[Marxism] The case for more union power

Louis Proyect lnp3 at panix.com
Tue Apr 7 07:32:42 MDT 2009

The Case for More Union Power
By liza.featherstone
Created 04/03/2009 - 10:46am

It was surreal, last month, to see Citigroup organizing the business 
community against the Employee Free Choice Act [1], a bill that would 
make it easier for workers to join unions by forcing employers to 
recognize a union after a majority of workers have signed cards. Here is 
a company whose CEO, Vikram Pandit, still has a job despite repeated 
failures and rakes in $11 million a year [2] running a company that has 
received $45 billion in handout (sorry, bailout) checks from the 
taxpayers. Yet Citigroup [3] was hoping to keep millions of low-wage 
workers from organizing to achieve a tiny fraction of the job security 
and compensation that its leaders now enjoy at taxpayers' expense. With 
enemies like this in the public-image battle, it might seem that EFCA 
barely needed friends. Yet despite the populist fervor in the land, 
anxiety about the economy is giving the bill's opponents more traction 
than they might otherwise inspire.

Part of that comes from the reverse problem; with congressional friends 
like EFCA has, it hardly needs enemies. Sen. Arlen Specter, R-Pa., whom 
unions considered one of the few sympathetic Republicans, has announced 
he will not vote for EFCA. And so has Sen. Dianne Feinstein, D-Calif. 
Vehement opposition from business is probably the main reason for the 
defections, but since pandering to that community doesn't look good 
these days, those opposing EFCA are blaming the economy. "The problems 
of the recession make this a particularly bad time to enact Employee 
Free Choice legislation. Employers understandably complain that adding a 
burden would result in further job losses," Specter said. Feinstein, 
too, cited the "extraordinarily difficult economy." Business is engaged 
in a massive lobbying and advertising campaign to reinforce such fears, 
with ads saying the bill would "hurt our already fragile economy." (The 
anti-EFCA lobby has also profited from the fact that offering workers 
the option of bypassing the secret-ballot election strikes some as 
undemocratic.) A few companies recently announced that they are scaling 
back projects because of projected labor-cost increases if EFCA passes.

But is the economic equation really that simple? More unions = higher 
labor costs = less hiring = longer recession? Actually, no. To debate 
EFCA's likely economic consequences is really to ask whether unions are 
good or bad for economic growth. The answer to that question depends on 
how broad and long term your view is.

On Feb. 25, 38 well-known economists, including notables like Jagdish 
Bhagwati and Robert Solow, announced their support for EFCA in an ad in 
the Washington Post, [4] pointing out that from 2000 to 2007, "virtually 
all of the nation's economic growth went to a small number of wealthy 
Americans." Part of the problem, they argue, is "the erosion of workers' 
ability to form unions and bargain collectively." It's hard to disagree 
with that. (Indeed, a recent Gallup poll found that a majority of 
Americans do favor EFCA, though most aren't following it closely [5].) 
It's well-established that union members earn higher wages and that 
employers are ruthless in their willingness to break the law to bust 
unions; in a study of over 400 union elections, Cornell University's 
Kate Bronfenbrenner found that one in four employers illegally fired 
workers for union activity [6]. But although the ad states that EFCA is 
"a critically important step to rebuilding our economy," it doesn't say 
why. So how do these economists respond to economic worries about EFCA?

Some of the ad's signatories are annoyed by the question. "If we used as 
the single criterion to pass a law that all aspects of it had to be good 
for the economic recovery," says economic sociologist Joseph Blasi, a 
professor at Rutgers University, "this would be a very destructive 
criterion as a basis for public policy." Columbia University economics 
professor Jagdish Bhagwati is an ardent free-trader well-known for 
clashing with unions in his opposition to labor standards in trade 
agreements and his hostility to consumer campaigns against sweatshops. 
Yet he takes the view that "unionization should be thought of as a 
fundamental human right" and that we shouldn't turn away from such a 
principle just because of financial and economic crisis.

Then again, Bhagwati, who elaborates on his public support of EFCA in 
the current New Republic [7], isn't impressed with the economic 
arguments of EFCA's opponents. "I think that the scare about unions 
adversely affecting our efficiency and even discouraging investment is 
really hard to condone," says Bhagwati, a senior fellow in international 
economics at the Council on Foreign Relations. "There is surely no 
compelling evidence that [unionization] undermines efficiency at the 
level of the factory."

Joseph Stiglitz, a Nobel laureate in economics, goes even further than 
his Columbia colleague in his dismissal of the projected EFCA woes 
imagined by business: "The likely impact on wages in the medium term is 
relatively small, and higher-wage workers are more productive, so the 
net impact on their costs is even smaller." It is about control, he 
says: "Obviously—myopically—[employers] would like more bargaining 
power. But that's short-sighted because unionized workers will perform 
better." Indeed, a recent study [8] comparing UPS [9], the single 
largest employer of Teamsters, and FedEx [10], a harsh union-buster, 
found that UPS had performed much better financially, with a return on 
equity that rarely falls below 20 percent. (Of course, businesspeople 
are never placated by such arguments because they rightly figure that 
even though unionization can inspire workers to be productive, the 
anxiety of rampant job insecurity and dearth of good employment options 
can do the same.) And Harvard University economist Richard Freeman has 
found no relationship between unions and firm solvency [11]; thus there 
is no reason to fear that EFCA will put anyone out of business.

But surely the most compelling question for Americans at this moment is, 
What effect will EFCA have on the broader economy? Its opponents say it 
will prolong the depression—if some employers have to pay workers more, 
they'll hire fewer people. Some unions counter that the bill should be 
seen as stimulus; when low-wage workers are in a position to bargain for 
higher wages, they'll have more money to spend. There's one problem with 
both scenarios: Organizing and bargaining for higher wages, even under a 
reformed system, will take a while. Stiglitz says EFCA will neither help 
nor hurt our present economy: "[T]he likely time for it to have an 
effect is too slow, so [EFCA] is not germane to the current situation."

However, even though it isn't stimulus, in the longer run, Stiglitz 
says, EFCA is "very important to a robust three-to-five year recovery." 
One of the major causes of the current global financial crisis has been 
a "lack of aggregate demand" over time, he explains. Too many people 
lack spending power. Stiglitz isn't alone in this opinion; plenty of 
other economists—including Berkeley's Harley Shaiken [12], who was on 
Obama's short list for labor secretary—agree on the big picture: If more 
Americans could join unions, they'd have more money to spend, and the 
economy would be healthier in the long run.

Of the organized opposition to EFCA—and the millions spent on 
advertising and lobbying—Stiglitz says: "I'm a little surprised at how 
adamant the business community has been. But they're afraid of a new 
social compact. They think it is the opening salvo in a new war. So it's 
really a form of class warfare."

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