In last week’s column, I argued that, because unions are likely to play an even smaller role in American politics and policy than they do today, progressives must come up with other strategies for mobilizing ordinary workers and voters to achieve goals like higher wages and a comprehensive system of social insurance. In a response published at Salon, Matthew Dimick of Georgetown University argues that "a liberalism without labor in a nation of staggering levels of economic inequality is even more unlikely."
Dimick notes correctly that universal, contributory social insurance programs like Social Security and Medicare become more difficult to justify in a society with highly polarized incomes. He writes:
"It is a brute, if unappreciated, political fact that countries that have more universal social insurance programs also have less inequality in the first place -- that is, less pretax, pre-transfer inequality ... If there is less inequality to begin with, broad and universal social insurance programs look and feel more like, well, insurance, and less like Robin Hood redistribution from rich to poor."
On this point Dimick is correct. He is right, too, about the contribution of unions in other countries in reducing income inequality:
"By reducing pretax, pre-transfer inequality, labor unions broaden the appeal for such programs while also making them more politically feasible."
Dimick’s question is the right one: "The question is what causes lower pretax, pre-transfer economic inequality?" But he is wrong to imply that unionization is the primary factor, rather than one of several factors. Rising inequality is a rubric for a number of different phenomena that happened to occur at the same time in the last 30 years in the U.S., but not in many otherwise similar industrial countries.
For example, the growth of American CEO salaries, extreme as it is in international comparison, has been dwarfed by the explosion of compensation to elites in the financial sector. The bonanzas reaped by the tycoons of finance result from the deregulation of the financial industry by the Clinton and George W. Bush administrations, combined with the socialization of the costs incurred by "too big to fail" financial firms. Vast fortunes have been made in finance by individuals who are allowed to keep the profits from highly-leveraged gambling, while their losses are absorbed by the taxpayers. If the financial industry in the U.S. had continued to be a tightly regulated utility, then elite bankers would never have become vastly richer than ordinary business executives. Pretax inequality in the U.S. would have been much reduced, unions or no unions.
As for CEOs, their inflated compensation packages reflect the way that corporate boards are organized in the U.S. In similar industrial countries where capitalism is organized differently, like Germany and Japan, CEO compensation has not risen dramatically since the 1970s. Legislation reforming CEO compensation in the U.S. might greatly reduce the widening gap between the pay of top executives and the pay of employees, even in the absence of a high level of unionization in the U.S.
While the top of the labor market in the U.S. has blown off, the bottom has fallen out at the same time. The decline of labor unions is one factor -- but again, only one. Another factor has been mass immigration. With a few exceptions, like the late Barbara Jordan, most liberals refuse to admit that mass immigration by disproportionately poor and uneducated workers in the last generation has had anything to do with reducing wages for janitors, construction workers and nursing home aides. The taboo that prevents discussion of this factor among progressives arises from the fact that Democratic activists, having written off the white working class, hope to import enough Latino voters to create a Democratic majority in the next decade or two. Whatever the merits of that as a political strategy, it is intellectually dishonest to pretend that flooding the low-end labor market with unskilled immigrant workers has not weakened the bargaining power of America's least powerful workers.
Indeed, it is questionable whether high levels of private-sector union membership and mass immigration are compatible. As the eminent historian of labor Vernon W. Briggs has pointed out, the high point of unionization in America coincided with the low point of immigration, between the cut-off of mass immigration in the 1920s and its resumption in the 1970s. Mass immigration can harm unionization in two ways: directly, by providing an ever-growing pool of non-union "scabs" to replace workers who seek to unionize, and indirectly, by increasing divisions among workers along non-economic lines that increase the difficulty of collaboration. For two decades now, some utopian progressives have claimed that it is possible to reconcile mass immigration with increased unionization by unionizing both natives and immigrants. In theory anything is possible but in practice private sector union membership has continued to crumble in the face of mass immigration.
Would higher levels of private sector unionization in the U.S. reduce pretax income inequality? It almost certainly would. Does that mean that the most important thing that we can do to reduce economic polarization in America is to defend public sector unions and hope that somehow private sector unionism can grow beyond its present marginal role? No. Even in a much friendlier political and economic environment, it would take decades for private sector unions to grow until they once again included a third of American workers as they did in the 1950s, to say nothing of a majority of the workforce.
Fortunately, we do not need to wait for an unlikely renaissance of trade unionism in America in order to address the causes of rising inequality -- causes like the deregulation of finance, excessive CEO compensation, and a loose labor market at the bottom. Reducing pretax inequality is not rocket science. We know how to do it. Turning finance into a tightly regulated utility again, and refusing to bail out overleveraged gambling houses on Wall Street, would dry up much of the pretax income of the financial elite. Reforms of corporate board structure and compensation could reduce CEO pay to the levels found in other industrial democracies. And ending mass immigration by the unskilled, in favor of a points system that favors educated immigrants, could put upward pressure on the wages of the working poor, by creating a tighter labor market.
While pursuing these and other measures to reduce pretax inequality, we can support efforts to make it easier for private sector workers to unionize. But the success of campaigns to reregulate finance, reduce the huge gap between the pay of CEOs and workers, and tighten the low-wage labor market does not depend on the prior success of unionization efforts. As I observed in my previous column, whether such campaigns succeed or fail depends on whether progressives are able to mobilize the majority of Americans who do not now belong to trade unions and are unlikely to do so in the near future.
Matthew Dimick thinks that without the help provided by unions, liberal politicians and activists cannot succeed. Well, the other half of the old farmer-labor coalition consisted of rural organizations like the Grange. American liberalism managed to survive the decline of the Grange, and it may have to survive the decline of the craft unions, as well. If American liberal politicians and activists are unable to appeal directly to the values and interests of American voters, without union officials acting as translators on their behalf, then they are clearly in the wrong business and should get out of politics.