The Great Divergence
Entry 6: Why do unions work in Europe but not in America?
Your idea that the workforce has to be either 100 percent unionized or 0 percent unionized sets the bar awfully high. It’s worth remembering that even at its peak in 1954, private-sector union membership was just a little under 40 percent. (Today it’s about 7 percent, or roughly where it stood before the New Deal.)
I’ll grant you that an economy built around large industrial companies like U.S. Steel and General Motors was easier to unionize than an economy built around smaller post-industrial companies like Wal-Mart and Apple. (By “large” I mean companies that employ lots and lots of people; clearly Apple can hold its own in any profit-based comparison.) But even in its mid-20th-century heyday, U.S. Steel wasn’t the only steel company in America, or General Motors the only auto company. Those companies had competitors, too. In my book I use Walter Reuther’s career as autoworker, union activist, and eventually president of the United Auto Workers to describe the labor movement’s rise from the 1930s to the 1950s. GM and Chrysler yielded to the UAW’s sit-down strikes in 1937, but Ford held out until 1941. (Reuther himself got beaten up by Ford company goons when he tried to distribute UAW leaflets at Ford’s River Rouge plant.) During those four years GM and Chrysler, both union shops, managed to stay in business even though they were competing against the nonunion Ford.
Finding ways to revive the labor movement is just about the toughest challenge facing liberalism today, but I don’t think it’s possible to make much headway reversing the inequality trend without it. I don’t pretend to have found a magic bullet, but Andy Stern, who as president of the Service Employees International Union from 1996 to 2010 saw more success in this area than just about anybody else, has a few ideas. He’d like to make it legal for unions to solicit outside funds, which is largely prohibited under the 1959 Landrum-Griffin Act. Union organizing is extremely expensive, which is why very little of it is being done today, and there’s a limit to how much labor unions can hit up their members. Stern would also like to negotiate wages industry-wide (as Reuther finally achieved with the car companies in the early 1950s) to remove wage-based price competition from the market. He also thinks the labor movement needs to globalize to keep up with the global economy.
At the risk of being called un-American by Mitt Romney, let me point out that globalism has not rendered unions obsolete in Western Europe. During the 1970s (the decade that coined the term “deindustrialization”), union density actually increased in most industrialized European countries even as it decreased in the United States. Since then, it’s decreased elsewhere too, but not to anything like the level here. Richard Freeman calculates that if average earnings for industrial workers in the United States had followed the pattern in these other countries—which faced the same pressures of global competition—then in 2005 the typical American industrial worker would have been paid $25 per hour instead of $16.
A lot of the difference can be attributed to the weakening of U.S. labor law with the Taft-Hartley Act in 1947 and after. Among other things, the penalty for firing a worker who tries to join a union is now so pitifully slight that bosses do it with impunity. One really interesting idea put forth by Richard D. Kahlenberg and Moshe Z. Marvit, in their new book Why Labor Organizing Should Be a Civil Right, is to extend legal protections under the Civil Rights Act to union membership. That way a worker whose boss fired him for trying to start a union could sue the boss, expose the company to the humiliation of the discovery process, and win significant monetary damages. Kahlenberg and Marvit argue that Americans understand the vocabulary of civil rights in a way that they don’t understand the vocabulary of labor rights. I mention Kahlenberg and Marvit’s idea in The Great Divergence, and Slate recently ran an excerpt of their book. So maybe it isn’t completely nuts to think about.
P.S. Reuther is pretty much the hero of my book. If the book has a villain, it’s Bryce Harlow, a man of impeccable personal character who helped destroy America by becoming a central architect of the Washington business lobby. I consider him a major player in the story of how the trend toward greater equality in incomes reversed itself.
Timothy Noah is a former Slate staffer. His book about income inequality is The Great Divergence.