Labor Day – Bah, Humbug!

, Managing Editor for Benefits Selling magazine writes that the Labor Day weekend this year is just bumming her out:

In an economy where unemployment rates are continually sliding, laid off workers try on average for a year before they find work again (often with less pay and worse benefits), and the country’s middle class income share is shrinking, it’s hard to find cause to celebrate the American worker.

You’d at least think those of us with jobs feel grateful and lucky to have them. But apparently not. A survey of 26,000 Americans coming from Yahoo Finance and Parade magazine finds sad, though not so surprising news:  We’re just not happy at work. Roughly 60 percent of Americans would choose a different career.

Why? Because a lot of us feel like our jobs aren’t getting us anywhere, the survey notes. It’s the common treadmill problem—we feel like we’re working hard and moving on, but we’re actually just staying where we were all along. (And isn’t that the definition of insanity? Doing the same thing over and over again and expecting a different result?)

Most surveyed employees say playing the right office politics is the only way to get ahead in the workplace; not hard work or initiative or creativity—or any other reason that would presumably constitute a justifiable reason for getting ahead.

Still, that doesn’t mean workers aren’t working hard despite this. Workers are so on edge about keeping their job in a squeezed economy and job market that they’re working longer and harder than ever. They’re taking any job they can get and corporations are squeezing more money out of each worker.

The survey even notes that we’re so worried about our financial state, too, that most of us would pick a measly 5 percent increase in salary over a whopping two-week increase in vacation time. Most workers barely even have a three-month savings cushion, most expect to work past the traditional retirement age and most can’t afford our health care. Talk about stress. No wonder three-quarters of workers say they’re stressed out at work.

And as noted, the extra work employees are putting in and extra stress we’re enduring isn’t going to ensure that we’ll get a promotion or a raise, let again ensure that we’ll keep our job.  The only place it ensures we’re headed is right into an EAP. We’re losing pay, benefits and faith as a result. And these are the lucky ones who have a job. Doesn’t seem like much cause for celebration to me.

Labor In Decline

Labor Day, the first Monday in September, is a creation of the labor movement dedicated to the social and economic achievements of American workers.  And while most of us celebrate it as a welcome day off, just what is the state of the labor movement today?

The changing conditions of the 1980s and 1990s undermined the position of organized labor,  representing a shrinking share of the work force. While more than one-third of employed people belonged to unions in 1945, union membership fell to 24.1% of the U.S. work force in 1979 and to 13.9% in 1998. Union numbers have plummeted 17% in just the last 20 years, and even though non-government workers outnumber public employees more than 5 to 1, more union members today hold jobs in the public sector than the private sector (7.6 million versus 7.2 million.)

Karla Walter, Senior Policy Analyst, and David Madland, Director of the American Worker Project at the Center for American Progress Action Fund find that the sharp decline over the past 40 years in the percentage of workers organized in unions has been associated with an equally sharp drop in the share of the nation’s income going to the middle class.

Here are the causes of the decline of organized labor:

  • Management, feeling the heat of foreign and domestic competition, is today less willing to accede to union demands for higher wages and benefits, and is much more aggressive about fighting unions’ attempts to organize workers. Strikes became infrequent in the 1980s and 1990s, as employers became more willing to hire strikebreakers when unions walk out and to keep them when the strike was over. They were emboldened in that stance when President Ronald Reagan in 1981 illegally fired striking air traffic controllers employed by the Federal Aviation Administration.
  • Automation is a continuing challenge for union members. Many older factories have introduced labor-saving automated machinery to perform tasks previously handled by workers.
  • The shift to service industry employment, where unions traditionally have been weaker, also has been a serious problem for labor unions. Women, young people, temporary and part-time workers – all less receptive to union membership – hold a large proportion of the new jobs created in recent years. And much American industry has migrated to regions that have a weaker union tradition than do the northern or the eastern regions – the southern and western parts of the United States. The kind of independent-minded young workers who sparked the dramatic rise of high-technology computer firms have little interest in belonging to organizations that they believe quash independence. A recent study, “Unions, Norms and the Rise in U.S. Wage Inequality,” also found that the biggest factor in the decline in unions’ power and density was job growth outside traditional labor strongholds like manufacturing, construction and transportation.  While 60% of the jobs destroyed since the start of the Great Recession were middle-income positions, most of the job growth since then has been in low-wage occupations, and The Department of Labor projects that over the coming decade the largest job growth will be in currently low-paying occupations such as home health aides, food service workers, and retail salespeople.
  • Years of negative publicity about corruption in the big Teamsters Union and other unions have hurt the labor movement. Unions’ past successes in boosting wages and benefits and improving the work environment have worked against further gains by making newer, younger workers conclude they no longer need unions to press their causes.
  • The surprising strength of the late 1990s economy is another reason unions faced trouble in recruiting new membersIn October and November 1999, the  unemployment rate had fallen to 4.1%, and economists said only people who were between jobs or chronically unemployed were out of work. Even in the face of the uncertainties of economic change, the abundance of jobs restored confidence that America was still a land of opportunity.
  • Corporate Personhood – Today, in places like Wisconsin, Republican governors and legislators have been intent on crippling or destroying public-sector unions. This is all the culmination of a movement begun by Nixon Supreme Court Justice nominee Lewis Powell, who started a movement of business interests in legal jurisdictions across the country to sue for corporate rights over individual protections. The agenda has pervaded all three branches of government as meaningful regulations and consumer protections were dismantled over the years.  The study, “Unions, Norms and the Rise in U.S. Wage Inequality,” concludes that an important cause of the decline of unions was “employers in unionized industries intensified their opposition” to unionization efforts. It notes that as unions have grown weaker, there has been less pressure on lawmakers to enact labor-friendly or worker-friendly measures: “As organized labor’s political power dissipates, economic interests in the labor market are dispersed and policy makers have fewer incentives to strengthen unions or otherwise equalize economic rewards.”

A Collapsing Middle Class

Although millions of Americans owe labor for having paved a pathway into the middle class, winning strong laws that ensure safe workplaces and fair treatment on the job, a distressing recent study from the Pew Research Center tells us that in economic terms the middle class “has suffered its worst decade in modern history.” Jobs are scarce, wages are declining, the nation’s wealth is concentrating more than ever at the top, and the middle class has shrunk in size for the first time since World War II.

The reason for the decline of the American middle class has become clear, as demonstrated in the graph above:  the rich have become so much richer in the last 30 years and left the rest of us behind. The decline of labor is one of many causes. A study written by Bruce Western, a professor of sociology at Harvard University, and Jake Rosenfeld, a sociology professor at the University of Washington, and published in the American Sociological Review called Unions, Norms and the Rise in U.S. Wage Inequality,”shows that the decline in organized labor’s power and membership has played a larger role in fostering increased wage inequality in the United States than is generally thought.  The study found that the decline in union power and density since 1973 explained a third of the increase in wage inequality among men since then, and a fifth of the increased inequality among women.

The study found that from 1973 to 2007:

  • Union membership in the private sector dropped from 34% to 8% among men. and
  • from 16% to 6% among women.
  • Wage inequality in the private sector increased by more than 40%.

The study found that the decline of organized labor held down wages in union and nonunion workplaces alike. Many nonunion employers — especially decades ago, when unions represented more than 30% of the private sector work force — raised wages to help avert the threat of union organizing. Moreover, the study argues that when unions were larger and had a far greater voice in politics and society, they played a more influential role in advocacy on wages across the economy, for instance, in pushing to raise the minimum wage. The conclusion:

In the early 1970s, when one in three male workers were organized, unions were often prominent voices for equity, not just for their members, but for all workers. Union decline marks an erosion of the moral economy and its underlying distributional norms. Wage inequality in the nonunion sector increased as a result…The decline of the U.S. labor movement has added as much to men’s wage inequality as has the relative increase in pay for college graduates…union decline contributes just half as much as education to the overall rise in women’s wage inequality.

Bob Herbert writes:

This is not a problem that began with the Great Recession, although the recession and its dismal aftermath have caused it to snowball. We’ve known for many years that despite hard work ordinary Americans have had trouble making ends meet, paying their monthly bills for food, shelter and clothing. It has become ever more difficult for families to find the funds necessary for decent childcare, and to send their children to college, and to prepare for a comfortable retirement. According to Pew, a mere 11 percent of Americans now describe themselves as very optimistic about the country’s long-term economic future. What we’re experiencing is nothing less than an historic generational decline in living standards. We’ve obviously been doing something very wrong.

There are Workable Solutions

While the Occupy Wall Street movement has been highly successful in calling attention to the problem, the Republicans have continued to perpetrate the causes of economic disparity,  while the Democrats haven’t done very much to address it and have instead supported Free Trade Agreements like NAFTA in 1994, and the Korean FTA in 2010, which statistics presented by the Economic Policy Institute show increase the U.S. trade deficit and displace displace American jobs.

Yet, when there is bipartisan compromise in Washington DC, as demonstrated by the passing of the Affordable Care Act, which, according to the CBO goes a long way to eliminating budget deficits – especially one of it’s main causes: skyrocketing health care costs- there are workable solutions.

Bob Herbert references some solutions put forth by Demos, a nonpartisan think tank that has researched the economic plight of the middle class and poorer Americans for many years, and come up with a blueprint for turning the situation around.

To understand the need for such concerted economic solutions, it is important to understand that the nation’s employment challenges go far beyond the normal business cycle, and is much more than a temporary cyclical downturn  to be followed by a robust recovery. Since forces like globalization, labor-saving technological advancements and the decline of labor unions have fundamentally changed the nature of work in the United States, the American economy will not be able to create enough good jobs to sustain a healthy middle class and reduce the number of people living in poverty without bold new legislative initiatives.

Demos’s report, “Millions to the Middle: 14 Big Ideas to Build a Strong and Diverse Middle Class,” offers a roadmap to recovery that includes:

  • A guarantee of at least 16 years of schooling for boys and girls growing up at a time when some form of post-secondary credential is a virtual prerequisite for a middle-class standard of living. Their proposed Contract for College would transform the federal financial aid system from one that is mostly loan-based to one that relies primarily on grants so graduates would be able to get out from under shouldering student debt loads. While tuition at public colleges have tripled since 1980,  this could double the percentage of students from low and moderate-income families who successfully complete college.
  • New or expanded initiatives to the employment crisis, including:
    • The establishment of a temporary 21st century version of the WPA public jobs program to ease the plight of those hardest hit by the employment crisis.
    • A larger commitment to public investments that would lead to substantial job creation and help make the U.S. far more competitive in the years and decades to come, including in infrastructure, such as roads, rail lines, seaports and electrical transmission; and increased investments in the newest clean energy technologies, and in scientific research and development.
    • A concerted national effort to reconstitute the labor movement so that working Americans are again able to band together to halt exploitation and effectively negotiate pay raises and benefits.

Bob Herbert summarizes it like this:

America’s proudest creation in the early post-World War II decades was its vast middle class. It did not spring spontaneously into being, like magic. The process was helped enormously by a wide range of public policy decisions that, among other things, established a highly progressive tax code, guaranteed the right of workers to join a union and bargain collectively, made massive infrastructure investments, and offered extensive public support for education, including higher education. The decline of the middle class was also the result of public policy choices, only this time they were geared to overwhelmingly benefit the very wealthy. Today’s downward mobility can only be reversed by a range of new choices consciously aimed at helping working Americans regain their financial footing. Demos’s report can be an important guide to that process. The goal is a fairer, more economically just and equitable America.