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Employee Free Choice and a Higher Minimum Wage

The following is an excerpt from The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It by Les Leopold. It has been adapted for the Web.

Employee Free Choice Act

The New Deal came about in part because of pressure from a growing labor movement. And the New Deal itself further strengthened unions. New Deal policy makers believed that, as union members, working people would have a better chance at getting their fair share of productivity. Roosevelt welcomed a new wave of union organizing. He supported the Wagner Act, which made it much easier for workers to unionize. And history shows that the plan worked: Postwar unionization did boost workers’ real wages—and in a way that was perfectly compatible with innovation and profits for business owners. We could do it again by passing the Employee Free Choice Act, now before Congress.21

Since the late 1940s, labor law has been whittled away—and employers have become increasingly aggressive in squelching union drives. Workers who try to organize a union are routinely harassed or even fired. For unions, it has become extremely costly and difficult to conduct an organizing drive. Without question the playing field has been tilted toward employers. Cornell University professor Kate Bronfenbrenner found in a survey of NLRB election campaigns in 1998 and 1999 that employers illegally fired employees for union activity in 25 percent of organizing drives.22 An updated study done by the Center for Economic and Policy Research estimates that in 2007, one in five union organizers or activists was illegally fired during organizing drives.23

It’s estimated that about 60 million Americans would like to join a union. If we remove the roadblocks, many of them could. And then they could win better wages and safer working conditions— at least 50,000 American workers die from job-related injuries or disease every year.24 Even if EFCA doesn’t result in a sudden rise in unionization, nonunion firms are likely to raise wages just to keep workers from turning to unions.25 And rising wages will stabilize our economy. Working people will stop holding back on spending, and that will chase deflation away. The Chamber of Commerce ought to promote unionism—it was good for business in years past and would be good for business again today.

Raising the Minimum Wage

A higher minimum wage would also guard against deflation and direct additional wealth away from the casino. And it’s the right thing to do. No one can live a decent life at the current minimum wage, which rises from $6.55 to $7.25 in 2009. If you adjust for inflation you can see that the real buying power of the minimum wage peaked in 1979 at about $8.89 in current dollars (see chart 11). This is an excellent time to jump the minimum wage to at least $10 an hour and index it permanently to inflation. (For those worried about potential job loss, see studies by David Carr and Alan Kreuger.)26

Will raising real wages through unionization and increasing the minimum wage actually pull us out of this crisis? We won’t know until we try. But we do know what happened when we let real wages decline—the top 1 percent ended up with more money than they knew what to do with. We tried deregulation and got “exotic and opaque derivatives” and the worst financial meltdown since the Great Depression. We tried trickle down and it widened the income gap. We tried to encourage investment by and for the rich, and we got a fantasy-finance boom and a slew of billionaires. We created a finance-heavy economy that was supposed to be the wave of the future. Instead we got a taste of the past—a near 1930s depression. Let’s find out what happens if we allow middle class and lower-income people to earn decent wages.

It’s not that these two changes can guarantee that we will never have another financial crash. They can’t. No amount of reform can guarantee that, as long as we have a free-enterprise financial sector. But the occasional mild recession is not what we’re worried—and angry—about. It’s the wild swings of excess and catastrophe that need taming. And unionization and a livable minimum wage will go a long way in moving us toward that goal.

This is the time to try these pro-worker strategies precisely because the financial world is changing so dramatically. Our financial elites have wheedled the government into handing the banking industry over a trillion dollars. More corporate handouts are sure to come. The orthodoxy of deregulation—embraced for years by both Republicans and Democrats—is being trashed by many of the very policy makers who once touted it. Right now, it’s going to be hard for financial leaders to argue that the minimum wage, unions, and fairer trade agreements interfere with free markets. We’ve needed a new direction for decades. Now is the best chance we’ll ever have to make it happen. Let us learn from the bankers and take bold action while we can.

 


 

Notes

  1. For a detailed description of EFCA, see the AFL-CIO website at www.aflcio.org/joinaunion/voiceatwork/efca/whatis.cfm.
  2. Kate Bronfenbrenner, “Uneasy Terrain: The Impact of Capital Mobility on Workers, Wages, and Union Organizing,” Cornell University ILR School Research Studies and Reports (September 2000), p. 43, at http://digitalcommons.ilr.cornell.edu/reports/3/.
  3. John Schmitt and Ben Zipperer, “Dropping the Ax: Illegal Firings during Union Election Campaigns, 1951–2007,” Center for Economic and Policy Research, March 2009, Summary, at www.cepr.net/documents/publications/dropping-theax-2009-03.pdf.
  4. Patrice Woeppel, “On Worker Deaths,” Center for Popular Economics, March 17, 2009, at www.fguide.org/?p=228.
  5. In fact, Kate Bronfenbrenner’s survey (p. 44) found that 20 percent of all employers reacted to a union campaign by increasing wages, even before the unionization effort succeeded.
  6. See David Card and Alan Krueger’s 1997 book, Myth and Measurement: The New Economics of the Minimum Wage (Princeton, NJ: Princeton University Press), which provides real-world evidence that the minimum wage does not kill jobs. Also see Robert Pollin and Stephanie Luce, The Living Wage: Building a Fair Economy (New York: The New Press, 2000), and the research published at the Political Economy Research Institute, Labor Markets and Living Wage Program at www.peri.umass.edu/Labor-Market-L.197.0.html.


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