Illustration by Sarah Angèle Wilson
This article appears in the August 2022 issue of The American Prospect magazine. Subscribe here.
The outlook for the labor movement in America is at once bleak and hopeful. On one hand, the number of workers belonging to or represented by unions continues to decline. In 2021, a meager 6.1 percent of private-sector workers belonged to a union, and union coverage overall stood at 11.6 percent. Income inequality is the highest it has ever been, and the power differential between labor and management, coupled with the weaknesses of U.S. labor law, enables employers to engage in rampant union-busting and retaliation with minimal penalties. Just when they are needed most, unions seem nearly at risk of extinction.
On the other hand, a wave of grassroots labor organizing has gained traction across the country at Starbucks, Amazon, REI, Trader Joe’s, and beyond. Sixty-eight percent of Americans support unions, the highest level since 1965, and the number is even higher among young people. Almost half of non-unionized workers say they would join a union if they had the chance. “I believe we may be on the verge of an era of mass organizing like we have not seen since the 1930s,” Rep. Andy Levin (D-MI) said in a statement to the Prospect.
Hoping to build upon this promising momentum, union organizers and labor experts are thinking big. Facing a legal and political environment rife with fragmentation, exclusion, and sluggishness, major structural change to the relationship between workers and companies may be the only way to tip the scales in workers’ favor. That’s where sectoral bargaining comes in.
SECTORAL BARGAINING IS A FORM of collective bargaining where workers bargain with multiple employers in order to set standards across an entire industry or sector. Negotiated benefits and wages apply to all workers across the sector, regardless of whether or not they are unionized.
As it stands, labor law in the United States emphasizes bargaining at the enterprise level—or more accurately, bargaining at individual workplaces or even subsets of workplaces. At the same time, the holes that have been punched in the law over the past half-century make it extremely difficult for workers to build power at the workplace level and allow for intense employer opposition—though President Biden’s appointees to the National Labor Relations Board are trying to fill some of those holes. A sectoral system would address the limits of enterprise-level bargaining, change what it means to organize, and lead to significant improvements in workers’ conditions.
Sectoral bargaining’s critical promise is to deliver the benefits of unionization to all workers, whether union members or not. Even at the height of their postwar power, when they represented roughly a third of the workforce, American unions were never able to set standards for the majority of American workers. The National Labor Relations Act doesn’t extend collective-bargaining rights to domestic workers, agricultural workers, and independent contractors, who are disproportionately women, people of color, and immigrants. Over the past several decades, the share of workers classified or misclassified as independent contractors has grown considerably, so that today, 46 percent of the American workforce doesn’t have a legal right to join a union. Sectoral bargaining is a way to cover those workers who are hardest to reach, reducing inequality to a significantly greater extent than workplace-level bargaining and helping to close gender and racial pay gaps in the process.
Sectoral bargaining’s critical promise is to deliver the benefits of unionization to all workers.
Sectoral bargaining is particularly effective in industries that are highly fissured, with layers of subcontracting, franchising, and outsourcing to so-called independent contractors. New Deal–era labor law misses this crucial aspect of our modern economy. Organizing at the workplace level is incapable of addressing the problems of fissured employment, which deliberately obscures power and responsibility to the benefit of corporations. Bargaining at the sectoral level, however, is able to hold these multinational employers accountable. It’s the difference between McDonald’s employees bargaining with their local franchisee, and fast-food employees across the country bargaining with the McDonald’s Corporation and the other fast-food giants. Only the latter is able to tackle the root of exploitation.
Sectoral bargaining also has the potential to disincentivize employer opposition to unionization. Under our current bargaining system, companies compete with each other over wages, and most managers thus believe that unionization will put them at a competitive disadvantage. Sectoral bargaining takes wages out of competition, requiring all companies in a sector to follow the same rules and adhere to the same standards, thus preventing a race to the bottom that pits workers against one another and drives down wages and living standards.
Employers then have to compete based on other factors, such as greater productivity or the quality of their product. With sectoral bargaining, as Sharon Block, executive director of the Labor and Worklife Program at Harvard Law School, explained: “You don’t have workers bearing the full burden of the competitiveness that is inherent in capitalism.”
Sectoral bargaining is not a replacement for union organizing at the enterprise level. Each type of bargaining can complement and strengthen the other. Indeed, countries with sectoral bargaining tend to have higher union density than countries without it. Proponents of sectoral bargaining emphasize that it should be accompanied by other reforms to give workers power at all levels. A robust system of workplace bargaining can promote solidarity in ways that sectoral bargaining cannot, and there will always be workplace-specific issues to be addressed that are outside the scope of sectoral agreements. Sectoral bargaining sets a floor for workplace organizing to build upon. And ensuring that unions have sufficient power and membership strengthens the deals that sectoral bargaining structures are able to negotiate.
In 2015, a New York wage board increased minimum wages for all of the state’s fast-food workers to $15 an hour.
THE EXPERIENCE OF AMAZON WORKERS in two different countries illustrates the difference that sectoral bargaining can make. In April of this year, Amazon warehouse workers in Staten Island won a historic unionization vote, the first in the country. Their path to a collective-bargaining agreement is uncertain, however, as Amazon is using all of its muscle to attempt to overturn the result. In Italy, by contrast, unions signed a national collective-bargaining agreement with Amazon last September. The first-of-its-kind contract and its follow-on agreements cover temporary workers and last-mile delivery, recognize unions as workers’ legitimate representatives, and create a framework for establishing firm-level standards.
Italy’s sectoral bargaining system was a crucial factor in enabling the agreement, writes David Madland, author of Re-Union: How Bold Labor Reforms Can Repair, Revitalize, and Reunite the United States. “Italy’s sectoral bargaining system facilitated worker activism, anchored discussions, and reduced Amazon’s opposition to an agreement.” A similar agreement in the U.S. seems unthinkable today, but sectoral bargaining could get us there.
America is the exception, not the rule, when it comes to sectoral bargaining. Countries across the globe have various sectoral systems, from Argentina to Norway, South Africa to Germany. In some nations, like France, the government ensures that key collective bargaining contracts in a given industry are extended to all of the industry’s employees. Elsewhere, where unions are stronger, legally mandated extension is not always necessary.
There have been several examples of sectoral bargaining in U.S. history, too, beginning with wage boards in the Progressive Era, preceding and during World War I. These boards were designed to set standards for workers without union representation or citizenship rights, and they existed in over a dozen states and Washington, D.C. In some states, they still exist. The New Deal’s National Industrial Recovery Act, War Labor Board, and Fair Labor Standards Act legalized various sectoral bargaining agreements and committees. There has also been “pattern bargaining” in powerful, highly unionized industries like the auto industry of yore, where the United Auto Workers would strike (or threaten to strike) one of the Big Three companies and win a contract that the other two would then accept. But this arrangement eroded over time, as foreign competition and factories in the non-union South weakened the UAW’s bargaining power. Today, there are disparities among its agreements with the Big Three automakers. In a few industries that employ hard-to-replace workers with special talents—movies, television, major-league sports—sectoral bargaining persists.
To make sectoral bargaining work in a sustainable way at the local, state, and national level, active government involvement is essential. Creating tripartite wage boards (with worker, business, and public representatives) and expanding upon existing prevailing-wage laws are just some of the steps that policymakers could take. At the federal level, the idea has at least been raised: In the 2020 Democratic primaries, candidates from Pete Buttigieg to Bernie Sanders developed their own sectoral proposals. Even Joe Biden promised to explore the concept. But with the PRO Act stalled, the possibilities for federal labor law reform in the short term range from slim to none.
Moving to sectoral bargaining requires changes in law and policy—and worker organizing.
Experiments at the state and local level, however, have begun—at least, where Democrats govern and unions are strong. These experiments are constrained by federal preemption, which prevents localities from enacting labor law, so they are not exactly sectoral bargaining. Rather than bargaining a contract, these efforts enable sectoral standard-setting that must ultimately be approved by the legislature or executive.
In 2015, then-New York Gov. Andrew Cuomo convened a wage board to examine wages in the fast-food industry, which resulted in an increase in the minimum wage paid to fast-food workers to $15 an hour, to be phased in over six years. More recently and ambitiously, California’s AB 257, the FAST Recovery Act, would establish a Fast Food Sector Council with worker, franchisee, company, and state representatives charged with negotiating industry-wide minimum standards. The bill passed the Assembly earlier this year and will be up for a Senate vote in August. Mary Kay Henry, international president of the Service Employees International Union, described the bill as “an essential stepping stone to the kind of sectoral bargaining we need.” SEIU and its Fight for $15 and a Union campaign have built support for the bill and have been at the forefront of pushing for sectoral solutions over the last decade. Fast food, with its low wages, rampant labor violations, franchising, and resistance to unionization, is a classic case of an industry in which sectoral organizing is essential to furthering workers’ interests. Over half a million California workers across more than 30,000 worksites stand to benefit if AB 257 becomes law.
MOVING TO SECTORAL BARGAINING requires changes in law and policy, but more importantly, it requires worker organizing. Its long-term success depends upon strengthening working-class organizations and creating a mass movement with the power to shape political will.
As Larry Cohen, former president of the Communications Workers of America and board chair of Our Revolution, writes: “This cannot be simply a policy argument, but must be a political demand backed up by increasing militancy across sectors.” Mobilization at the local and state level has begun to build this foundation, as workers who have fallen through the cracks are demanding a seat at the table and reimagining what is possible for themselves, their co-workers, their unions, and their country.
