Monday, April 27, 2009

One of Robert Reich's answers to The Economist makes the strategy behind the proposed card check ("Employee Free Choice") bill clearer in a way I hadn't completely understood before (though I should have):  

DIA: You have said that America needs unions "to restore prosperity to the middle class". But traditional union bastions like manufacturing are disappearing; the cost of pensions and health care are rising; more and more jobs are freelance, and more and more businesses are non-union. Have we seen the end of unions in America? If not, what form will they take in the future?

Mr Reich: We'll see more unionisation in the personal service sector of the economy -- especially in big-box retailers, restaurant chains, major hotels, and hospitals. Jobs in this sector don't compete with lower-cost imports . And because they require that people do them, they're not easily supplanted by computerised machines. Most of these jobs pay very low wages and offer minimal benefits. Unions would help give these workers the bargaining leverage they need. [E.A.]

OK, so the idea is to target unskilled workers who do work that can't be outsourced, and who work for large institutions. Questions:

a) Is this an admission that traditional power of unions--to go on strike--is no longer a very effective weapon? So unions have to rely on corporate campaigns--which work best against big, respectable institutions--and mandatory arbitration? A union card no longer becomes a way to engage in a (sometimes risky) "economic contest" with management through walkouts and picketing. It's a ticket that lets you summon a federal mediator who will raise your wage, whether or not your union has any strike power. Labor must think these chain retailers are sitting ducks. After all, why not sign the card and get the government to award you a raise?

b) Are there really enough workers in these service jobs to "rebuild the middle class," even if they all get 50% raises?

c) How is Obama going to "bend the curve" of health care costs downwards if all the hospitals get unionized?

d) If these non-outsourceable low skilled jobs are the key to raising incomes at the bottom, how does it make sense to allow a continued "insourcing" of unskilled illegal immigrants to bid down wages in these jobs (which happens even if the immigrants work for competing small-box service providers)? The retail jobs don't compete with cheaper foreign workers--until the cheaper foreign workers come here . Does Robert Reich really think the Democrats proposed legalization plan will stop the future flow of the undocumented unskilled (as opposed to establishing a precedent that will attract more of them)? Are American labor leaders that naive? Or is the idea that once the nontradable chain retail sector is organized, unions will reverse their current support for legalization and become restrictionists?

e) It sounds as if the "big box" middle-class-rebuilding strategy is based on a model of the economy in which the main activity is consuming (and providing services to people who are in the process of consuming) things that are produced elsewhere. But doesn't Obama talk about a future economy based less on private consumption --in which Best Buy, Cheesecake Factory and the Ritz Carlton have a much smaller role? I sense a contradiction.

f) Of course, if unions do for Best Buy what they did for Chrysler, they'll shrink the sector quite effectively. But they won't rebuild the middle class. ...