Posts Tagged ‘unions’

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Chris Dillow is right about one thing: citing globalization as the reason for the success of Donald Trump’s campaign, especially among working-class voters, “suits some people very well for foreigners to get the blame rather than for inequality and the health of capitalism to come under scrutiny.”

But that doesn’t mean that, alongside many other factors (from the decline in labor unions to increasing automation), globalization—to be precise, capitalist globalization—doesn’t deserve some good share of the blame.

There are two main ways the U.S. working-class is affected by globalization: in terms of jobs and in terms of consumption.

As far as jobs are concerned, the combination of cheap imports (e.g., toys and garments) and outsourcing (e.g., to produce motor vehicles and electronics) has led to the reallocation of workers away from high-wage manufacturing jobs into other sectors and occupations, with large declines in wages among workers who have been forced to have the freedom to switch. Those effects are pretty straightforward, at least in terms of the research of Avraham Ebenstein, Ann Harrison, and Margaret McMillan.*

What about the cheaper goods workers can buy? The argument that is usually invoked to counter the negative effects on jobs and wages is that workers can now purchase less expensive goods (e.g., at big-box and dollar stores), thereby increasing their consumption.

Here’s Dillow:

For one thing, cheap imports should help workers. If you’re spending $5 on a Chinese T-shirt rather than $10 on a US-made one, you’ve got $5 more to spend on other things. That should increase demand and jobs.

That may be true in the short run, since with the same nominal incomes workers can add other items to their consumption bundle.

But what Dillow and others miss is the fact that, as the prices of items in the wage bundle decline (and without an ability to defend the value of their customary standard of living), the value of workers’ labor power also has a tendency to decline. As a result, employers have to pay less to get access to laborers’ ability to work—and their profits rise.

Considering both jobs and consumption, members of the U.S. working-class—many of them voters in Pennsylvania, Ohio, Michigan, and Wisconsin—correctly understood they were under assault by the forces of globalization.

The fact that U.S. workers have, in recent decades, been negatively affected by globalization doesn’t mean either adopting a nationalist stance or ignoring all the other factors. Nationalism (e.g., in terms of erecting protectionist barriers to trade) just pits workers in one country against those in other countries and doesn’t, within any country including the United States, solve the problem of workers getting the short end of the economic stick. And, certainly, we need to look at all the causes of workers’ current plight, from deteriorating real minimum wages to skill- and power-biased technological change.

However, globalization as it is currently configured has been one of the strategies employers have been able to use to discipline and punish workers, increasing both inequality and insecurity.

Globalization is therefore at least in part to blame for Trump’s victory.

 

*Even those who, like Gary Clyde Hufbauer and Tyler Moran, want to argue that, through the “prosperity effect,” globalization has made a positive contribution to average wages, are forced to admit that “Richer households did enjoy a disproportionate share of benefits from globalization, because of their dominant claim on corporate profits and proprietors’ incomes and the very small impact of foreign competition on the wages of highly skilled workers.”

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For neoclassical economists (like Gregory Mankiw, in his bestselling textbook, Principles of Microeconomics), the major effect of labor unions is that they cause unemployment, by setting a wage rate that exceeds the equilibrium price for labor. According to this story, while union workers (“insiders”) may benefit, unemployed non-union workers (“outsiders”) lose out.* So, their overall conclusion is, unions ultimately hurt workers and cause increased inequality. Unions should therefore be discouraged.

Over the course of the past three and a half decades, the United States it seems has been following neoclassical economists’ advice: the overall unionization rate has fallen to 11.1 percent, while the rate for private-sector workers is even lower, 6.7 percent in 2015 (according to the Bureau of Labor Statistics).**

But the folks at the Economic Policy Institute [ht: ja] tell a story very different from the neoclassical one. As they see it, it’s the precipitous decline in U.S. labor unions from 1979 to 2013 that has played a key role in hurting workers and increasing inequality. In particular, it has decreased the wages of the vast majority of private-sector, full-time nonunion workers—and nonunion men without a college degree and nonunion men with a high school diploma or less have are the ones who suffered the most. Thus, for example, weekly wages for nonunion private-sector men would be an estimated 5 percent ($52) higher in 2013 if private-sector union density (the share of workers in similar industries and regions who are union members) had remained at its 1979 level. And for nonunion private-sector men with a high school diploma or less education, weekly wages would be an estimated 9 percent ($61) higher if union density remained at its 1979 levels (for a year-round worker, this translates to an annual wage loss of about $3,172). In general, union decline has exacerbated wage inequality in the United States by dampening the pay of nonunion workers as well as by eroding the share of workers directly benefitting from unionization. One of the key ways, therefore, to help workers and to lessen inequality is to encourage the formation and strengthening of labor unions.

What’s particularly interesting about the Institute’s analysis (in addition to their empirical estimates) is their analysis of the various ways unions help workers, especially nonunion workers. Here are some of them:

  • the threat of unionization: nonunion employers worried about a possible unionization drive may match union pay scales to reduce the demand for organization
  • the ripple effect: like minimum-wage increases, union wage rates for production workers can lead to increases in wages for those above them (e.g., their managers)
  • the moral economy: unions help institute norms of fairness regarding pay, benefits, and worker treatment that can extend beyond the unionized core of the workforce

The problem, of course, is that since the late-1970s, the presence and effects of unions within the U.S. economy and society have been on the decline. As the authors conclude:

nonunion employers are increasingly unlikely to fear a threat of unionization. . . responding to possible unionization threats through increasing wages is one pathway through which unions raised pay for nonunion workers in past periods. With organizing efforts at a standstill throughout much of the private sector, typical nonunion employers now have little to fear. Given the ongoing attacks on existing unions, labor leaders are doing all they can to hold onto their remaining terrain.

We contend that unions’ influence on nonunion pay once extended beyond these threat effects. But their ability to maintain wage and benefit standards rested on their political and economic power, and their salience throughout the culture. . .That presence has vanished throughout much of the private sector, rendering unions unable to exert the same political, economic, and cultural influence over the working lives of average Americans, union and not.

The result for all workers, but especially for nonunion workers, has been a prolonged period of stagnant wages—and, for American society as a whole, an increase in inequality that has made the existing economic institutions increasingly fragile and, in the eyes of many, fundamentally illegitimate.

 

*This is from the PowerPoint Slides for Mankiw’s book by Ron Cronovich:

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**While a much higher portion of workers in the public sector are members of unions (35.2 percent), there are many more private-sector workers (113.2 million) than government workers (20.6 million).

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It took two and a half years but, on the basis of yesterday’s ruling by the National Labor Relations Board (pdf), research and teaching assistants at Columbia University now have the right to form a union (as GWC-UAW Local 2110).

It comes as no surprise that Columbia’s administration opposed the ruling:

The university said in a statement Tuesday that it’s reviewing the ruling, but that it “disagrees with this outcome because we believe the academic relationship students have with faculty members and departments as part of their studies is not the same as between employer and employee.”

First and foremost, Columbia said, “students serving as research or teaching assistants come to Columbia to gain knowledge and expertise, and we believe there are legitimate concerns about the impact of involving a nonacademic third party in this scholarly training.”

And the consequences of the NLRB ruling extend far beyond Columbia:

NPR’s Yuki Noguchi reports that “only a small fraction of graduate students at public universities are currently represented by unions — but the decision governing private university students is expected to lead to unionization efforts that could organize tens of thousands more.”

The NLRB had long held that students who teach or research at a private university were not employees covered under the National Labor Relations Act, Yuki reports. That changed in 2000, when the board decided a case in favor of students, and changed again with another ruling four years later. Now the NLRB has reversed itself yet again.

In Tuesday’s decision, the board majority wrote that the 2004 ruling “deprived an entire category of workers of the protections of the Act, without a convincing justification in either the statutory language or the policies of the Act.”

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Not surprisingly, Yale (where graduate-student employees have been attempting to organize their own union for 25 years) echoed Columbia’s response:

Peter Salovey, president of Yale, said in a separate statement that the “mentorship and training that Yale professors provide to graduate students is essential to educating the next generation of leading scholars” and that he’d “long been concerned that this relationship would become less productive and rewarding under a formal collective bargaining regime, in which professors would be ‘supervisors’ of their graduate student ‘employees.’”

But the American Association of University Professors, which argued in an amicus brief in the Columbia case that collective bargaining can improve graduate students’ academic freedom, applauded the NLRB decision.

“This is a tremendous victory for student workers, and the AAUP stands ready to work with graduate employees to defend their rights, including rights to academic freedom and shared governance participation,” Howard Bunsis, chair of the association’s Collective Bargaining Congress and a professor of accounting at Eastern Michigan University, said in a statement. “Graduate employees deserve a seat at the table and a voice in higher education.”

Protest of the day

Posted: 26 May 2016 in Uncategorized
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Meanwhile, unions (led by the CGT, the Confédération générale du travailare leading strike actions across France at oil refineries, nuclear power stations, ports, and transportation hubs to protest the labor reform bill the government pushed through the National Assembly without a vote.

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*Here is a link to the lyrics of the famous Italian partisan song “Bella Ciao.” And another link to the Nuit Debout orchestra’s performance of Verdi’s “Nabucco.”