When America had sectoral bargaining: Labor Day, 1933
On Labor Day 2019, both the pro-union and anti-union forces in this nation are going into overdrive. On the anti side last week, President Trump’s National Labor Relations Board released a diktat stating that misclassifying a worker as a non-employee doesn’t violate the nation’s labor laws, but firing her if she protests the misclassification does. If you want to experience the security that the National Labor Relations Act currently affords workers, that is, you first must be fired.
On the pro side, however, there is ferment and creativity—if not yet any growth. In some sectors and industries, the strike is back, as the successive and successful strikes of teachers and hotel workers clearly demonstrate. Good thing: Historically, strikes have proved to be the most effective way to reduce economic inequality. During the supposedly somnolent Eisenhower ’50s, the United States was home to more than 300 major strikes every year, which, in a nutshell, is what created the postwar era’s broadly shared prosperity.
The problem today is that the rate of unionization is so low—6.4 percent in the private sector—that even a series of successful strikes can’t alter the nation’s imbalance of income. Last week, Gallup released a new poll showing that unions’ approval rating has reached the highest level in decades—64 percent, which, please note, is exactly ten times our rate of private-sector unionization. Since union growth is impeded by a national labor law that effectively precludes it, the pro-union community is endeavoring to figure out how to win more with less. Which brings us to the new models of collective bargaining that are currently emerging, incubating, or both.
On the Prospect’s website today, you’ll find an article by four authors, one of whom, Gerry Hudson, is the secretary-treasurer of the Service Employees International Union (SEIU), arguing that the relatively new strategy of Bargaining for the Common Good (BCG) can be employed to bargain for policies that will retard or reverse climate change. When unions engage in this kind of bargaining, they seek allies in the broader communities that their work affects, and then, in concert with those groups, present demands not just for themselves but for those communities as well. This was the model for the successful teacher strikes of recent years, in which unions aligned themselves with parent and community groups to demand and win not just raises but more funding for schools and more community services. My hunch is that BCG is a factor in unions’ rising popularity, as it supplants the image of unions as concerned only with narrow self-interest with one of advancing, well, the common good.
Bargaining for the Common Good, however, is just one of two expanded forms of bargaining now being advanced by pro-union advocates. The other is sectoral bargaining, in which workers bargain not only with their own employers, but with every employer in their industry or sector, whether those employers’ workers are unionized or not. This form of bargaining requires us to envision a more organized economy than the one to which Americans are accustomed, but, in fact, the United States has seen versions of sectoral bargaining before, and in other nations it has been fairly commonplace.
France, for instance, has a rate of unionization just about as low as ours, but the contracts that France’s unions win are by law extended to every comparable worker. In Germany, some collective bargaining proceeds regionally, and covers every major employer in that region and sector, whether unionized or not—though employer participation has declined in recent years.
There is, not surprisingly, a direct correlation between the degree to which a nation engages in sectoral bargaining and its level of economic inequality, as the following chart demonstrates.
The more collective bargaining coverage, the lower the economic inequality
The United States, you’ll note, is at the lowest end of workers covered by bargaining and at the highest end of economic-inequality levels.
That said, our nation has seen occasional, if all too rare, instances of sectoral bargaining. The system was at the heart of the First New Deal—Franklin Roosevelt’s National Industrial Recovery Act of 1933, which both legalized collective bargaining and mandated it across every industry, until the Supreme Court struck it down in 1935. As University of Michigan law professor Kate Andrias has documented, the Fair Labor Standards Act of 1938, which established the national minimum wage, also allowed for sectoral bargaining in various industries, though that provision was repealed in the anti-union offensive of the late ’40s.
More recently, when Seattle decided to become the first major jurisdiction to adopt a $15 minimum wage in 2014, the particulars of the new law were formulated by a labor-business bargaining committee, and only then ratified by the city council. When I wrote about Seattle’s embrace of the $15 minimum for the Prospect, Washington state SEIU leader David Rolf, who headed the labor-side negotiators, assessed the process this way:
It wasn’t traditional collective bargaining, but it was an alternative form of bargaining. It was very like Europe—politically constructed bargaining between the leaders of business and labor. Some of the people who will benefit from the raise will be union members in home care and grocery stores, but most will never be union members. It covers more people than any contract you could get today.
The following year, SEIU—the union behind the Fight for 15 and efforts to unionize workers in the fast-food industry—was involved in another form of sectoral bargaining, when New York state convened a wage board to raise the minimum wage to $15 for the state’s fast-food workers. New York and California are among the handful of states that have created wage boards in several industries, though most of those boards have been dormant for decades.
Last month, SEIU President Mary Kay Henry went one major step further, demanding “industry-wide bargaining tables to negotiate wages, benefits and working conditions” as a matter of national policy—and making support for sectoral bargaining a condition for the union’s endorsement of a Democratic presidential candidate. Almost simultaneously, Bernie Sanders and Beto O’Rourke released their labor policy papers, both of which backed the establishment of sectoral bargaining.
In a sense, SEIU’s embrace of sectoral bargaining follows logically from its support for the Fight for 15, in which the union’s political clout has helped produce statutory minimum wage hikes in a host of Democratic-controlled cities and states, but has yet to enable the union to win any contracts in the fast-food industry, which was the campaign’s other goal. Like a statutory wage hike, sectoral bargaining would be the product of legislation—though, of course, street heat is one way to pressure a city council, state legislature, or Congress to act. In theory, at least, sectoral bargaining could make union growth a little easier, since employers might understand that going union wouldn’t require them to pay their workers at a higher rate than their non-union competitors paid theirs. A look at the nations that engage in sectoral bargaining suggests that it might help unions grow somewhat bigger and more powerful—though conversely, it will take bigger and more powerful unions to prod the U.S. to adopt sectoral bargaining. The formula for rebuilding America’s union movement remains a mystery, though the good news on Labor Day 2019 is that a lot of people are trying to solve it.