Why Alt-Labor Groups Are Making Employers Mighty Nervous

Union membership remained steady last year—steady at its near-hundred-year low. A mere 6.7 percent of private-sector workers are union members, as are 11.3 percent of U.S. workers overall, according to figures released last Friday by the Bureau of Labor Statistics (BLS.)   

Those government union membership statistics, however, don’t capture an entire swath of new, exciting and emerging labor activists—“alt-labor” activists—whom alarmed employers would like to see regulated by the same laws that apply to unions. Yet before we regulate them as unions, shouldn’t we first count them as unions?  

Consider those striking fast food workers you’ve been reading about, the ones calling for a $15 an hour wage. Their numbers are not counted in the union membership figures. How about those Wal-Mart workers who struck for Black Friday and just won a key court case? Uncounted. What about the day laborers who joined any one of hundreds of workers’ centers nationwide? You got it, not included.  Neither are the restaurant workers, home health care workers, taxi drivers or domestic workers, all of whom are organizing for workplace power outside traditional unions. 

Why are these labor activists uncounted? The BLS bases its union membership numbers on the Current Population Survey (CPS). Every month, the government asks about 15,000 people whether they are union members or members of an employee association like a union. The people who went on strike at McDonald’s for a day, or who joined a local workers’ center, will almost certainly say “no” to this question, because they don’t pay union dues or aren’t covered by a contract. The government’s questions have no place for these workers who are part of a new breed of “alt-labor” groups leveraging workplace power outside the realm of collective bargaining —such as through worker centers, labor coalitions, or the three million members of the AFL-CIO’s Working America. In addition, the government union numbers exclude people who report they are self-employed. In todays’ economy, that could easily mean day laborers and domestic workers who are part of new labor groups. 

This problem is not a new one. Although the media has long used the BLS numbers to gauge labor’s strength, the BLS numbers only paint part of the picture. For instance, these numbers have never reflected the numbers of people who tried to form unions each year, but who were thwarted by resistant employers or weakened labor law. However, there are other government statistics we can use to find a trail for these would-be unionists, like the numbers who tried to form unions through voting in National Labor Relations Board (NLRB) union elections. In order to truly capture today’s morphing labor movement, the government would have to ask different questions—ones which aimed to pinpoint wider involvement in today’s iterations of worker groups.  

Employers don’t actually want the BLS union membership numbers to rise. They will tout the news about low 2013 union membership without counting such new activists among labor’s ranks.  Nevertheless, the Chamber of Commerce, the National Restaurant Association and anti-union coalition groups publicly insist that these new groups are unions, because they want them to be subjected to the same kinds of legal limits that have come to constrain America’s labor unions, such as not being able to strike in sympathy with other workers. Scott DeFife, an executive vice president at the National Restaurant Association, said as much to the New York Times recently: “They’re trying to have it both ways. They’re a union and not a union. They’re organizing workers but not organizing workers. They have a history of tactics unions couldn’t get away with.” DeFife’s group insists that the Restaurant Opportunity Center (ROC) is a union despite ROC’s insistence that it is not.

Do these uncounted “alt-labor” groups serve the same function that unions once did?  No, they do not.  When workers gained the right to state-backed collective bargaining through unions in the 1930s, it was one of the few checks the U.S. ever effectively put on employer power. As a result, people who have a union today make 26 percent more than those who do not, according to the government’s new statistics, and are much more likely to have health insurance and real pensions. The new labor groups have yet to harness a comparable kind of state-backed power with which to force employers to play fair. However, in a 21st century economy in which collective bargaining has been so severely weakened by structural changes and the roll back in workers’ rights, these new labor activists represent an important frontier for people concerned about worker power and economic inequality writ large. And their impact is becoming increasingly clear. President Obama’s $10.10 minimum wage for federal contractors rose on a groundswell of economic activism driven by labor groups both “counted” and “uncounted.”    

You know that workers are on to something when employers start to get nervous.  It turns out the low union membership statistics may not be as good a measure of labor’s future as employers would hope. 

Comments

Progressive economists should readily admit -- shout, scream -- that a “moderate” federal minimum wage increase, typically 10% cited in conservative studies, should indeed have little or no effect on poverty rates. Why would an extra 1/4 of one percent of GDP added to low wage pay checks be expected to clear a broad swath through poverty? That is what a $1 an hour increase in the federal minimum wage equates to -- about $40 billion out of a $16 trillion economy. (E.I.T.C. shifts $55 billion.)

A $15 an hour minimum wage OTH would send about 3.5% of GDP the way of 45% of American workers -- about $560 billion (much of it to bottom 20 percentile incomes who today take only 2% of overall income).
* * * * * *
Could raising the wages of 45% of the workforce actually raise demand for the goods and services they produce? Sounds sensible at some level; raising wages so much ought to add demand somewhere – but, is it all smoke and mirrors? Before the 45% -- who would get a wage hike to $15 an hour -- can raise demand anywhere, they would need to get the extra cash from somewhere else – meaning the 55%. (Bottom 45 percentile incomes – not wages – currently take 10% of overall income – so, at no time are we talking giant chunks of the economy here.)

The 45% can get higher pay even as "numerical" (to coin a phrase?) demand for their output declines due to higher prices -- as long as labor gets an bigger enough slice of the new price tags. This can be compared to a leveraged buyout or buying stocks on margin.

Products produced by low-wage labor tend to be staples whose demand tends to be inelastic. Demand for food is inelastic – maybe even fast food. If the price of your Saturday family jaunt to McDonald's rises from $24 to $30, are you really going to eat at home (the kiddies haven't forgotten the fundamental theorem of economics: money grows on trees :-])? And fast food should be the most worrisome example: lowest wages to start with; even so, highest labor costs, 25%.

Wal-Mart is the lowest price raising example (surprise) with 7% labor costs. Jump Wal-Mart pay 50% and its prices go up all of 3.5%.

If low wage labor costs average 15% across the board and go up 50%, overall prices increase only 7.5% -- and that is for low wage made products only; nobody's car note, mortgage payment or health premium is affected. If demand drops just enough for price increases to maintain the same gross receipts (conservative, even without inelasticity), low wage income should improve appreciably.

Allow me to cite: from a 1/ll/14, NYT article "The Vicious Circle of Income Inequality" by Professor Robert H. Frank of Cornell:
“… higher incomes of top earners have been shifting consumer demand in favor of goods whose value stems from the talents of other top earners. … as the rich get richer, the talented people they patronize get richer, too. Their spending, in turn, increases the incomes of other elite practitioners, and so on.”

The same species of wheels-within-wheels multiplier ought to work the at both ends of the income spectrum -- and likely in the middle. A minimum wage raise to $15 an hour is not going to send most low-wage earners in pursuit of upper end autos, extra bedrooms or gold seal medical plans. Wal-Mart and Mickey D's should do just fine, OTH – which in turn should keep Wal-Mart and Mickey D's doing even better.
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My minimum wage worksheet -- the easily could-have-been minimum wage dbl indexed for inflation and per capita income growth:

yr..per capita...real...nominal...dbl-index...%-of

68...15,473....10.74..(1.60)......10.74......100%
69-70-71-72-73
74...18,284.....9.43...(2.00)......12.61
75...18,313.....9.08...(2.10)......12.61
76...18,945.....9.40...(2.30)......13.04........72%
77
78...20,422.....9.45...(2.65)......14.11
79...20,696.....9.29...(2.90)......14.32
80...20,236.....8.75...(3.10)......14.00
81...20,112.....8.57...(3.35)......13.89........62%
82-83-84-85-86-87-88-89
90...24,000.....6.76...(3.80)......16.56
91...23,540.....7.26...(4.25)......16.24........44%
92-93-94-95
96...25,887.....7.04...(4.75)......17.85
97...26,884.....7.46...(5.15)......19.02........39%
98-99-00-01-02-03-04-05-06
07...29,075.....6.56...(5.85)......20.09
08...28,166.....7.07...(6.55)......19.45
09...27,819.....7.86...(7.25)......19.42........40%
10-11-12
13...29,209.....7.25...(7.25)......20.20?......36%?

When it comes to labor/jobs, it's honestly frightening to see how this generation is trying to find a solution without factoring in the range of elements -- putting together a puzzle with the most important pieces missing. The old model no longer applies. US corporations are no longer dependent on US workers or consumers. Workers no longer have rights, and there is nothing they can do about it. Every one of us can be replaced on our jobs within an hour, and with very rare exception, they can be replaced by someone who must do the job for a fraction of what you are paid. We have an abundance of surplus labor, and a growing share of these (workfare labor, prison labor, etc.) don't have such protections as the right to a minimum wage, fair hiring/firing protections, etc.

The ancestors of those unions which were enshrined in labor laws in the 1930s were informal groups of employees, much like the alt-labor groups of today, who had to fight outside the law for working conditions that even the worst-paid and worst-treated workers of today (except immigrant slave labor) take for granted. The Molly Maguires in the West Virginia mines, the steel workers at Carnegie's plant, the Haymarket protestors, etc. Because management used violence to stop them (violence which government, under their influence, did not punish), some of these groups themselves had to form gangs in self defense.

Unless truly progressive government takes hold, these alt-labor groups of today may face the same struggle, unassisted by the law, that their ancestors had to fight.

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