Union-Busting Is Theft -- a Weapon of Class Warfare from Above
Union-busting gives employers the means to manipulate the labor market in order to squeeze out more profits by paying workers less than what a free and fair market would bear. It's wage theft of another kind – perfectly legal, but just as costly for working people.
As the drama playing out in Wisconsin shows, union-busting is not only a weapon in the class war being waged by the richest Americans – it's also a means of waging political war on Democrats and progressive organizations.
The War on Public Employees
Both sides in the battle raging in state capitols across the country agree on just one thing: we are witness to a defining showdown pitting union-busting conservatives against the last group of American workers that enjoys a high rate of union membership, and the economic security that comes with it.
As I noted last week, 37 percent of government workers belong to a union, compared with just 7 percent of private-sector employees. Last year, more working people belonged to a union in the public sector (7.9 million) than in the private (7.4 million), despite the fact that corporate America employs five times the number of wage-earners.
Economist John Schmitt explained that “as private-sector unionization rates fell ... the share of public-sector workers in a union held steady” and “public-sector unions played an important role in protecting their members against declines in health and pension benefits seen in the private sector.”
Meanwhile, the four-fifths of the U.S. workforce in the private sector got hammered. As the Economic Policy Institute has documented so well in its report, the State of Working America, private employers did not do the right thing on health, pensions or pay. Private-sector workers --and unions-- were too weak to resist the employer assault.
The decline in private sector unions dovetailed perfectly with the beginning of a long period of wage stagnation and benefit cuts for working people and a steep increase in corporate profits – today, the largest share of America's national income goes to profits and the smallest share to wages since the government started tracking those figures.
Union-busting As Political Warfare
In Wisconsin, public employees' unions have agreed to meet all of Republican governor Scott Walker's demands on wages and benefits, but he's dug in his heels and refused to negotiate a compromise. That's because the provisions the governor has spun as “emergency measures” to address this year's budget deficit would yield paltry savings in the near-term.
The real point is to defund and declaw his state's unions. As the New York Times put it, “In each case, Republican talk of balancing budgets is cover for the real purpose of gutting the political force of middle-class state workers, who are steady supporters of Democrats and pose a threat to a growing conservative agenda.”
Among other things, the bill requires a new union vote every year, and “prohibits covered employers from collecting union dues through salary deductions,” according to labor attorney Troy Thompson. The unions would have to collect dues directly from employees, and the measure “allows employees to stay in a union without paying union dues.”
Defunding the American labor movement is a huge goal for Walker's corporate sponsors. Contrary to right-wing spin, it's illegal for unions to use workers' dues for political purposes, but union PACs, which are funded by voluntary contributions from their members, help pay for not only the campaigns of politicians who are friendly to workers but also a number of progressive think-tanks and advocacy groups that have proven to be a thorn in the side of the Corporate Right. (Just one example among many is U.S. Chamber Watch, which has proven to be such an obstacle for the Chamber of Commerce that it explored launching a sleazy disinformation campaign to discredit the group.)
But unions do more than that to advance a pro-middle-class agenda. They also educate workers and, as a result, union members are more likely to vote their economic interests than be blinded by culture war issues. In 2004, although George Bush won the votes of white working-class men by 25 percent over John Kerry, blue-collar white guys who belonged to unions broke for Kerry by 21 percent. Charles Noble, a political scientist at IC Long Beach, commented, “Clearly, union members had a different perspective on the election, most likely provided by the unions themselves, which poured millions into educating and mobilizing union households.”
Similarly, in 2008, John McCain beat Obama by 25 percent among all gun owners, but Obama won over union members who pack heat by a 12 percent margin.
Guy Molyneux, a partner with Hart Research, which conducted exit polls for the AFL-CIO, told the New York Times that white male union members “supported Mr. Obama over Mr. McCain by a margin of 18 percentage points, while for all white men, exit polls found they backed Mr. McCain by a 16 percent margin.”
In economic terms, the wages of many Americans working in the private sector represent a "market failure" of massive proportions. Even the most devout of free-marketeers -- economists like Alan Greenspan and the late Milton Friedman -- agree that it's appropriate and necessary for government to intervene in the case of those failures (they believe it's the only time such "meddling" is appropriate). But the corporate Right, which claims to have an almost religious reverence for the power of "free" and functional markets, has gotten fat off of this particular market failure, and it's dead-set on continuing to game the system for its own enrichment.
The market does work pretty well for Americans with advanced degrees or specialized skills that allow them to command an income that's as high as the market for their scarce talents will bear. There are also people with more common skills who have the scratch (and/or connections) and fortitude to establish their own businesses -- think George W. Bush or a really great mechanic who owns his or her own shop.
But that leaves a lot of people; about 80 percent of working America are hourly workers, "wage slaves" in the traditional sense. There's no doubt that their salaries are heavily influenced by the laws of supply and demand. We saw that clearly in the latter half of the 1990s, when, under Bill Clinton, the Fed allowed the economy to grow at a fast clip, unemployment dropped below 4 percent, and for a brief period, a three-decade spiral in inequality was reversed as wages grew for people in every income bracket.
But a common fallacy is that wages are determined by market forces. They're not, for a variety of reasons that require more explanation than space permits. I'll focus on two: what economists call "information asymmetries" and coercion. Both are anathema to a functional free market, and both exist today, in abundance, in the American workplace.
To understand these failures of the free market, one has to go back, briefly, to basic economic theory. In order for a free market transaction to work, both the buyer and the seller need to have a good grasp of what the product being sold -- in this case, people's sweat -- is worth elsewhere, who else is buying and selling, etc. In other words, they have to have more or less equal access to information. There can be no misrepresentation by either the buyer or the seller in a free market transaction. And both parties have to enter into the transaction freely, without being coerced; neither side can exercise power or undue influence over the other, whether implicitly or explicitly, through threats or other means.
Now let's look at how that theoretical construct plays out in the real world of the American workplace. When an individual worker negotiates a price for his time, effort and dedication with any business bigger than a mom-and-pop operation, there's quite a bit of explicit coercion (much of it in violation of our labor laws), which I'll get to shortly. But there's always an element of inherent coercion when an individual negotiates with a company alone, because of the power differential: a company that's shorthanded by one person will continue to function, while a person without a job is up a creek with no paddle, unable to put a roof over her head or food on the table.
The "information asymmetries" in such a negotiation are immense -- they're actually more like process asymmetries. Companies spend millions of dollars on human resource experts, consultants, labor lawyers, etc., and they know both the conditions of the market and the ins and outs of the labor laws in intimate detail. While working people with rarified skills are often members of trade associations or guilds, read trade journals and have a pretty good sense of what the market will bear, many low- and semi-skilled workers don't know their rights under the labor laws, don't know how to assert them and (rightfully) fear reprisals when they do. They often have little knowledge of the financial health -- or illness, as the case may be -- of the company to which they're applying for a job, how profitable it is, how much similar workers in other regions or firms earn, etc.
For the majority of Americans who lack scarce talents or a high level of education, negotiating a price for one's time with a firm on an individual basis is anything but a free market transaction. That's where collective bargaining comes in -- when workers bargain as a group, they do so on a level playing field with employers, and the resulting wages (and benefits) are as high as the market can bear, but no higher.
Unions, like corporations, have a great deal of information about the market. They know how a firm is doing, how profitable it is and where it is relative to the larger industry in which it operates. They know what deals workers at other plants have negotiated. They have attorneys who are just as familiar with the American labor laws as their counterparts in management.
And while an individual has very little leverage in negotiations -- again, most companies can do with one less worker -- collectively, an entire work force has the ability to shut down or at least slow down a company's operations if management chooses not to negotiate in good faith (as is often the case).
It's not difficult to quantify the difference between what most hourly employees take home and what the free market would dictate. Economists Lawrence Mishel and Matthew Walters estimate the "union wage premium" -- the amount of additional pay a unionized worker receives compared with a similar worker who isn't a member of a union -- at around 20 percent (that's in keeping with other studies, using different methodologies, which put the premium in a range between 15 and 25 percent). If one includes benefits -- health care, paid vacations, etc. -- union members make almost 30 percent more than their nonunion counterparts.
Another way of looking at it is this: Millions of American families are scraping by on below-market wages, and if that weren't the case, there wouldn't be such a large group of American families among the "working poor." In economic theory, it's a given that a producer can't sell his or her wares below the cost of production. The equivalent to the cost of producing a gizmo, when we're talking about the sale of someone's working hours, is the cost of providing basic necessities -- nutritious food, safe housing and decent medical care. These are out of reach for the almost three million American families who work full-time and live beneath the poverty level. According to the Working Poor Families Project, half of the working poor have no health insurance.
When enough workers are organized and can speak with one voice, they represent a powerful influence on the political establishment—one that’s largely missing in the United States today. Inequality, stagnant wages, out-of-reach health-care costs, bad trade policy that hurts the middle class, dwindling opportunities to get an affordable high-quality education, and a host of other issues that have a real impact on most American families—they’re all problems that a healthy labor movement can force politicians to address.
That's unacceptable to the plutocracy. And it is this battle, rather than various states' budget woes, that is propelling the workers' uprising now sweeping across the country.
Editor's note: part of this column was adapted from Joshua Holland's book, The Fifteen Biggest Lies About the Economy (and Everything Else the Right Doesn't Want You to Know About Taxes, Jobs and Corporate America).