1. Government and Labor Unions
Workers and labor unions can achieve change either in the economic arena (unionizing and collective bargaining) or in the governmental arena. Over the past 75 years, some of the greatest achievements have been won in the governmental arena, and unions become integral part of Democratic coalition from Roosevelt on.
Franklin Roosevelt and the New Deal (1933-1939)
* New Deal – massive government jobs stimulus programs to boost economy during Great Depression. Based on Keynesian economic theory that government spending to create jobs during economic downturn will boost consumer spending * Social Safety Net: Social Security, Welfare, Unemployment Insurance programs created * Pro-union legislation: Wagner Act makes it easier for unions to organize by providing card-check union recognition when 50 percent plus 1 (majority) sign union cards. Created National Labor Relations Board to rule on unfair labor practices. * John L. Lewis and CIO take advantage of Roosevelt’s pro-union policies to increase union membership from 12 percent to 35 percent of workforce in just six years.
Republican Congressional Reaction
* Taft-Hartley Act passed by Republican Congress over Democratic President Truman’s veto in 1947. * Taft-Hartley requires 90-day waiting period before union elections which gives companies time to fight union organizing drives * Creates “right to work” states where workers do not have to pay union dues. Southern states quickly pass right to work legislation, and U.S. is only nation with pro-union laws in one part of the country and anti-union laws in the other part. Southern states both anti-union and fearful of allowing free labor unions at a time when African-Americans are still suffering under segregation and not allowed to vote. * Creation of “right to work” states enables shift of manufacturing to non-union South starting in 1960s.
John F. Kennedy (D)
* Signs executive order in 1962 allowing federal government workers to unionize, which is quickly followed by state laws allowing state and local government workers to unionize. * Today, half of all union members are in the public sector (teachers, police, fire, state and local government, professors)
Lyndon Johnson (D)
* Expands social safety net in 1960s by creating Medicare health care coverage for the elderly and Medicaid for the poor and disabled.
Barack Obama (D)
* Parallels with Franklin D. Roosevelt * $787 billion stimulus bill to create and preserve jobs during Great Recession, and General Motors/Chrysler bailout to protect jobs in the auto industry. * Expansion of social safety net through health care bill requiring coverage for almost all workers. * Supported Employee Free Choice Act to promote unions (would have restored Wagner Act simple 50 percent plus 1 card check for unionization with no 90-day wait for separate election, but bill did not pass)
2. Collective Bargaining:
How do unions achieve contracts? What are the major differences between public and private sector? * Union movement today is 50 percent public sector, 50 percent private sector * National Labor Relations Board (one federal agency) governs private sector, various state laws and agencies govern public sector * Private sector has right to strike, public sector does not. * Public sector teachers and government workers have right to nonbinding mediation, police and firefighters have binding arbitration where neutral arbitrator has right to choose final settlement.
What determines the outcome?
* Power relationship between two sides (Christie has power to impose final contract, which gives him uneven power over state government workers; pro sports leagues have relative equality of power between owners and players associations) * Macroeconomics – what is overall economy expected to do over next several years?
* Microeconomics—what are the specific economic conditions of the industry or government? Is the industry facing competition? Is the long range outlook for the industry good (Verizon Land Lines is a shrinking industry, Wireless is growing)? What are comparative contracts won by similar unions? Are corporate profits or government tax collections expected to grow? * Main areas of negotiations: Wages, Benefits (Health Insurance and Pensions), Hours (length of work week, hours worked, vacation days), Working Conditions (safety issues), Job Security (no layoff clauses, seniority rights)
Types of Bargaining:
* Traditional “win-lose” – zero-sum bargaining (what one side gains, the other pays or loses) * Concession bargaining – both sides negotiating the size of givebacks in a downturn * “Win-Win Bargaining” – both sides gain by collaborative bargaining efforts designed to give both sides what they need – ideas that expand revenues, while giving workers more, for example.
3. Globalization and Free Trade:
* Decline of Manufacturing really started in 1960s with shift of jobs to non-union South and then to other countries to take advantage of lower wages. Created “Rust belt” in Northeast and Midwest unionized states. * Example: “Mollie’s Job” book shifted Mollie’s job in 1960s from Paterson to North Carolina where wages were half as high, then in 1990s from North Carolina to Mexico where wages were one-sixth what Mollie was originally paid.
Globalization and New Technological Revolution
* As big an upheaval in economy and for workers as Industrial Revolution * New technology, free trade, educated workforces, tax incentives offered by various countries changed dynamics * Rise of multinational corporations that do not think of themselves as American or Dutch companies any more, seek lowest-cost place for production – computers and cars often contain parts made in 20 or more countries
* European Union created common market of 450 million people from 30 countries with both companies and workers free to move anywhere within EU to work. Creation of Euro as common currency, major economic decisions made by European Union congress, German bailout of Greece shows multinational commitment within EU * NAFTA-North American Free Trade Alliance (Canada, US, Mexico) started under Republican Presidents Reagan and Bush, enacted under Democratic President Clinton, shows commitment of U.S. to free trade as policy, as do recent agreements with Colombia, Panama and South Korea. 800,000 U.S. jobs lost due to NAFTA
Is it possible to stop globalization?
* National governments find it hard to regulate multinational companies that can move operations easily * Obama looking at idea of minimum tax for U.S. corporations to take away incentive for companies to locate operations in countries that offer tax-free havens. Companies have incentive to apportion most of their profits to tax-free foreign operations
Great Recession of 2007-2009
* Credit crunch, collapse of the housing market and stock market cost workers 15 percent of home value and retirement portfolios. * 15 percent of Americans lost jobs, and another 20 percent lost wages or hours. More Americans working part-time and without benefits. * Recovery since 2009 is first jobless recovery in U.S. history. Profits are up, but unemployment stuck in 8 percent to 10 percent range – this is called the “New Normal” and reflects continued outsourcing of jobs to foreign countries and inability of U.S. economy as a result to create enough new jobs. Six job applicants for each job created
Is free trade really free?
* Dumping of subsidized foreign steel * Government investments and subsidies to companies that give their firms an advantage * Informal protectionist agreements, such as Japan limiting car exports to U.S. for several years following GM bailout * China making it difficult for some companies to unload cargo from ships sitting in their ports.