Monday, January 26, 2009

Reich: The Union Way Up

A sampling of what the former Secretary of Labor wrote in the L.A. Times today,

Why is this recession so deep, and what can be done to reverse it?

Hint: Go back about 50 years, when America's middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.

At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.

Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions. So there must be some other reason for this dramatic decline.

But put that question aside for a moment. One point is clear: Smaller numbers of unionized workers mean less bargaining power, and less bargaining power results in lower wages.

Read the whole thing and pass it on you your friends and family.

1 comment:

Andrew Oh-Willeke said...

Well, there was that little detail of fighting World War II to consider as well.

One of the reasons that the U.S. was so bountiful in 1955, was the the U.S. economy, unlike that of Europe, Japan and much of the rest of the world, had not recently been reduced to rubble by the world's most fierce war ever, so we are in the best position to produce goods for the world.

Not unrelated was the fact that so many resources had been devoted to guns for so long, that there were huge pent up demands for "butter," i.e. consumer goods, both at home and abroad.

And, there was the huge, intentional wealth transfer spawned by the G.I. Bill and high taxes, designed to give Vets spending pwoer and education.

Also, the war killed a meaningful chunk of the domestic work force, making the labor that remains artificially in demand.

Finally, because of the technology available at the time, the most efficient way to make goods was in large, fairly unskilled labor intensive plants.

A more persausive interpretation is that unions facilitated the process of providing workers with the benefits of the strong bargaining position that they came to the table with at that point in time. Unions was coming into their own through the late 1920s and into the New Deal, but that alone didn't produce results.