The big squeeze on labor

Can one government agency give unions a leg up, and resist the power of globalization and technological progress?

Topics: The Labor Movement, China, Globalization, Unemployment, U.S. Economy, How the World Works,

The big squeeze on labor

American workers don’t have much to celebrate this Labor Day. Unemployment is high, the strength of organized labor is abysmally low, and the prospect of meaningful political action on the jobs front is nonexistent.

There is, however, one government agency attempting to do its part to boost union power in the United States, in the best tradition of the principles that theoretically underlie Labor Day. The NLRB, a relic of the New Deal empowered to enforce the National Labor Relations Act, has been a busy bee. In recent weeks, the NLRB has issued a series of rulings, that, taken together, make it a little easier for workers to unionize, and a little harder to roll back unions that are already in place.

Most controversially, the NLRB has also brought a complaint against Boeing, claiming that the airplane manufacturer’s decision to locate a plant in South Carolina represented an illegal reprisal against its unionized workforce in Washington. The decision precipitated a storm of outrage from the right, and even inspired befuddlement and sharp criticism from commentators not normally associated with the crowd that automatically sees socialism in Obama’s every eyebrow twitch.

Joe Nocera, a business columnist for the New York Times went on the rampage in late August:

Seriously, when has a government agency ever tried to dictate where a company makes its products? I can’t ever remember it happening. Neither can Boeing, which is fighting the complaint. J. Michael Luttig, Boeing’s general counsel, has described the action as “unprecedented.” He has also said that it was a disservice to a country that is “in desperate need of economic growth and the concomitant job creation.” He’s right….

It is a mind-boggling stretch to describe Boeing’s strategy as “retaliation.” Companies have often moved to right-to-work states to avoid strikes; it is part of the calculus every big manufacturer makes.



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Let’s reserve judgment on the correctness of Luttig’s overall analysis. But one thing is certainly true. For many decades, the federal government has declined to make any effort whatsoever to stop the steady flow of jobs away from states with strong unions to right-to-work states. It is quite the shock, at this late date, to witness a challenge to such a well-established status quo.

But on this Labor Day weekend, is it really too crazy to wonder if maybe the federal government should have been a little more proactive in protecting the interests of working men and women? The migration of high-paying, benefi- rich union jobs to right-to-work states like South Carolina has been a critical factor in the decline of organized labor in the United States. It’s also not at all beyond the pale to connect the decline of union power to growing income inequality, middle class wage stagnation, and, ultimately, the hollowing out of American manufacturing capacity — as low-wage emerging nations like China do to the entire U.S. exactly what the South did to the Rust Belt.

Just because Joe Nocera can’t remember anything like this ever happening before doesn’t necessarily mean it should be considered anathema. Unthinkable things happen all the time. For the historically minded, the hornet’s nest stirred up by NRLB’s Boeing action might recall another epochal event involving the White House and organized labor: Ronald Reagan’s successful crusade to crush PATCO — the air traffic controller’s union — almost 30 years ago. The president of the United States declared war on organized labor — and history says pretty conclusively that he won.

At least so far. Again, it’s Labor Day weekend, so let’s indulge in some worker-friendly fantasy. Is it even remotely possible that future labor historians might one day look back at the NLRB’s complaint against Boeing and consider it the catalyst for a pendulum swing in the opposite direction? Income inequality can’t continue to grow, and massive unemployment fester, forever, right?

Of course, to even make such a comparison would require that the NLRB was successful in bringing its complaint, and that’s hardly assured. There will be years of legal squabbling before the Boeing case is resolved, and the entire complaint could be dropped if Republicans take over the White House next November.

And that doesn’t even take into account far greater historical forces restraining the fortunes of labor than whatever the current predilections of the occupants of the White House might happen to be. Reagan didn’t overthrow organized labor all by himself — over the last three decades his efforts benefited from the help of billions of new entrants in the global labor pool and relentless advances in technology that have combined to brutalize the middle classes of developed nations. Reagan had the wind at his back. Obama is spitting into the storm.

Consider China. A brand new paper from M.I.T. economist David Autor, crunches the data on “rising Chinese import competition between 1990 and 2007 on local U.S. labor markets” and concludes that it may account for, “conservatively,” as much as “one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment.”

We find that increased exposure to low-income country imports is associated with rising unemployment, decreased labor-force participation, and increased use of disability and other transfer benefitts, as well as with lower wages, in affected local labor markets… The largest components of these transfers are federal disability, retirement and in-kind medical transfer payments. Unemployment insurance and income assistance programs play an important but secondary role.

Trade with China, in other words, not only boosts unemployment in the U.S., but also increases drag on the safety net.

Of course, there are scores of economists who will point out that trade with China results in lower prices for manufactured goods, and that overall, both China and the U.S. register net economic gains from increased trade. But the data on rising income inequality, at this point, seems pointless to dispute: the economic benefits from trade with China have not been evenly distributed. The working class is getting screwed.

The pressures exerted by globalization are reinforced by technological progress. Once upon a time, gains in labor productivity midwifed by technological advances went hand in hand with wage gains. But somewhere around 1980, the correlation snapped. Labor productivity continued to grow — employers got more bang for the buck from each worker, but workers stopped sharing the gains.

There are numerous explanations for what’s happened. The computerization of routine tasks has wiped out an entire class of jobs that once provided millions of workers with decent livings. The American educational system has failed to produce enough of the skilled graduates that can best thrive in this new world. Technology and globalization intersect: It’s easier than ever before to outsource and offshore jobs. But taken all together, the bottom line is fairly conclusive. If you’re not highly educated and you live in a developed nation, a good job is going to be hard to find.

Reversing this trend will require Herculean efforts beyond the scope of any single government agency. The only long run savior might be the full economic development of countries such as China and India, which would relax the competitive pressure on global wages and open up new markets for the U.S. and other developed nations.

But in the meantime, it’s going to be a tough haul. There’s no quick fix. These trends have been transforming labor markets for decades. And then, once the American worker’s back was against the wall, along came the Great Recession with a sucker punch hitting the most vulnerable where it hurts the most. Recovery will take decades — and that’s assuming future administrations don’t make policy decisions that exacerbate the problem, instead of ameliorating it.

And who, after watching what passes for government in Washington over the past couple of years, could possibly have any confidence in that?

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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