It’s not news to those who follow labor markets that the erosion of collective bargaining has undercut wages and benefits not only for union members, but for nonunion workers as well. This has been a major cause of middle-class income stagnation and rising inequality, according to an Economic Policy Institute [EPI] report called “The Benefits of Collective Bargaining, An Antidote to Wage Decline and Inequality.”
Heyday Gone Astray
In the heyday of post World War II, government policy encouraged the growth of unions and labor advanced such that 40 percent of all workers were members of a union and full-time workers could afford to raise a family on what they made at the workplace. No so today. As EPI points out, “millions of workers desire union representation but are not able to obtain it…Restoring workers’ ability to organize and bargain collectively for improved compensation and a voice on the job is a major public policy priority.”
Two weeks ago, when I asked House Leaders directly whether their reconfigured $71 billion biennial budget had any good news to boost wages and benefits, Republican House Finance Committee Chairman Ryan Smith said “market forces” would do that work.
At the presser, House Speaker Cliff Rosenberger and his top lieutenants revealed the many dramatic changes they made to Gov. John Kasich’s executive budget. The all-male messengers seemed to have missed the history lesson on the golden era of rising wages and the benefits that followed World War II for 20 or more years. Wages and benefits have stagnated for the last three decades as the wealthy class has reaped the lion’s share of profits, producing the greatest economic disparity between the have and have-nots in American history.
One of the key components of a so-called “People’s Platform,” revealed at the Populism 2015 conference held in Washington D.C. last week, is a call for raising the minimum wage so workers who work service sector jobs can carry their own weight without resorting to public help. For hard-right GOP governor’s like John Kasich, weaning people off “dependency” on government is central to their belief that pubic sector assistance only reduces the incentive to find a job. If an abundance of good-paying jobs were in fact real, Gov. Kasich and other Republican governors might have a backstop to justify their stinginess. But labor market facts show the brood of Republican governors elected in 2010 are not producing those good-paying jobs nearly as fast as they should, given their advertising that applying principles of fiscal conservatism is the cure. But all is not well, of course, and it’s hard to imagine why market forces keep the minimum wage down while CEO salaries rise sky high.
Lee Saunders, President of AFSCME [American Federation of State, County and Municipal Employees] knows where the leverage is and what can change the course of the plight of modern-day workers. “How do we get better wages? Union members know the answer, we bargain for a raise,” he said in a recent article. Saunders correctly notes that union members earn 13.6 percent more than their nonunion counterparts, even when adjusted for characteristics like age and education. Unionized workers, he says, are also 28.2 percent more likely to be covered by employer-provided health insurance, and 53.9 percent more likely to have employer-provided pensions.
Kasich Attacks Unions [Again]
In Ohio, Gov. Kasich won a close race in 2010, some say, because he kept secret his desire to attack public sector unions. That attack came in the form of SB 5, a bill the governor pushed hard but which voters eventually rejected 2-1 at the ballot box when it was hauled before voters following the bill’s journey through a friendly Republican legislature. Mr. Kasich, who some Capital Square watchers said would have lost by a half-million votes had he told voters what he was going to do once elected, got handed his head by voters who knew SB 5 was nothing but rabid Republicanism in action.
Looking back to 1964, nearly 38 percent of Ohio workers were unions members. In 2014, that percentage plummeted to about 12 percent.
But even though voters said it was a bad idea in 2011, the spirit of SB 5 lives on in the House’s new budget with the insertion of union-busting language no one wants to take credit that focused on punishing faculty at Ohio’s public colleges and universities who like unions. Even though he lost badly in 2011, Gov. Kasich’s anti-union fervor was alive and well, this time in Washington where he tried to boost his near-zero national recognition for president. In the all-to rare occasions where he actually lets reporters ask him questions, he faulted faculty tenure for why Ohio colleges and universities don’t have a culture of innovation like western and eastern universities do. John McNay, a professor of history at the University of Cincinnati and president of the Ohio Conference of the American Association of University Professors, said there is “no legitimate argument for making these important decisions blindly or for penalizing faculty because they are making use of their expertise.”
Weak Unions Keep Wages and Democracy Low
For AFSCME leader Saunders, the erosion of collective bargaining is the single largest factor behind the stagnation of middle-class wages. As union membership rates declined, he says, the share of income earned by middle-class households declined, too. EPI makes its case for the return of unions: 1) The decline of collective bargaining has affected nonunion workers in industries or occupations that previously had extensive collective bargaining because their employers no longer raise wages toward the union-set standard as union membership rates decline; 2) The decline of collective bargaining through its impact on union and nonunion workers can explain one-third of the rise of wage inequality among men since 1979, and one-fifth among women. Democracy, as judged by voting, is also higher when union membership is higher.
President Obama, who is acting on his own executive power to give federal employees and uniformed members of the U.S. military a 1.3 percent pay raise in fiscal year 2016, called on employers to do the right thing by helping reduce inequality by raising what they pay their workers. With record corporate profits, economists say the business community can share the wealth with workers, instead of treating them like commodity costs to be controlled like rent and utilities. Maximizing shareholder interest isn’t, as governor’s like Mr. Kasich believe, the first obligation of business, which is at play when profits are used to buy back shares or expand business operations overseas where regulations are more lax and governments are more handsoff than in the U.S.A.
At the Populism 2015 conference, the second items on the People’s Platform is laser-focused on boosting wages. “Inequality has reached new extremes, as more and more jobs become contingent and part-time, with low pay and few benefits. We should lift the floor under every worker by guaranteeing a living wage, paid sick and vacation days, and affordable health care. We should empower workers to form unions and bargain collectively. We must curb perverse CEO compensation policies that give executives personal incentives to plunder their own companies.”
Should Market Forces Determine Lawmakers’ Salaries?
The Ohio Senate, where Gov. Kasich’s whittled down budget goes next, won’t do anything to debunk Chairman Smith’s belief that market forces reign supreme. As the last line of defense for Gov. Kasich, no one should look to his favorite wing-man, Senate President Keith Faber, to use public policy as it was once used by great progressive presidents like Franklin D. Roosevelt to boost wages or benefits. Meanwhile, dependency on government for corporations, the people who run them and the board of directors who hire them, will continue unabated. Handouts to business is key to Gov. Kasich’s notion that government serve as handmaiden to the private sector.
It’s certainly a fascinating thought-problem to wonder how lawmakers and Gov. Kasich’s salaries would fare if market forces controlled their value in the same way Republicans say market forces should manage worker’s compensation and benefits.
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