Raising Wages From the Bottom Up

Inequality

Raising Wages From the Bottom Up

Three ways city and state governments can make the difference.

April 6, 2015

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This article appears in the Spring 2015 issue of The American Prospect magazine. And click here for a free PDF of this 25th Anniversary Issue of the Prospect.

In 1999, while he was working at a local immigrant service center in Los Angeles, Victor Narro began encountering a particularly aggrieved group of workers. They were the men who worked at carwashes, and their complaint was that they were paid solely in tips—the carwashes themselves paid them nothing at all.

At first, the workers came by in a trickle, but soon enough, in a flood. Narro, whose soft voice and shy manner belie a keen strategic sensibility, consulted with legal services attorneys and discovered that while every now and then a carwash was penalized for cheating its workers, such instances were few and far between. “There were no regulations overseeing the industry,” Narro says. The state’s labor department conducted no sweeps of the carwashes to investigate what looked to be an industry-wide pattern of violations of basic wage and hour laws. When Narro took a new job at UCLA’s Labor Center, he had researchers survey L.A. carwashes. They reported that roughly one-fourth of the industry’s 10,000 workers were paid only in tips.

The workers who did get a paycheck weren’t raking it in, either. Wage theft was the norm in the industry, and the carwasheros (as the workers, almost entirely Mexican and Central American immigrants, have come to be called) had little recourse—especially since so many were undocumented. Oscar Sanchez, a tall, sober-faced carwashero who came to Los Angeles from Guatemala in 2000, recalls working a 10-hour day and routinely getting paid for five hours. Workers at his carwash, in South Central L.A., got no lunch breaks; the owner would “bring us burgers and we’d have to wash cars and eat at the same time.” The owner also had a mini-mart on the property, and rented the two rooms upstairs as living quarters for four of the workers—one of them Sanchez. “She wouldn’t pay us on time, but she demanded the rent on time,” Sanchez says. “When we fell behind, she said she couldn’t pay us because we owed her rent.”

Under California law, employers in a few industries in which wage theft was endemic—farm labor contracting, garment work, and construction—were required to register with the state and post surety bonds every year to cover any back-pay settlements and penalties that authorities assessed on them. Armed with data from his researchers, Narro asked legislators to get carwash owners added to the list. The bill, signed into law by Governor Gray Davis, required owners to register with the state and to post a $15,000 bond to cover labor-code violations.

But the new law changed nothing. Davis’s successor, Arnold Schwarzenegger, had no interest in strengthening it when it came up for renewal at two-year intervals. “We’d win cases, but we were still swamped with violations,” says Narro.

In 2006, the national AFL-CIO had established a partnership with a union of day laborers, and Narro reasoned that the Federation might be interested in trying to foster a union of carwasheros, too. He approached the AFL-CIO, which responded enthusiastically and sought out an established union willing to undertake the campaign. The United Steelworkers—which had expanded into other sectors as the U.S. steelmaking industry continued to shrink—took up the cause. Steelworkers Local 675, an L.A.-based union that chiefly represented oil refinery workers, agreed to undertake the campaign and welcome the carwasheros into the local. “If you can’t make steel,” says Dave Campbell, the local’s secretary-treasurer, “you might as well wash it.”

In 2008, the AFL-CIO and the Steelworkers commenced their campaign. The Federation staffed the carwasheros’ worker center, named CLEAN, with organizers under the direction of Justin McBride, a veteran of multiple union campaigns. The Steelworkers loaned organizers to the effort and announced it would negotiate contracts and service the new members.

By 2013, however, the campaign had stalled. Of the estimated 500 carwashes in Los Angeles County, just four had gone union. Part of the problem was that the industry itself was fragmented. CLEAN’s research determined that the 500 carwashes had 450 different owners; no one owned more than five. Worse still, a number of carwashes seemed to be operating like Walter White’s carwash in Breaking Bad—less as a business than as a money-laundering operation. Finally, no individual carwash employed more than a handful of workers, which made organizing both costly and labor-intensive.

To succeed, a completely new strategy was needed. In 2013, with the carwash law set for renewal, McBride proposed to greatly increase the bond carwash owners had to post—unless they established a formal grievance procedure, the kind that, by law, can only exist under a union contract.

Schwarzenegger had by then returned to Hollywood, and his successor, Jerry Brown, had long supported the cause of low-wage workers. Brown’s labor commissioner, Julie Su, had begun sweeps of carwashes that routinely turned up violations. Democrats, following the 2012 elections, had two-thirds majorities in both houses of the legislature. The stars were aligned for McBride’s proposal, though he had “to compile data showing that the $15,000 bond was inadequate” to protect workers, says Caitlin Vega, the state AFL-CIO’s lobbyist who was shepherding the bill that codified McBride’s proposal. Fortunately, she adds, “Justin is very good at math.”

In a rather elegant solution, the bill that passed the legislature and that Brown signed simply added a zero to the $15,000. (It also eliminated the original act’s two-year sunset provision.) Starting in January 2014, carwash owners would have to post a bond of $150,000—unless they agreed to let their workers go union.

As the new year dawned, Labor Commissioner Su and Los Angeles City Attorney Michael Feuer convened a raucous meeting of more than 100 L.A. carwash owners to explain the new statute. “We heard some complaints about the law,” Su says, but the purpose of the meeting was to make clear both the terms of the law and Su and Feuer’s intention to enforce it with ongoing and widespread inspections.

Several months later, 16 carwashes announced they were going union. Today, Local 675 represents workers at 25 carwashes in Southern California. The unionized carwasheros work under contracts that their union representative, Manuel Ramirez, acknowledges are “very basic.” They make roughly 2 percent above minimum wage, they have shaded places where they take their breaks, they have lunch breaks, fresh water, time clocks, regular paychecks— the merest basics of a work relationship, but ones routinely denied their nonunion brethren. The unionized carwashes are chiefly those that couldn’t afford the new surety bond, located disproportionately in the poorer sections of the city. Still, both the new law and the increased inspection regimen have improved conditions across the industry. “Now,” says Narro, “hardly any carwasheros are paid only in tips.”

 

Photo courtesy of USW Local 675

Though the longest of long shots, the carwashero campaign has unionized two dozen Los Angeles–area carwashes—with the crucial assistance of state government.

THE VICTORIES OF THE CARWASHEROS, limited though they be, are a clear example of what Rutgers University sociology professor Janice Fine terms “regulatory unionism”—the enactment or enforcement of laws that not only better workers’ lot but also enhance their ability to organize in their workplace. The latter, of course, was the intent of the National Labor Relations Act, the federal law passed in 1935 that created a clear process through which workers could form unions. Over the past four decades, however, the NLRA has largely become a dead letter, as employers have found multiple ways to violate the terms of the act with impunity.  

Though Obama labor officials have improved enforcement efforts, conservative pressure at the federal level has thwarted all efforts to strengthen the NLRA itself. But with the heightened profile of the economic-inequality issue, the burgeoning of low-paying jobs, and the demonstrations of low-wage workers for higher wages and greater justice, state and city governments have proved more responsive to the new proletariat’s plight. With the lion’s share of major American cities now firmly in liberal control (25 of the nation’s 30 largest cities currently have Democratic mayors), municipalities have raised the local minimum wage and required employers to provide their workers with paid sick days and, for part-time retail workers, an advance schedule of their hours. Only seven states, however, have Democratic governors and Democratic control of both houses of the legislature, so the number of such pro-worker statutes emerging from statehouses is smaller.

But the one thing that progressive states and cities have generally not been able to do is enact measures that help workers organize into unions. The NLRA specifically preempts most such endeavors. That’s why the case of the carwasheros is so remarkable.  

Nonetheless, the carwasheros’ victory illustrates one of the three ways in which cities and states can currently boost not just worker income but worker power. These paths, to be sure, are narrow—but not so narrow that they can’t accommodate more campaigns from creative strategists and dedicated workers. The three paths are:

  • Using a city or state’s purchasing, financial, regulatory, or wage-setting power to foster worker organization;
  • Giving worker organizations the authority to help enforce and monitor city or state labor ordinances; and
  • Cracking down on the misclassification of workers so that those mislabeled as “independent contractors” can become unionizable employees.

 

THE FIRST STRATEGY, PIONEERED by the Los Angeles Alliance for a New Economy (LAANE) and copied in multiple cities, is to condition city approval of new projects seeking tax abatements, public funds, or other municipal assistance on those projects meeting labor criteria that benefit the city’s residents: the payment of living wages, the hiring of women and minorities, the adherence to environmental standards—and the ability of workers in the project to join unions.

No one has done more to foster unionization through such policies than Madeline Janis, LAANE ’s founding director and now the head of Jobs to Move America, which seeks to bring the manufacture of rail cars and buses—an industry almost entirely offshored in recent decades—back to the United States and back to unionized American workers. In 2008, Los Angeles voters levied a tax increase on themselves to fund the construction of an ambitious rail system. When L.A.’s transit authority began looking for a rail-car manufacturer, however, virtually all were overseas. Even more problematically, the federal Department of Transportation conditioned its considerable financial support for such transit projects on conventional lowest-bidder criteria. Janis managed to persuade the department to add a “best value” criterion that gives points to bidders who hire veterans and workers from neighborhoods with high poverty rates. Able to choose a bidder by those criteria, the L.A. agency selected a Japanese manufacturer that pledged to build a factory in L.A. County and, with further prodding from Los Angeles Mayor Eric Garcetti, not to oppose its workers’ efforts to unionize. Transit agencies in Chicago and Maryland have now adopted contract criteria similar to those in Los Angeles.

LAANE and its many offshoots have most often been founded and, initially, funded by their cities’ hotel unions—locals of UNITE HERE. Beginning in the 1990s, that union succeeded in conditioning many city governments’ approval of new hotel projects that sought some form of financial assistance on the hotels agreeing to let their workers choose whether to join a union. A new wrinkle in this strategy appeared in 2005, when the East Bay Alliance for a Sustainable Economy (EBASE) won the approval of voters in Emeryville—a small city wedged between Berkeley and Oakland—to require a minimum wage, higher than California’s, for employees of that city’s hotels, on the theory that the local taxpayers’ support for public infrastructure around the Bay Bridge was really the key to the hotels’ success and, indeed, existence. LAANE followed up in 2007 by persuading the Los Angeles City Council to enact a similar ordinance for the hotels lining Century Boulevard, the approach road to LAX, and again last year, when it convinced the city council to set an hourly wage of $15.37 for workers at every hotel in the city with at least 150 rooms.

Each of these statutes contained one crucial “supercession” (or escape hatch for employers): They allowed hotels that reached collective-bargaining agreements with their workers to waive the wage requirement if their employees, through their contracts, agreed to it in return for other benefits. With this option clearly serving as an incentive to unionization, UNITE HERE was able to organize the large hotels of Emeryville and five of the 12 hotels on L.A.’s Century Boulevard. The citywide Los Angeles ordinance, which covers 63 hotels, many of them already unionized, takes effect later this year.

Such “carve-outs,” as they are also called, not only can pressure owners and managers but also give workers some choices in the bargaining process. “Collective bargaining supercession cuts both ways,” says Ken Jacobs, who chairs the Center for Labor Research and Education at the University of California, Berkeley. The waitstaff in some Bay Area hotels, he says, made enough in tips to trade away a higher legislated wage in return for better benefits. When unions are strong, supercession can work to employees’ advantage; when unions are weak, it may not.

When San Francisco enacted the nation’s first Retail Workers Bill of Rights late last year, requiring managers to provide their employees with their work schedules two weeks in advance, the city’s leading unions of retail workers, for instance, chose not to lobby for an exemption for retail establishments that had union contracts. For one thing, the vast majority of the city’s retail outlets had no such contracts and the union, even with a carveout, believed it lacked the capacity to organize them. For another, a number of the union’s existing contracts contained no such provision for advance scheduling; many of its own members would plainly benefit from a straight-up application of the law. The bill was enacted with no supercessions. “If your union doesn’t have much leverage,” says one labor lawyer, “you usually want just a law that sets a standard.”

Jacobs argues that even without carve-outs, such laws still advantage unions. “From an organizing perspective, setting a $15.37 wage for all large hotels reduces the differential between union and nonunion hotels, which has grown very large as the cost of health benefits has gone up. You have to raise wages across the board to narrow the difference in labor costs between union and nonunion establishments. Legislating labor standards can be a way to reduce one of the barriers to unionization.”

 

THE SECOND FORM OF CITY or state policy that enhances worker power is giving worker organizations the authority and funding to monitor and educate workers about the labor-standard laws that those governments enact. In 2007, San Francisco passed an ordinance requiring employers to provide their employees with health insurance and paid sick days. Last year, the council established advance scheduling for retail workers, and city voters enacted a $15 minimum wage. The city’s office of labor standards enforcement, says Donna Levitt, its manager, has recognized that “workers feel more comfortable going to a community group than a government agency” when they experience mistreatment on the job, and has contracted with and funded a range of community-based organizations, most of them rooted in particular minority communities, to augment the office’s own outreach and monitoring efforts.

The most notable success these efforts have achieved came at Yank Sing in Chinatown—the James Beard Award–winning establishment considered one of the nation’s foremost (and highest-dollar) dim-sum restaurants. In 2013, some Yank Sing workers, who were protesting pervasive wage and hour violations, approached the Chinese Progressive Association (CPA), one of the groups with which the city had contracted to monitor labor standards. Interviewing workers in their homes, CPA identified a number of worker-leaders who persuaded nearly 100 of the restaurant’s 280 employees (virtually all of them Chinese immigrants) to file legal claims for back pay and to pressure management to end other abusive labor practices. The workers established a committee to negotiate with the owners, and the following autumn, in a process overseen by Levitt’s office, won a settlement awarding them more than $4 million in back pay and providing them health insurance (as required by city law) and vacations. Though they were already functioning in the manner of a union, the workers chose not to form one.

In fact, while there are a number of worker centers that organize workers to help monitor ordinances, and even collect dues from some of their members, few if any have been able to take the crucial step of helping workers form unions. The problem is that once workers’ organizations elect representatives to bargain over pay and working conditions with private-sector employers, they fall under the not-very-protective jurisdiction of the NLRA—and thus become easy prey for employers seeking to retain nonunion status.

What’s the most, then, that worker organizations helping enforce labor standards can do? One labor leader, speaking on background, criticizes the San Francisco model of funding multiple worker centers for fragmenting the already attenuated power that such organizations wield. If the city funded just one omnibus group that also received dues payments from members, he argues, that group might amass enough resources to become a force in city politics—still not a union, but something more than a monitor, and a more forceful advocate for workers’ interests.

 

(AP Photo/Nick Ut, File)

Five days of striking by truck drivers shut the massive ports in Long Beach, California, in 2014. A federal court later ruled that Green Fleet drivers weren’t independent contractors but actually employees.

THE THIRD WAY THAT CITIES and states can build worker power is to stop the illegal practice of worker misclassification. Over the past several decades, many U.S. companies have relieved themselves of the obligation to provide their workers with benefits or pay them an adequate wage, through the expedient of declaring their workers not to be their employees. One common practice is to contract with employment agencies that claim the workers are formally theirs, even though the workers may labor for years at the same company. (Such practices are the norm at the massive warehouses of retailers such as Walmart, and at the factories of Japanese auto manufacturers in Southern states.) Another dodge, prevalent in trucking, is to claim drivers are independent contractors even though they work for just one company, a notable example being the case of the port truckers who move containers from the nation’s harbors to retailers’ warehouses.

Byron Monzon, who has worked as a port trucker for the past 13 years, has actually had weeks where he drove full time and ended up owing the company. As Monzon explains, the company routinely deducts from his paycheck all the expenses for which he, as an “independent contractor,” is held responsible: gas, maintenance, tires, insurance. Despite this, the port truckers’ loads, routes, and hours are set by their trucking company, and they are expressly forbidden to use their truck for any other company, or purpose.

Since the 1980s, a range of unions have sought ways to have those mislabeled truckers (estimated at 50,000 nationally) legally redefined as employees. Nearly a decade ago, the Teamsters, LAANE, and a number of environmental and community groups initiated a joint campaign at the adjoining ports of Los Angeles and Long Beach, where 40 percent of the nation’s imports arrive, mainly from Asia. While the groups won stricter emissions standards for trucks, it wasn’t until two years ago that their efforts to reclassify and organize truckers began to show some movement.

What made the difference—just as with the carwasheros— was in large part a supportive state labor commissioner. For years, individual workers had gone to court alleging wage theft—fruitlessly, since their status as independent contractors meant they weren’t protected by wage and hour legislation. But with the election of Brown as governor and the appointment of Su as his labor commissioner, the state’s labor department began to rule that the truckers fit the legal description of employees. At that point, says Roxana Tynan, Janis’s successor as LAANE’s executive director, the Teamster-LAANE strategy shifted to “focusing on ever larger numbers of wage and hour violations, building up a big penalty for the trucking companies.”

The penalties indeed grew bigger. This year, a court upheld a state labor department ruling that seven drivers for Pacer Cartage were actually employees, and ordered that they receive $2 million in back pay and penalties. A 2014 report by LAANE and two other groups estimated that the total amount of back pay—excluding penalties— that California trucking companies owed the port drivers was roughly $850 million.

Emboldened by the settlements, more and more port drivers have filed misclassification actions with the state labor commission; to date, they’ve won every one. Since the cascade of rulings has not in itself been sufficient to build unions, however, the Teamsters have also called a series of one- and two-day strikes against targeted trucking companies—a considerable risk for the drivers, since there’s no law against firing an “independent contractor” for striking.

The strikes have proved a stunning success. By picketing the companies’ trucks at the port terminal gates where trucks line up, the striking drivers were able to stop the flow of trucks into the terminal yards—compelling the terminals to announce they’d no longer do business with those companies. And in a groundbreaking decision, a federal appellate court ordered one company, Green Fleet, to rehire two “independent contractors” it had discharged for striking, on the grounds that the drivers were really employees and thus protected by labor law.

Confronted with mounting financial penalties, unfavorable legal rulings, and business shutdowns, some companies have begun to acknowledge that they are actually employers. Last September, Shippers Transport Express, one of the largest companies that drivers had sued, told its drivers it would acknowledge their status as employees, and this February, it signed a contract that entitled them to a $21 hourly wage, paid sick days, and employer-provided medical, vision, and dental care. The Teamsters are currently in negotiations with other companies that would still have to make good on drivers’ back-pay claims, but could waive the additional penalties if the drivers agreed—provided the truckers were deemed employees and could vote on whether to join a union. A bill currently pending in the California legislature would exempt companies from such penalties if they made good on the worker’s claims and reclassified them as what they are—employees.

 

ALL THREE OF THESE PATHS to worker power require clear-eyed strategies, a core of crack organizers, and workers willing to take some considerable risks—the more so since all these endeavors involve workers who are largely immigrants, many undocumented. But they also require the political support of state or local governments. In that sense, they conform to what former organizer Rich Yeselson terms a strategy of “fortress unionism”—of continuing to keep unions strong in those locales where they already have some support, in the bluest cities and states.

But nothing about these endeavors resembles a “hold the fort” strategy. On the contrary, they rely on organizing the immigrant populations that have transformed American cities, in coalitions with other progressive groups, to elect local and state governments concerned with the plight of low-wage workers. They necessitate the painstaking worksite, home-visit, and community organizing always required to build unions, this time in industries where state or local government may have just enough authority to empower workers, the deficiencies of the NLRA notwithstanding.

Absent changes in the NLRA, absent a sea change in the nation’s balance of political power, these will remain niche campaigns—but niche campaigns may be the best labor can do just now. They offer a hopeful new model in a larger labor environment that often feels hopeless. “The movement is changing,” says California AFL-CIO lobbyist Vega. “Increasingly, we’re focused on the fight of low-wage workers for basic justice—super-exploited workers who in the face of every kind of abuse and intimidation are brave enough to fight back. For people in today’s union movement, that’s what inspires us.”

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