The Rise and Fall of the Labor Union

By the end of the 19th century, business interests had grown so powerful in our society that their stranglehold on individual prosperity created an inequity between the common citizens and the wealthy, industrial class. Tired of working harder and getting less than those who owned the businesses they helped succeed, and angered by conditions that amounted to little more than indentured servitude, the working class of America began to unite in its angst against the businesses and corporations. It was the rebirth of the Labor Unions. (Their original incarnations being the trade guilds that went back hundreds of years. The Guilds were different than modern unions though in that they existed primarily to promote education and ensure quality, rather than to ensure certain worker rights.) The bravery of those common men and women who stood their ground against the politically powerful and wealthy businessmen gradually but effectively secured many of the employment regulations that exist today. Without their efforts to organize workers towards a common cause, be it the 10 hour work day (later the 8 hour work day) or mandatory break periods or guaranteed wage scales, to name a few, our lives as employees would be very different than they are today. We have safety regulations (OSHA) and pension plans (401k’s) and medical benefits (for some at least) and conduct laws, all because individuals along the line have stood up and demanded an end to exploitation. At the height of their influence, unions represented the majority of both skilled and unskilled workers in the workforce. Having secured basic worker rights across the board, they refocused their efforts on increasing pay, securing medical benefits, establishing retirement plans and forming worker hierarchy systems of tenure. And in the process of being worker advocates, the unions became businesses themselves.

Unions were successful in getting the businesses to do by threat of work stoppage what they should have been doing already out of common decency and appreciation of the people who make the businesses successful in the first place. Wages in this country began to rise, and with it the standard of life for the “common man.” Unions were so successful in fact, that workers who belonged to a union could reliably depend on holding the same job for a lifetime, with annual wage increases and advancement opportunity, even if his competency or productivity didn’t warrant such rewards. Medical protection and pension plans were all but assured to union members, but actual business contributions were in constant flux with each contract renegotiation. Still, the prospect for a comfortable and relatively secure financial outlook was something that many workers could depend on. The fight, it seemed, was won. Every now and then a skirmish might flare up during contract talks, but by and large, the labor movement had managed to stabilize the relationship between workers and employers at a level generally acceptable to all.

So where do we stand today? Interestingly, membership in labor unions has declined steadily since the 1970’s, with a more rapid decline beginning in the 1980’s. The reasons for the decline of “Big Labor” are manifold, including among them the decisions of businesses to once again put profit ahead of people (emulated throughout the Reagan Presidency), the increased entitlement attitude of the union negotiators, and the growing disconnect between business leaders, union leaders, and actual employees. Were the unions too successful in gaining the concessions from businesses so early on? Did they demand too much as to sour the carefully forged stalemate that was intact? Did unions push for too much reform in the political arena, thereby excluding any sort of bargaining ability from the businesses? Or did business leaders simply get tired of having to accede to union demands to retain knowledgeable workers and instead pine for the days of low cost, expendable employees in favor of increased profits? As with so much in the political and social arena today, the answer can only be found by blending all of these questions into one, for all of these factors have led us back to where we once began, but with a twist. The unions became much like an over-protective mother against the abusive father that was business, and both began to call on government to play referee. Politics, already partisan on ideological grounds, naturally acceded to the call of inclusion, noticing a chance to both increase its own power in social life and increase its coffers by granting access and influence. And somewhere in the mix, the original intent of unions to help the common man became a turf battle of ugly proportions. Big Labor allied with the Democratic Party and Big Business allied with the Republican Party and whichever party held the reins of power advanced the desires of their biggest donors, the unions and the corporations. The worker became an afterthought as each of the three sought to consolidate their power to control the conditions of daily life in society.

To understand some of the problems that have caused the rift, let’s look at guaranteed tenure policies that unions have created. On the surface, this seems a good idea. Workers can have assurance that their job, and therefore their income, is secure. Companies have the assurance of qualified workers always being on the task. But having a guaranteed tenure does not guarantee that workers will remain equally productive. Indeed, the knowledge that it would be difficult for an employer to fire you can often lead to a decrease in worker efficiency and the quality of work. This can become costly to a business, as well as leaving them with little recourse to remedy the situation save from becoming a non-union shop entirely. The result- less job security for employees as businesses decide to cut their losses and hire non-union. Better to insist on a conditional guarantee of tenure dependent on maintaining efficiency and quality of work. What was a win-lose situation becomes a win-win. Simple Common Sense approaches to the non-compensatory agreements between businesses and unions could go a long way towards reducing the animosity.

Unions also spend a good deal of time trying to increase the non-pay benefits of their members too, and have been so successful in their efforts that many public employee unions (whose members are paid with tax receipts) have garnered promises that are greater than a city or state can deliver. As a result, we are seeing a large-scale breakdown in local government budgets as ill-conceived agreements are coming due. Blame the politicians who have not acted in the public’s best interests. But do the unions really think that bankrupting their own governments with these unsustainable deals is in the interest of their members? Do their members think this? Only by implementing reform in our pension and health care systems can we eliminate the drag these programs are placing on our public funds. (See The National Whole Life Pension Plan and Affordable Health Care Does Not Mean Free Health Care) By eliminating these as bargaining chips from the table, unions and businesses could concentrate on establishing and maintaining a more equitable wage scale, as well as returning to more traditional tasks of member skill training and quality control. These latter two objectives could only be a benefit to both workers and businesses, cutting costs while improving marketability of the products or services that are produced.

Because the corporations have shown us time and time again that they will always put profit above human need and decency, the importance of the unions as a watchdog, partner, and advocate will never really go away, nor should it. But perhaps it is time to refocus the energies of unions away from political agendas and towards the needs of workers. Union dues should not be used to support political candidates or launch issue attacks. Union dues should be used to assist union members in times of unemployment, disability, or to supplement pensions. Unions should strive to provide better-trained workers with a higher degree of dedication and integrity. Businesses need to refocus their own agendas by returning jobs to this country, removing their desires to influence social policy, and respecting their workers as they respect their CEO’s. Profits should not be channeled into campaign chests nor used to buy access to politicians, but instead to increase the value or safety of their products and the wages of their workers as they merit it.

The success of the American economy depends on the relationship between workers and corporations, and when the relationship turns sour, the whole country suffers. Businesses turned off by the spoiled brat antics of union leadership have begun moving their jobs out of the country (or are at least hiring non-union) in an effort to once again increase profit. The move to countries without the extensive labor regulations lets businesses effectively revert to their 19th century selves. American workers are left without jobs or income, meaning that the products sold by these American companies (in name only) aren’t being bought up as quickly. This leads to a decrease in profits again and the beginning of a downward spiral. In this scenario, which is playing out all over the country, workers and companies both end up as the loser. It’s time to end the counter productive struggle between employer and employee. It’s time to recognize that success for all is ultimately better for each of us individually and as a society. Business needs workers and workers need businesses. The relationship should be symbiotic, not antagonistic.

Reining In Big Business

To the average person living in a democracy, capitalism, and the social changes it forges, rarely is given much thought. And yet our very lives, not to mention our livelihoods, are so wholly connected to our capitalistic economy, that the line between people and business has become blurred, and the properties of one has been usurped by the other. Private enterprise is the engine of our economy, but it also the string that ties us all together. Everything we buy is supplied by a business. Every paycheck we earn is supplied by a business. Every facet of our culture is connected to another by a business of some kind or another. It is this omnipresent aspect of business that makes it so powerful and yet so invisible at the same time. We would like to believe that businesses exist to offer a quality and fairly priced service or a product while making a modest profit for the owners and employees. We would like to believe that companies have the best interest at heart when it comes to their customers and their employees. We would like to think of business as an extension of the human traits we most admire, but the reality is that business in today’s world is hardly the altruistic picture we paint for ourselves. The success of capitalism in the West, and especially in this country, has instead made its higher echelons drunk with wealth and power, and unfortunately, capitalism doesn’t make a very fun drunk. Business, rather than compliment society, now tries to rule it with an iron glove.

The problem isn’t really with all business, per se, but rather with the evolution that has transformed business from the small or medium sized company into the multi-national behemoth that dominates the business landscape today. The legal rules that separated business endeavors from their founders and created the corporation as a separate legal entity, akin to an individual person, have bestowed upon these large companies many of the rights that are constitutionally guaranteed to us as individuals, even though the businesses are not human beings in any way. But because corporate capitalism uses its own considerable wealth to advance legislation, often times these businesses are not held accountable as an individual would be. They are receiving all of the benefits without bearing any of the responsibility. Furthermore, through their legislative access (allowed them by means of political contributions by a variety of means, both legal and extra-legal) they enjoy access to policymakers and exert influence on policy and laws without having any accountability to the general public, a practice that not-so-subtly bypasses the representative system guaranteed by our Constitution. This is wrong, and to stop this corporate subversion, we need to change our political finance laws as well as our interpretation of the rights of businesses. To what extent should a corporation’s activities be separated from those who actively manage it?

Does a business exist merely to produce profit or is it more of a cooperative effort between the business leaders and the employees to ensure mutual success? The answer should be, “Yes.” Obviously, in order for a business to be successful, it has to be prosperous at some level. It must earn enough money to pay for all of its materials and employees and utilities. And if the goal of free enterprise is to provide a materially wealthier lifestyle for the entrepreneur, a business must also generate an adequate profit for the owner. But since the success of a business is directly related to the effectiveness and expertise of its employees, business leaders need to find a balance between acceptable profit and outright greed. Most employees enjoy working for a successful corporation if they see the company returning some of its profit to the workers through benefits or raises or other perks. Yet increasingly, large businesses are decreasing their investment in their workers through reduced pension plans or decreasing health insurance coverage, or worse, through down-sizing and relocation. It’s hard to blame them with costs for these programs skyrocketing in recent years, but in many cases, corporate profits are increasing at just as rapid rates, yet the employee cuts continue unabated as the shareholders profits rise. Reducing the costs of doing business should be a top priority in the area of economic reform, and I’ve already discussed ways to significantly decrease or eliminate the costs associated with retirement and health benefits. (See The National Whole Life Pension Plan and Affordable Health Care Does Not Mean Free Health Care) But any reductions in the cost of doing business should be translated into lower costs, better products, higher wages or any combination of the three. If society and politics work to reduce the costs to business, we should expect business to reduce their desire for enormous profit margins and settle for merely large or even modest profit margins.

We also need to take a look at certain areas of business that generate large profit margins simply because the products or services rendered are necessities for living in this modern world or are mandated by law or nature. A prime candidate for scrutiny would be businesses in the energy industry. Modern society requires a fair amount of energy, either as electricity or as gasoline. And although we derive our electricity from a variety of public sources (hydroelectric plants using public river ways for energy, wind farms using public air, or nuclear generators using public minerals and dollars), the costs to the public are anything but consistent. In a capitalist system, these fluctuations are attributed to supply and demand, but recent shenanigans in this sector of business have shown us that this isn’t necessarily the case. Manipulation and false scarcity have been used to increase the costs to the consumer for no reason other than greed, and the energy sector isn’t alone in this. (For ideas on energy reform, read The Future of Energy) Insurance companies, whose products are often mandated by law, and medical companies, whose products are mandated by nature, also engage in these kinds of manipulations. Perhaps returning some of these businesses to public control, or at least more stringent public regulation is finally in order. After all, there are plenty of other ways for people to make their fortune without having to gouge consumers for the very necessities of modern life.

Corporations, because they are also the main source of employment for many, also enjoy certain legal protections not afforded to individuals. This is done under the assumption that a large business is too valuable, in terms of tax revenue and as an employer of the people, to hold accountable for many of its mistakes. We see the error of this thinking all around us, but usually only learn of it once the real damage has been done. Think in terms of environmental pollution or sealed out of court settlements. Think in terms of hushed up research documents in the rush to market the newest medicine. Think in terms of massive product recalls due to cheap or defective parts. All of these issues tend to diminish the image of business in the eyes of the public. Yet our politicians support these loopholes as if they were part and parcel to the way the world works. As individuals, we expect accountability from each other. We expect honesty and integrity. Why don’t we demand the same of corporations? Why don’t our politicians? The truth is that the corporations don’t care what we think, because they’ve paid for the politicians to keep things as they are and our apathy at the voting booth affirms their assumption that we don’t care or can’t see what is happening. Corporations need to be held accountable for the products they sell. They need to be held accountable for the messes they make. They need to be open and forthright when they discover a faulty product. And they need to put safety and integrity at the same level of concern as they put profit.

Finally, businesses, both large and small need to have greater accountability to the public (if they are a publicly held corporation) or to their employees and customers (if they are a small or medium business) in both their financial dealings and their human efforts. Employees should be paid a living wage, (which becomes more possible with pension and health care reforms) be offered a fair amount of leave for illnesses and vacations, and be given the opportunity to grow with the company to their ability and aspirations. It is the best interest of any business to have happy, productive employees, and this can be achieved without seriously harming profit. Simply offering more flexibility in scheduling and more reasonable expectations from overworked staffers would be a start. After all, there is only so much money a person can enjoy, and no one wants to be worked into insanity. The benefits derived from making other people’s lives happier can outshine the brightest diamond, and they provide more goodwill towards a company in the long run.

I don’t think of business as evil, or capitalism as the enemy, and I don’t think money will automatically turn you bad. But it is plain to all who care to look with an open eye that the modern constructs of business in society are leading us back to a place we’d sooner keep in the past. Unless we make an effort to drive the influence of corporate money from our politics, unless we begin to demand honesty and integrity from our business leaders, and unless we teach the future leaders of business that people matter more than profit, we will see a return to the days of indentured servitude as the costs of living continue to outpace wages because our poor, rich corporations aren’t clearing enough profit.