 1970's.

Union membership provides a helpful lens through which to view the process.

During the 1960's union membership bounced up and down within a narrow range ending the decade slightly higher than it began. But starting in 1970, it began a steady decline. In 1970 union workers were 29.6 percent of the work force. At those numbers, unions were able to exert considerable leverage over the wages, benefits and working conditions of all workers. By 1980 union workers were down to 23.2 percent of the total workforce. By the year 2000, union members represented just 13.5 percent of all workers. Today it is about 12.1 percent.

Conventional wisdom holds that Ronald Reagan caused the decline of unions by busting the air traffic controllers union (PATCO) in 1981. Not so. What Reagan and his advisors understood was that union power was already on the wane. Did they know for certain that they could attack PATCO and get away with it? Probably. But even if they didn't, they deemed it a risk--a "probe," if you will--worth taking.

Either way, they did bust PATCO. Consequently, the message that unions could be beat came through for all to see. Employers got the point and stepped up their already fierce resistance at the bargaining table. And they devoted new and effective resources to defeating organizing efforts by their workers.

Workers also got it that unions were weakening. That too made organizing tougher. Corruption scandals and other difficulties added to problems of unions. As the power of unions declined, real wages for workers declined too. Most economists agree that measured in constant dollars, wages in the US have been effectively stagnant since about 1975.

Unions were indisputably an effective instrument for building a broad "middle" class. They did so by applying sufficient power to assure that workers shared in the value that they were helping to create. As industrialization brought enormous innovation and productivity, workers waged epic struggles that won them the wages to buy what they were making. Working conditions improved. Home ownership, car ownership and college for the children of workers became widespread. Pensions and employer paid health care became the norm.

But. But. But. For many reasons unions were less effective at sustaining the newly huge middle-class than they had been at creating it. (The how and the why of the inability of US unions to perceive, let alone counteract, the new forces coming into play in the 1970's is an interesting and important but different topic.)

Declining union membership and power is, however, only one variable in the equation that has brought us to the white hot economic and political meltdown now dominating our news and our lives. Another critical variable is this: as the wallets of workers held fewer and fewer union cards, credit cards were filling up those very same wallets. Workers were in effect trading union cards for MasterCard's.

In the process workers became the proverbial frogs in the pot on the stove. The temperature kept getting closer to the boiling point. But the water felt just fine. Because even though worker power was in decline, worker consumption was going up. Color TV's replaced black and white TV's, only to be replaced again by bigger screen TV's and now LCD's and Plasmas. Vehicles got bigger and better and working families had more of them. Shopping malls proliferated and shopping itself became the national religion. Cell phones, computers, video games, boats, iPods and snowmobiles--workers had stuff, lots and lots of stuff. The whole economy grew.