It’s Labor Day weekend, time for our annual salute to a
25-year-old charade: Our so-called respect for the rights of
workers to organize.
Since 1981, U.S. workers have not had an effective right to
bargain collectively and withhold their labor (strike) if they feel
it necessary in the course of bargaining for a fair contract.
It’s Labor Day weekend, time for our annual salute to a 25-year-old charade: Our so-called respect for the rights of workers to organize.
Since 1981, U.S. workers have not had an effective right to bargain collectively and withhold their labor (strike) if they feel it necessary in the course of bargaining for a fair contract.
That year, President Reagan fired striking members of the Professional Air Traffic Controllers and hired replacement workers – a legal but ignored option since 1939. The result has been a diminution of the earning power of average Americans and an explosion in executive pay.
According to the Bureau of Labor Statistics, the number of strikes involving more than 1,000 workers often exceeded 400 annually in the 1950s and 1960s. The number dropped dramatically after the PATCO strike, until in 2003 the BLS recorded only 14 such strikes.
One might well argue that there were too many strikes 50 years ago, but since the PATCO strike, worker bargaining power has declined precipitously – to the direct advantage of corporate America.
The New York Times reported recently that corporate profits have been feeding off worker paychecks for decades. Wages are now the lowest share of the Gross Domestic Product since 1947, when the government began keeping records. Corporate profits, on the other hand, are now at their highest share of GDP in 40 years.
This despite the fact that productivity gains have outpaced median family income by 3-1 since 1973. Worker productivity rose 16.6 percent from 2000 to 2005, according to Labor Department statistics, but during the same period median worker income rose only 7.2 percent.
Where did all that extra profit go?
According to a study last year by Carola Frydman of Harvard and Raven E. Saks, an economist at the Federal Reserve, worker and executive pay increased by about the same rate, 1.3 percent, from the end of World War II until about the time of the 1981 strike.
Since then, executive pay has increased by an average of 6.8 percent a year. Last year alone the increase was 27 percent. Average worker income in that time went up by 0.8 percent.
In 1940 the average top executive made 68 times the average worker’s salary. In 2004, that multiple had jumped to 170, according to the same study.
Since the PATCO strike, the share of total wage income of the top 1 percent of earners has nearly doubled, rising from 6 percent three decades ago to 11.2 percent today, according to the New York Times.
And Goldman Sachs economists recently reported that “the most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income.”
How did we get here?
In 1939, the Supreme Court decided in NLRB v. Mackay Radio & Telegraph Co. that employers can “replace” you when you strike, permanently if they choose, even though it is illegal to fire you for exercising your labor rights. In the category of “distinctions without a difference,” squaring the circle of “firing” vs. “replacing” was one of the most boneheaded, logic-defying Supreme Court decisions in history.
Until PATCO, custom and the desire for labor harmony resulted in an effective balance of bargaining power. Everyone suffers during a strike – employers lose profits, workers lose paychecks – motivating both sides, in principle, to bargain in good faith.
Since PATCO, employers, knowing they can replace strikers, don’t have to bargain at all. Workers have a few arrows in their quiver, such as corporate PR campaigns. And many companies have become more nimble in the international marketplace without the constraints of collectively bargained contracts.
But overall, workers have been the losers.
Outside of public employee unions, whose ability to collect dues and organize is under constant attack, the right to strike exists in name only. The law has been effectively emasculated by the courts and conservative policies.
The prescription is to ban replacement workers – or ban strikes altogether and require binding arbitration.
Banning replacement workers would restore the balance at the bargaining table destroyed by PATCO. Binding arbitration would require both sides to justify their contract demands to a neutral party. This has worked well for public employee unions, but could work just as well for trouble industries that need worker give-backs from time to time.
It’s Labor Day. It’s time to end the charade.
John Yewell can be reached at [email protected]
